The 5 Things Every
New Issuer Should Know
By VAUGHAN KOOYMAN, Founder and Director of Acquisitions of Make Space
Capital Partners and DANNY FREEDMAN, Owner and Director of Corporate
Development at Make Space Capital Partners
Registered in May 2019, Make Space Capital
Partners set a goal of building a portfolio of
profitable assets in the storage industry. In
August, the fund announced it’s first close on
tranche one of its private placement and the
acquisition of two stabilized storage properties
in Pender Harbour, BC and Winnipeg, MB.
Several months into the project, Vaughan
Kooyman, Founder and Director of Acquisitions, and Danny Freedman, Owner and
Director of Corporate Development, want to
share what they have learnt along the way.
Here are the top 5 things that every new
issuer should know.
1. Be Budget Conscious
From day one you need to be on top of your
budget. Travel, events, the printing of marketing materials and shipping can add up easily in
the first few months after a launch. Expenses
add up quickly and threaten to turn into a
major headache. It’s crucial to set a budget and
stick to it from the start.
Here are six factors that should be considered
while planning a budget for the new offering:
software, marketing costs, travel and event
costs, financial modeling, internal resources,
and an internal or external sales team. Each of
these factors will vary depending on the stage of
a project and other internal/external factors
such as the geographical range of the offering
and ambitiousness of your goals.
It’s only once you have a detailed budget that
you’ll be able to find cost-effective and
pragmatic connections. For example, split costs
between investor events and acquisition trips or
leverage technology by using webinars instead
of in-person meetings that require more flights
and hotels. Saving money and energy go hand
in hand in this case, allowing higher efficiency
on an on-going basis.
2. Do your research: EMDs and Market
positioning
It is equally important to do your research and
choose the right EMD before the ship is out on
the water. Vaughan Kooyman says, “We chose
Raintree because of their professionalism and
collaborative approach. Although it was
rigorous, we appreciate the extensive due
diligence - it helps us build trust within the
industry as we seek more quality EMDs to
partner with”.
Research is also the key to how you position
yourself in the market. It’s crucial to know your
industry. For us, we knew that the real estate
industry is both crowded and competitive. You
need to find the unique value proposition that
sets you apart from the rest and tell a story that
everyone can understand. However, a story can
only get you so far. Keep yourself aligned with
best in class standards such as RRSP, RESP
and TFSA eligibility, good governance and
competitive terms for investors and advisors. A
combination of reputable EMDs and proper
market positioning makes the offering more
trustworthy from the start.
3. Create trust through aligned management and trusted independent directors
The world of private equity relies on credibility
and trust. Build trust through management
alignment, clear and focused targets and goals,
and the active engagement of senior management and independent directors. Owners of the
business should already be significantly
invested with their own capital in harmony with
any investment they are seeking to attract, your
offering should be attractive to your management team and employees.
Independent directors provide stewardship and
guidance to management, but also oversight
and independent review of the organization, its
resources and objectives with no bias towards
the result. They are a crucial piece of the
puzzle.
4. Stay engaged
Becoming a new issuer means putting yourself
out there. You’ll be crossing the country
meeting with advisors, EMD management and
investors. These meetings, both in-person and
through virtual communication, come with the
opportunity to glean what is important to
advisors, to investors and to yourself.
As financial advisors do their own due diligence,
often as rigorous as any EMD’s, you’ll be
challenged to answer questions not previously
posed. Dig deep, show behind the scenes and
prove that both management and the offering
can be trusted.
By being open to any and all questions you can
gauge interest, build an understanding of the
offering and learn what’s currently lacking in
your marketing materials and presentations.
Don’t pass up any opportunity to engage with
advisors, investors and EMD management.
And if you’re taking the next step and writing
an OM this is your chance to delve into your
offering, and your assumptions. Continuous
learning (and a good lawyer) will help you
establish a strong foundation for growth.
5. Build Long-term Relationships
Becoming an issuer is like starting an entirely
new business. This is not a side project, but a
full-time commitment, and you are in it for the
long haul. Accordingly, think of the relationships you build from day one as long-term.
Treat all those you interact with; advisors, EMD
management, investors and the like, with
respect and attentiveness. Your success will
follow.
As you embark on this adventure keep in mind
- nobody is alone in it. The private equity
industry is filled with people who can help:
EMD representatives, advisors, investors,
industry experts, journalists, PCMA members
and more. Sometimes all you need to do is ask.
Danny & Vaughan would be happy to speak with
issuers who are thinking of getting started in
Private Equity. Reach out to us at:
info@makespacecapital.com or visit our
website:
www.makespacecapital.com
BUSINESS INSIGHTS
