Hundreds of private equity investors, advisers specializing in M&A and finance and other business professionals will be in Grand Rapids this week for the Great Lakes Capital Connection. The two-day conference, hosted for the first time by the Western Michigan chapter of the Association for Corporate Growth, involves keynote speakers, panel discussions, and private networking events to create collaboration across the region. MiBiz spoke with ACG West Michigan President Rabih Jamal, a managing partner at DWH LLC in Grand Rapids, about the event and his perspectives on the present conditions for accessing capital.
Why is it important that Grand Rapids was chosen to host this year’s Great Lakes Capital Connection?
Attracting business professionals from around the region is important to the business community here for other business people to see what Grand Rapids and West Michigan has to offer. I think it’s important mostly, though, because I believe West Michigan to be highly concentrated in privately-owned businesses and family businesses and populated with an entrepreneurial and business mindset. Generally speaking, as these businesses contemplate growth, expansion or succession, any type of transition event that businesses go through periodically, they need access to experienced advisers, access to capital, and they need access to a business community that can help them achieve those objectives and goals. And that’s a lot of what GLCC has to offer to Grand Rapids and the Western Michigan business community.
How does hosting the conference help the business climate in Grand Rapids?
Grand Rapids is constantly viewed as a smaller city relative to the other (ACG) chapters (in the Great Lakes region). You think of Pittsburgh, Cleveland, Detroit and Grand Rapids is considered smaller. Showing what Grand Rapids has to offer is another reason why GLCC is important.
Does this provide the local ACG chapter a chance to show off Grand Rapids to outside investors who could make investments in the market?
Absolutely. That’s one of the primary goals. A lot of the attendees work with businesses that are outside of the region that may consider expansion into Grand Rapids. They also have the capital that can be deployed here to help expand and grow the business community here and ultimately help ensure the sustainability of this area for many, many years.
For a company out there today seeking to raise growth capital or to finance a transaction, what’s the market like right now?
From our recent experience, I consider the market very healthy from an access to capital perspective. There’s a lot of capital on the sidelines looking to deploy to opportunities that can provide a return on investment higher than what they can receive in other investment sectors. The banking and financing community is aggressively pursuing opportunities, so companies that are positioned for growth that need either debt or equity capital should have sufficient access in this environment.
How has that environment changed in the last few years?
Probably the most obvious change is that the lending community is more willing to explore deals that would have appeared riskier a couple years ago based on the regulatory changes and the recovery from the downturn that we experienced years ago. It seems that the lending community is much more aggressive in the willingness to lend into opportunities that may be a little more speculative in nature, allowing for businesses to take more significant growth steps in an environment that’s more conducive for that.
Is it just banks that are more open?
I would say the same applies for private equity groups. It appears that PE groups that were doing deals two years ago had less competition and there were less PE groups out there competing for the same deals. In the last couple years and most recently, there’s been a number of additional private equity groups that have popped up that are aggressively chasing deals and driving up valuations, and it seems that that interest continues.
If we have more PE groups investing, does that translate into more people putting their money into private equity deals?
In our experience, it seems like investors are generally attracted to the higher returns that private equity has to offer, and given the limited investment opportunities that investors have to deploy their money, having private equity as part of their portfolio is becoming more important. Talking to financial advisers and business advisers that support high-net worth individuals, they’re advising their clients to invest in private equity as a means to diversify their portfolios.
What are the biggest capital needs out there today?
The businesses that we’re working with are investing heavy into expansions, growing their footprint geographically and square footage in terms of their existing facilities, as well as heavy emphasis on automation and improved efficiencies within their business environment. That’s probably where we’re seeing most of the investment, in real and personal property. We’re also finding that businesses that are struggling to grow organically are becoming more open to looking for capital to support growth through acquisition. That seems to be a strategy being pursued more frequently than we’ve seen in the past.
Great Lakes Capital Connection
- When: Sept. 6-7
- Where: Amway Grand Plaza Hotel, downtown Grand Rapids
- Participating ACG chapters: Cincinnati, Cleveland, Columbus, Detroit, Indiana, Pittsburgh, West Michigan
- More info: acg-glcc.org