Supporting, growing and managing a vast range of companies, teams and portfolios, District Equity puts people first, and works diligently to deploy its exceptional asset management skills.
District Equity is a strategic advisor, counselor, and partner to its continuously growing portfolio of clients. The firm works diligently to deploy its exceptional asset management skills and talent for managing people to the benefit of the firm’s clients and portfolio businesses. This enables District Equity to support, grow and successfully manage a vast array of companies in different industries, as well as manage teams and investment portfolios.
CORPORATE DEVELOPMENT PRACTICE
This multinational, independent private capital and corporate development firm was founded with the goal of providing the investment and advisory side services of capital markets to businesses, to help corporations identify and capitalize on market inefficiencies.
District Equity’s combination of operational and investment expertise enables it to provide additional strategic corporate guidance to its portfolio company management teams, while also helping them identify new opportunities for growth. The firm also is dedicated to growing its current portfolio of companies by supporting each of them as a strategic advisor, and by drawing on its financing capacity.
The firm has run the gamut when it comes to enterprise investing. From corporate workouts and special situation investing, to growth and expansion capital investments, District Equity has the expertise to handle each type of situation, and its experienced team has operated, grown, and successfully exited a number of businesses. This team cut its teeth by performing every operational task from negotiating rates with government-affiliated prime and subcontractors, to conducting interviews with potential new hires, to rebranding exercises, and more. District Equity has turned owner-lifestyle businesses with limited scalability into growth-oriented corporations that add tremendous value for a number of partners.
District Equity takes a long-term view of its portfolio companies, and thus invests and reinvests in those companies for their growth. Moreover, the firm looks at holding many of its investments indefinitely. The firm adds additional value with its expertise in capital markets and strategic partnerships with private equity firms, family offices, sovereign wealth funds, and financial institutions. This enables District Equity to negotiate better financing terms and keep the cost of capital low for its portfolio companies. The firm is strategically headquartered in Washington DC, and is well-connected with many legislative relationships that enable the firm to assist its partners in understanding how regulatory changes may impact their businesses.
ADVISORY & STRATEGIC CONSULTING
One key to District Equity’s Advisory business is its ability to provide professional due diligence and valuation support for its capital partners prior to any deal execution. By conducting detailed evaluations of identified target businesses and their potential for long-term sustainability and profitability, the firm is able to readily identify the best potential acquisitions, while avoiding hidden pitfalls. As District Equity’s CEO, Maury Bradsher explains, “When we’re accessing or sponsoring a potential deal, we do an extensive financial scrub of the business and create our own financial models. Because we’ve operated businesses before, we know what to look for, where potential problems may be hiding, where to shave unnecessary costs, and where to invest human capital and monetary assets. We are comfortable with talking to management to ensure strategic alignments exist and that there is a shared vision. Our corporate pedigree enables us to quickly position the best-suited people in the right places. This proves to be valuable for our capital partners because it saves them time by providing an efficient process for evaluating a potential deal with us.”
While there are times when new management needs to be injected into a business, District Equity prefers to maintain and develop current management teams. Regardless of the way this ends up working, the firm will work to come to an agreement with the management team, by outlining goals for the company and emphasizing how those goals will be measured and benchmarked. Maury Bradsher explains, “The preference is to work with the existing management and use that institutional knowledge to build out the business. What that very often may entail is repositioning management into different roles in the business. In such situations we try and alleviate uncertainty by communicating early and often. So we work with management on a very clear set of metrics and use them as part of our performance and compensation plan. This gets them engaged and helps assuage many employment-related fears, and people will know exactly where they stand and what’s in it for them. This also provides us with something that we can consistently refer back to and use to ensure accountability for everyone, including ourselves.”
Going further, and looking deeper into the functionality and internal structure of a business is key to District Equity’s approach, even if it sometimes can require what some might call ‘tough love.’ “Making structural changes to a distressed business is very challenging, to say the least,” Bradsher tells Business Worldwide. “Very often it’s met with internal resistance because: 1) as creatures of habit, people often are used to doing things in a certain way, even when it may not be in the best interest of the business, and 2) the perception of an acquirer as a ‘corporate raider’ or ‘Wall Street guy’ can present its own set of challenges.” As he explains further, “it’s paramount for us to be upfront, to communicate consistently, and to provide as much detail as is appropriate about some very tough decisions that need to be made. Our ultimate objective is to create value, which means that our day-to-day goal is to be a true value-adding partner to the businesses that we own and the people that we work with. Change can be scary but it does not have to be difficult. For these reasons cultural fit is a very important part of our diligence process.”
FOCUS OF FIRM & THE REGULATORY ENVIRONMENT
District Equity currently is evaluating a pipeline of companies in industries as diverse as media, real estate, healthcare, cyber innovation, infrastructure investments, and traditional C&I (Commercial and Industrial). “The bidding market remains very competitive,” Maury states. “There’s a tremendous amount of capital going after a lot of the same opportunities, and that’s a big reason why multiples continue to increase.
“While the economy certainly is still in a time of easy money, the impacts of new regulations on financial institutions can be felt. Banks have become more discriminatory because of regulatory compliance; in turn these new regulations contribute to higher cost of capital. This creates an avenue for alternative lenders to step in and fund these deals that banks are turning away from. The market place is still flooded with capital, enabling debt and equity multiples to be driven higher and higher. So the sources of funding and the correct amount of leverage in an acquisition have to be in harmony. Thus, the key is to be able to look at each opportunity and identify the ideal structure and sources of capital. Additionally, we have to understand government regulations, and their impacts on our banking partners and portfolio companies.”
It’s clear to see why the firm stands out and has taken the gong for the 2015 Business Worldwide M&A awards, winning ‘Asset Management Firm of the Year, USA 2015’. “District Equity is honored and humbled to receive this award,” says Maury, “it’s always a rewarding experience when you put in hard work and get recognized by your peers for it.”