Winning Big by Doing Minority Recaps

Erik Miller watched his entrepreneurial father build a thriving business, only to be squeezed by private equity. After 30 years in finance, Erik is now running Perspective Equity Partners to partner & collaborate with founders.

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Most independent sponsors want control, but Erik's first deal as an independent sponsor was a minority recap. The key is underwriting people, not just numbers. Co-founder tension, decision bottlenecks, ego; we discuss all the variables. Erik calls himself a "psychologist" (albeit "low-level"). That is, he spends as much time managing dynamics as he does reviewing financials.

Erik has a long career on Wall Street behind him. He was trained by John Utendahl, a masterful and high-profile fundraiser, who built CRMs & "LinkedIn" for himself before software existed. As an independent sponsor, Erik is aware of the characteristics that make shops good vs. bad. Focusing on the founders, enabling them to go from good to great, is the key, he says.

His Camille Rose deal is the cleanest example. He acquired a minority stake, ~40%, in 2022, and never tried to take the wheel. Instead, the founder, the exceptional Janelle Stephens, has stayed in charge. Erik went to work behind the scenes: finance, supply chain, basic blocking and tackling. Revenue more than doubled. Now #4 in its category, women haircare products.

Another edge that Erik reflects on is that he's got 30 years of relationships. When he needs capital or talent, he calls people who actually pick up. This network didn't exist when he was 30, but it does now. His partnership mindset doesn't stop with founders, he is also willing to split his GP economics with operating partners. It's cheaper than hiring them in the opsco, and far more aligned. Yet another example of his simple model: give up control to gain trust. When it works, it really works.

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