Dealmakers are flocking to the Sunshine State for InterGrowth 2015 for one cardinal reason: Networking. Middle-market dealmakers are also sure to enjoy keynotes from golf legend Greg Norman and executive roundtables on hot topics, such as investing in Southeast Asia. And don’t forget, you can play golf or tennis or visit Walt Disney World. (Scoll down for our interview with ACG chair Doug Tatum for more on how InterGrowth has changed over the years.)
Hosted by the Association for Corporate Growth (ACG), InterGrowth 2015 takes place April 13-15 at the Waldorf Astoria and Hilton Bonnet Creek in Orlando, Florida. Braun Jones, senior adviser at Outcome Capital and chairman of the conference, says that organizers focused on making the conference easier for attendees to meet and establish new connections and strengthen existing relationships.
“This year, we’re really focused on trying to maximize the networking opportunities. The entire agenda has been scheduled with that in mind,” Jones says.
New this year is a free mobile networking and scheduling application that replaces the previous year’s InterGrowth Connect app. The new app is streamlined, allowing conference-goers access to the full list of attendees and email addresses, create their own schedules and view company profiles through the PitchBook service, which is integrated into the app.
According to ACG, conference attendees closed more than 1,900 deals in 2014 worth $162 billion, and they deployed nearly $13 billion so far in 2015, as of March 2.
The setting for InterGrowth 2015 is a shared conference center between the Waldorf Astoria and Hilton Bonnet Creek, each with pools and several restaurants, plus the adjoining Waldorf Astoria golf course. For informal networking, the conference schedule includes a golf tournament, 5K run and tennis tournament. Like InterGrowth 2014, which was held at the luxurious Aria on the Las Vegas strip, InterGrowth 2015 boasts nearby attractions. Walt Disney World is three miles away, and Universal Studios Orlando is 12 miles away.
The keynote speakers are Greg Norman, golfing legend and entrepreneur, who will be interviewed by Greg Gumbel of CBS Sports, and Salim Ismail—technology strategist, former vice chairman of Yahoo Inc. (Nasdaq: YHOO) and a veteran of seven early-stage companies.
Norman’s Great White Enterprises—his golfing nickname is the Great White Shark—is involved in golf-course design, community development, apparel, wine, event management, licensing and merchandising. Ismail is the founding executive director of Singularity University, a technology-focused educational institution, and a noted speaker on the unexpected and far-reaching effects of technology advancements on business and society.
The first night of the event tees off with a two-hour networking session, ACG Capital Connection, where conference-goers can visit with more than 100 private equity firms at tables organized into by industry segments.
During the second and third days of InterGrowth, the day-long ACG Deal Source will have a similar setup, but with investment bankers available at tables to meet. Throughout the conference, attendees can meet with each other either in common areas, in the InterGrowth Lounge area or at tables that can be reserved ahead of time.
This is the third year for the InterGrowth Lounge, which was developed in response to surveys that showed attendees wanted more spaces to meet, Jones says. “I think networking is always the focus, but you learn a little bit each year; sometimes you do things that don’t work; sometimes you try things that do work.”
It will be interesting to hear what conference attendees say about the currently full pipeline for middle-market deals, says Martin Okner, ACG New York chairman and managing director of SHM Corporate Navigators, a strategic advisory firm in New York.
“I think one of the interesting dynamics of InterGrowth this year is the continued heightened competition for deal flow at an unprecedented level, and not just from your traditional players,” Okner says. Strategic buyers and family offices are showing a greater interest in the middle market than they have before.
Okner, who has attended four InterGrowth conferences before this year, advises first-time attendees to get the list of conference-goers as soon as possible to begin lining up one-to-one meetings in advance.
“It’s the only place where you can meet very efficiently with 50, 60 people in literally two days,” he says.
China Plus One
Andrew Rice, senior vice president private equity firm the Jordan Co. LP, which has offices in New York, Chicago and China, is leading a session on opportunities in Southeast Asia outside of China. Rice says that as foreign investors in Asia have focused attention on China, the easy middle-market investment opportunities in the country have been picked over, and the cost of doing business there has increased, including labor rates that double every five years. The main China investment theme is now about investing there to sell back into the domestic market.
Some investors are now taking a “China-plus-one” view of manufacturing, looking at opportunities in other countries in the region that have become suppliers to China. “There are a lot of multinationals that have big assembly operations in China, but they have some components made in Vietnam, or in Singapore or Malaysia. So their network is all of Asia,” Rice says.
A new trade pact for the Association of Southeast Asia Nations will also create opportunities. Under the pact, tariffs on exports between the countries in the association have been dropped, starting this year, and professional workers will soon be allowed to travel between the countries without visa restrictions. And in a few years, all workers will be allowed to move freely in the region.
Lifting trade restrictions will lead to infrastructure projects—ports, railroads, highways—and then other opportunities as the economies develop. For most of Southeast Asia, economists are predicting fast growth, Rice says.
Benefits of BDCs
Brad Newkirk, managing partner of assurance services at Dixon Hughes Goodman in Charlotte, North Carolina, is leading an executive roundtable session on business development companies, examining how and why BDCs should be created and the advantages, disadvantages and tax implications of the publicly traded structures.
Companies or funds that are considering launching a BDC should weigh the benefits versus the challenges of the publically traded structure. For example, Newkirk says, with a BDC, managers can focus their time on acquiring portfolio companies instead of fundraising, but they have to make sure that they hire accounting staff members who are experienced and knowledgeable about SEC public filing requirements.
One factor driving BDC creation is the increasing demands that institutional investors, such as state pension funds, are putting on private equity funds as they try to control risk, Newkirk says. Sometimes the requirements are so onerous that they overreach even SEC’s requirements for publically traded vehicles, and the fund managers figure: “Why not just go public?”
The big advantage of BDCs is the funds raised. “You just reap so much more money. The money that a private equity company can get in public markets—anything that they can do privately pales in comparison to what they can do publicly,” Newkirk says.
Jules Reich, partner at WeiserMazars accounting and tax advisory firm in New York, is leading the roundtable discussion on trends in consumer and retail sector growth.
Technology advances and other factors are driving a significant shift in consumer and retail spending globally, Reich says. “It probably emanates from a lot of different things, but mostly you’re seeing urbanization going on-- in a lot of different parts of the world-- that didn’t exist.” Consumers with more disposable income in China, India and Brazil, for example, are helping to drive “a tremendous wave of spending,” he says. “We’re definitely seeing positive acceleration.” One current trend involves companies importing brands. They buy a brand and bring it back to a fast-growing, recently developed local market that they are familiar with—in Asia or South America, for example-- to grow the brand there.
Another trend is related to dropping gasoline prices. With consumers enjoying low gas prices possibly for the next 10 years, the added cash in their pockets is changing demand forecasts.
Bruce Fenton, a partner in the commercial department of law firm Pepper Hamilton in Philadelphia, is leading the executive roundtable discussion on preparing a business for a sale. Generally, in the current market, prices are high, but the very best pricing is reserved for the sellers of companies with absolutely no warts, Fenton says.
Fenton says his most important advice to sellers is: Don’t have any surprises for the buyer and present them with every piece of information. Sellers should work out potential issues that may come up in a sale well in advance because buyers are more willing to stretch for a deal when they have higher levels of comfort with a potential acquisition.