An independent investment firm founded by two professors at Western Michigan University is making great strides in its first year of operation.
Doug Lepisto and Derrick McIver – associate professors of management and co-directors of the Center for Principled Leadership and Business Strategy at Haworth College of Business at WMU – are partner co-managers of Sleeping Giant Capital, a private equity firm they own. co-founded in August which “operates at the intersection of investment management and executive training”, which the Business Journal first reported in September.
Sleeping Giant Capital is targeting $ 50 million with the goal of generating economic, social and educational returns in West Michigan through the acquisition of small businesses. The fund will take stakes in companies generating $ 3 million to $ 30 million in income and transition from a new owner-operator to running the business.
The fund will pursue at least two acquisitions per year, with 80% of the acquisitions located in western Michigan, and a portion of the profits of the acquired companies will be redistributed by Sleeping Giant Capital to Haworth College of Business to maintain and expand the center. for principled leadership and business strategy.
The unusual thing about the business is that McIver and Lepisto are training many aspiring owner-operators to invest in as part of Acquire, their new educational program at the center they run at Western.
The critical problem that Lepisto and McIver seek to address through their training course is that the transition of business ownership – a growing trend as the baby boom generation retires – requires a pool of future owners. – talented operators who are currently underdeveloped. Acquire, which is open to MBA students as well as experienced professionals, is an innovative and digitally enhanced program that will seek to fill the void by educating aspiring owner-operators on research, analysis, acquisition and leadership. small businesses.
“We want to be able to offer a transformational opportunity to experienced professionals to show them a third career path, that they don’t need to set up a big business or start a business, but that there is this other path, which is that they can go out and acquire a business and become the CEO, ”Lepisto said. “We see that there is a huge amount of interest around this, in terms of entrepreneurship and being the CEO of a company, and there are a lot of people who have the experience, the talent and the the motivation to be able to do it. We want to be able to show them that way.
The course consists of a personal exploration to determine if acquisitions are suitable for each participant, followed by training on the transaction process and how a business grows after the acquisition. McIver and Lepisto lead the class, and they also bring in bankers, lawyers, accountants, and private investors to talk about their experiences, tactics, and lessons learned.
Graduates of the training program are eligible to apply for a competitive process in which they are personally mentored by executives and supported with capital to research and acquire a business.
McIver and Lepisto led their first Acquire cohort of 20 participants in the winter / spring semester. A new cohort begins this fall and had about 40 people enrolled in mid-June. More information is available at wmich.edu/leadershipcenter/acquire.
The Sleeping Giant co-founders have been busy since August. After putting in place the tools and systems to run their business, they began raising funds and first closed $ 21 million in March. Then they made their first investment – an undisclosed sum to Michael Abdella, a native of Flint, a 2011 graduate of WMU and founder of Mauve Capital Partners, to support his acquisition of LineDrive in late April. Abdella became CEO of LineDrive on May 1.
LineDrive is an Itasca, Illinois-based industrial sales company specializing in PPE and other equipment that helps plant productivity.
“I have looked at many different organizations over the past two years as I was considering acquiring a business,” Abdella said. “There were two main things I was looking for: personal fit and organizational culture. The LineDrive team is incredibly capable and this company is essentially a talent organization whose success is directly linked to the quality of talent management, support and development. The company is already a thought leader in industrial sales, and this attracted me a lot in terms of the growth potential of the company – the company has distinct competitive advantages.
Abdella said his end goal was to grow the company to two to three times its current size.
Lepisto said Abdella is a “hungry, talented and experienced young leader,” and he and McIver were excited about his ambition, skills, investment thesis and commitment to growing the business in a reasoned way, which makes him an excellent candidate for Sleeping Giant’s. first investment.
Several other applicants have now applied for funding from Sleeping Giant, and managing partners are working to determine which applicants to move forward with.
Sleeping Giant has also secured an accelerator space in downtown Kalamazoo to train owner-operators which will likely open in late August or early September, the partners said.
Lepisto said one of the reasons Sleeping Giant Capital exists is to help future owner-operators based in West Michigan acquire businesses that otherwise could be bought by non-local investors and moved to abroad, so that the capital stays in that region and helps it to flourish.
“There is not only a tremendous opportunity on the investment side, but it can improve the health of our western Michigan community which stretches from Grand Rapids to Kalamazoo,” he said. “If people rally around this concept, it creates financial benefits for investors, it creates educational returns for Western – we have great educational opportunities that we’re going to build into some of our undergraduate programs, and there is has a really cool virtuous circle there – (and) then there’s also this element of community impact that we hope we can contribute to. “