By "Jim Lein, Oracle Midsize-Oracle" on Mar 09, 2015
Lenley Hensarling, past GVP and GM of Oracle JD Edwards, provides due diligence and advisory services to private equity and venture capital firms. He is currently engaged as an independent operating partner for Peak Equity Partners. He has over 30 years experience developing engineering and go-to-market strategies for software companies.
Q: What is your role at Peak Equity Partners?
Peak Equity Partners concentrates on buyouts and recapitalizations of enterprise software and solutions companies. We’re most interested in companies that are just past the venture capital stage—not ready to go public and not ready to be sold to another company. My role is to provide advisory services to companies within their portfolio, help identify opportunities for investment, and perform due diligence once a decision has been made that a specific company is interesting. At that phase, we work together to determine the real state of the business—verify that what we think is there, is really there.
Q: What qualities do you look for in potential investment opportunities?
A lot of companies that were on a trajectory to hit success were somewhat derailed by the turn down in the economy. That didn’t mean that what they had wasn’t a good idea or that they weren’t necessarily executing well. The good ones held on—kept the cash flow coming. They got stranded as it were, and private equity is a good vehicle to get them back on a trajectory to deliver their value to customers and to investors.
That ability for a company to deliver value to the marketplace is what we are looking for. Is there a revenue stream? Do they have customers? Is their market of substantial size? Are they likely to get back on a good trajectory and go to the next level with an infusion of capital, advice, and expertise?
Q: How do you find companies like this?
Companies in this situation often hire an investment banker to seek out capital opportunities. There also exists a large network within the investment community. For example, a venture capital firm might have initially funded a company, but for whatever reasons that company is no longer a good fit for their portfolio, or the fund has closed out and their attention is better focused on new opportunities. They still think it’s a good company and the company’s board of directors and management engage with an investment bank to find someone to sell it to.
Private equity firms also proactively look for hidden gems, leveraging their networks and those of their operating partners. The call around and have some conversations. Sometimes those conversations go somewhere and sometimes they don’t.
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The views expressed here are my own, and not necessarily those of Oracle.