The Launch of the FOX Deal Exchange

Overview

This organizing session at the 2012 FOX Fall Forum marked the launch of a new investment community, the FOX Deal Exchange. FOX CEO and FDX Chairman Sara Hamilton provided an overview of this venture, which was followed by a panel discussion with three leading private equity teams, each dedicated to deploying one family’s private capital in strategic ways. 

Some key takeaways:

The new FOX Deal Exchange

  • FDX Capital, a member of FINRA and SIPC, is an independent company set up to serve the FOX family offices in the area of direct investing. 
  • FDX mandate: Screening private deals to determine their suitability for family office investors, organizing forums and focus groups targeting areas of interest for direct investing, and working with FOX members to understand their deal making objectives and foster connections among investing families.
  • Goal: FDX seeks to create a high-quality market that attracts high quality deals by focusing on what is unique about our network – family driven opportunities sponsored by families with long-term horizons 
  • Types of deals: Direct deals (primary focus), enhanced direct deals, asset sales, RE transactions, subscriptions and posting opportunities.
  • Fees: Fees will be success-based, generally billed to the person looking to raise capital. No AUM-based fees or fees to review deals.

Family Experiences with Private Equity Panel (PE)

Deal sourcing:
  • Look at economic trends quarterly, identify sectors, define investment thesis blueprint, identify places and call them up. 
  • Don’t be reactionary – don’t source through the country club
Industry selection:
  • Try to find businesses in industries with good fundamentals (avoid the hard industries).
  • Look for areas where you have a competitive advantage.

Partner selection:

  • Spend a lot of time picking the right partners. Find good businesses with great people and give them the flexible capital to allow them to do what they want to do. Best deals are relationship driven.
  • Must have a great corporate culture. Don’t buy places we think we could run better. 
  • How do they react when things go wrong?
  • Invest in companies that are purely capital-starved for growth
  • Look for alignment, focus, hard work, honesty/transparency
Approach: 
  • Try to deliver resources beyond capital to the businesses they invest in
  • Long time horizon and flexible capital is family’s biggest asset
  • Use funds for exposure to areas where they have no expertise – or co-invest with somebody who has more expertise.
  • Have the ability not to sell – but do sell. Do you decide to sell or do you have to sell? All of us want to sell when the person leading that business thinks it is the right thing.
Fees: 
  • Pay fees when they co-invest. 
  • Charge fees when they bring somebody in. Charge most to people who are most passive. Charge what they’d pay on the other side.

Presentations

Publish Date