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The Acquirers Podcast

Value After Hours S06 E18: Ben Claremon on Devonshire Partners' Micro Public-to-Private Equity Strat

May 6, 2024
Ben Claremon, Partner at Devonshire Partners, discusses challenges and opportunities in the microcap market, strategies for small companies to navigate punches, exploring microcap investing and private equity strategies, fundraising models in private equity, and industry focus on stable industrial companies with pricing power.
01:00:11

Episode guests

Podcast summary created with Snipd AI

Quick takeaways

  • Small and microcap companies struggle with a lack of growth capital due to limited large check riders, inhibiting opportunities for acquisitions at intrinsic value.
  • Institutional disinterest in microcap companies has shifted focus to larger market caps, leading to underperformance and orphaned undervalued firms in the small and microcap universe.

Deep dives

Structural Lack of Growth Capital in Small and Microcap Companies

Small and microcap companies face a significant challenge due to the structural lack of growth capital available to them. This issue stems from the limited availability of large check riders in the space, leading to opportunities being missed. For instance, a scenario where a firm could not raise a $200 million fund to acquire shares at a negotiated transaction below intrinsic value highlights the difficulties faced by long-only investors in this arena. This lack of growth capital inhibits companies from compounding and expanding, presenting an ongoing challenge in the small and microcap universe.

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