I recently had the privilege of appearing as a guest on one of the first episodes of the DealMakers Podcast. The conversation was a bit different from most of the interviews I have done. Specifically, given that the host, Bendly Jean, is the founder of a private equity firm named Ribbon Equity, the discussion straddled both public and private market investing.

In addition to giving an overview of Cove Street’s philosophy and how we are approaching today’s somewhat bizarre markets, I also made the case that private equity companies should be focusing more of their capital on smaller public companies. The U.S. small cap and microcap public space is littered with what we would call orphaned companies, those that never get any love or receive a proper valuation from the public markets. As such, private equity sponsors who are willing to cap their fund size and target smaller public companies might find that buyout multiples in underfollowed corners of the public space are more reasonable than are private company multiples or those of larger public companies. This is theme that comes up a lot in our interviews and writing: less is more and smaller is better!

Please have a listen.

-Ben

Ben Claremon
Principal & Portfolio Manager
LinkedIn