Charles Scripps on Managing a Successful Private Equity Firm
An interview with Charles Scripps, the Managing Partner at Black Lake Capital.
Charles Scripps is the Managing Partner at Black Lake Capital, a Colorado-based private equity firm that invests in technology and innovation-enabled businesses. With over ten transactions under his belt, Charles knows what it takes to succeed in the private equity space. In a recent interview, I talked to Scripps about what makes Black Lake Capital so successful.
“It’s a big number. It’s been a lot of work,” Scripps said of the ten completed transactions since 2013, when the firm was founded. Scripps attributes the company’s success to several factors, including the quality of its team, the flexibility of its investment strategy, and the focus on value creation.
“We as a team focus on keeping that pipeline full, even when you have a deal that’s under [Letter of Intent] LOI,” he told me in a Zoom call, adding that deals can always fall through. “You’ve been doing due diligence for a month, and everything looks great. You still have to focus on the pipeline because it can die tomorrow.”
Scripps, a McKinsey and Wharton-trained investment professional with two decades of private equity and long-short hedge fund experience, said that Black Lake Capital sees nearly 500 deals a year, with only a small percentage making it to the firm’s active deal queue.
“I try to meet at least one new management team a week, hopefully, two,” he said. “And we try to keep that kind of level of engagement, even when we’re in the middle of a process. You know, hopefully, those conversations are turning into our next opportunity. It can take more than a year from when we meet that team to when we close the transaction,” he added.
Scripps placed an enormous value on his firm’s flexible investment strategy, including the ability to do substantial minority recaps that provide an exit for other investors while still allowing the company to maintain a controlling stake.
“That flexibility can be really important to sellers,” he said, explaining that it allows sellers to maintain some ownership in the business and have a vested interest in its continued success.
“We are comfortable with a lot of different structures…You just never know what’s going to happen. But being creative in terms of trying to meet the sellers’ goals of overall value while protecting our investors with a structure that doesn’t pay too much if the business performs at a low level or doesn’t hit the owner’s expectations,” he added.
While many private equity firms may have a myopic focus on financial engineering and achieving short-term gains, Scripps said that Black Lake Capital takes a more long-term view of its investments.
“We’re trying to sell ourselves as partners just as much as they’re trying to sell their business to us,” he said. “You know, what, what are we going to bring? What’s it like working with us? Everybody has horror stories about working with private equity? How can we sort of allay those fears?”
Tell us what you think on LinkedIn, Instagram, Facebook, or Twitter! @opusconnect.
By Lou Sokolovskiy, Founder & CEO at Opus Connect