Inside Business Development Strategy with LFM Capital

An interview with Jessica Ginsberg, Director of Business Development at LFM Capital

When you hear Nashville, you probably think of country music stars, the Grand Ole Opry, or beautiful countryside. In recent years, however, Nashville has become one of the fastest-growing US cities in areas like technology, banking, healthcare, and logistics. It recently topped the list of the US cities with the most economic growth in 2021.

Private equity firm LFM Capital has been at the center of this growth, investing in manufacturing companies for more than six years. Since shortly after the firm’s inception in 2014, Jessica Ginsberg has led its business development efforts, which have resulted in nearly a dozen platform company investments, including most recently Diamabrush, a leading manufacturer of concrete floor polishing and resurfacing products.  Ginsberg’s team has also helped source several add-on acquisition opportunities, including most recently Beranek, maker of precision components used in aerospace and defense, which was acquired by LFM portfolio company, J&E Precision.

What is Ginsberg’s sourcing strategy that has enabled her to find so many great deals in such a short time?  She says the firm subscribes to a dual-channel approach focused on both direct and indirect sourcing.

LFM’s direct sourcing methods include cold calling and emailing, industry trade show attendance, and occasionally LinkedIn messaging.

“Direct sourcing can be a very long process, ” she recently told me in a Zoom interview.

“To give you a sense of scale, we send over 15,000 emails per year and it often takes 6 or 7 tries to get a response from a business owner,” she added.

That might seem like a lot of work for little return, but Jessica says it is “absolutely worth it” because of the quality of leads that come through this channel.

“Most times, it is not a competitive situation so there are not auction dynamics. The diligence process, however, can take a very long time because the business owner is running the process by themselves while trying to run a business,” she said.

As for the indirect sourcing side of the equation, which refers to deals LFM sees from investment bankers, brokers, and other intermediaries, Jessica says she actively maintains and grows her network to seek out opportunities that fit LFM’s investment strategy.

“We typically see between 600 and700 manufacturing deals in a year, and then we will  narrow that down and review around 150 to 200 of those deals with our investment committee, with the goal of closing 2 to 3 new platforms per year.”

LFM has always been committed to Business Development in order to maintain a full pipeline of actionable investment opportunities.  As such, Ginsberg has built a strong team around her to assist in the sourcing process.  Other members of the BD team are focused on industry research, scouting trade shows, and managing data around the sourcing process. Given LFM’s manufacturing background and investment focus, the team is very focused on lean initiatives and continuous improvement, which is always motivates the BD team to identify new sourcing strategies.

“We tend to divide up the universe, and I think it’s really important to let my team members own different parts of the process – be it managing metrics, outreach to highly targeted business owners, or leading an add-on search for a portfolio company,” she said.

“I am really excited about the business development function within private equity. It has grown a lot and has become a very viable career path. I think COVID really accelerated that because of the inability to get out there and do the things we usually do – and it made us realize that there are many, many ways to stay relevant and get in front of people.  I am thrilled to have found such a great firm and team to continue to grow with” she added.

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By Lou Sokolovskiy, Founder & CEO at Opus Connect
September 2021