The Private Equity Podcast, by Raw Selection

The Opportunity in Micro Cap Investing And The Importance of Playbooks With Javar Avery

April 30, 2024 Alex Rawlings
The Opportunity in Micro Cap Investing And The Importance of Playbooks With Javar Avery
The Private Equity Podcast, by Raw Selection
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The Private Equity Podcast, by Raw Selection
The Opportunity in Micro Cap Investing And The Importance of Playbooks With Javar Avery
Apr 30, 2024
Alex Rawlings

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Welcome to The Private Equity Podcast! In this episode, host Alex Rawlings talks with Javar Avery, President at Sun and Moon Capital. They delve into micro-cap investing's potential and the essential role of operational playbooks. Avery discusses the rationale behind focusing on smaller, often overlooked companies, detailing the importance of detailed due diligence and strategic deal-making. He highlights overcoming key risks, like key man risk, and maintaining owner engagement for success. The episode also touches on Avery's influences and reading recommendations, offering insights into effective strategies for micro-cap investment growth.

Breakdown:

[00:00] Javar Avery discusses the potential of investing in micro-cap companies and wonders why larger firms aren't more active in this space.
[00:15] The focus is on market competition, management, and team evaluation, introducing governance playbooks for strategic guidance.
[00:37] Introduction to Javar Avery and Sun and Moon Capital's focus on microcap investing, targeting companies with $1 million to $2 million of EBITDA.
[01:07] Exploring the opportunities and challenges in microcap investing, and Avery's emphasis on the use of playbooks for business implementation.
[01:37] Avery provides a brief overview of his background, his role at Sun and Moon Capital, and his personal life.
[02:59] Discussion on common mistakes in Private Equity and the necessity for having a clear rationale and strategy for deals.
[03:26] Avery shares an experience with a deal that lacked rationale and emphasizes the importance of having a structured due diligence process.
[04:47] The significance of playbooks in overcoming integration challenges and maintaining structured operations post-acquisition.
[06:35] Avery discusses his interest in micro-cap investing, influenced by recognizing the potential value and challenges in smaller businesses.
[08:30] Reasons behind choosing micro-cap investing include less competition, potential for significant value addition, and the unique challenges of smaller businesses.
[12:46] Details on Sun and Moon Capital's due diligence process, tailored to their investment rationale and focused on commercial, financial, and management evaluations.
[15:12] The ECE strategy used by Sun and Moon Capital to provide operational support without running the companies directly.
[17:06] Key risk factors in micro-cap investing, such as key man risk and concentration risks, and strategies to mitigate these risks including retaining skin in the game for owners.
[19:34] Avery shares his reading interests, emphasizing autobiographies, business insights from books like "Moneyball," and his passion for learning outside his expertise.
[23:32] Recommendations for books and influences, highlighting the importance of different perspectives and personal development.
[28:14] Contact information for Javar Avery and an invitation for listeners interested in learning more or seeking investment opportunities to reach out.
[29:10] Closing remarks, thanking Javar Avery for his insights into micro-cap investing and the critical role of operational playbooks.

You can connect with Javar Avery on LinkedIn by visiting his LinkedIn Page.

Thank you for tuning in!

To get the newest Private Equity episodes, you can subscribe on iTunes or Spotify here.

Lastly, if you have any feedback on the podcast or want to reach out to Al

Show Notes

Send us a Text Message.

Welcome to The Private Equity Podcast! In this episode, host Alex Rawlings talks with Javar Avery, President at Sun and Moon Capital. They delve into micro-cap investing's potential and the essential role of operational playbooks. Avery discusses the rationale behind focusing on smaller, often overlooked companies, detailing the importance of detailed due diligence and strategic deal-making. He highlights overcoming key risks, like key man risk, and maintaining owner engagement for success. The episode also touches on Avery's influences and reading recommendations, offering insights into effective strategies for micro-cap investment growth.

Breakdown:

[00:00] Javar Avery discusses the potential of investing in micro-cap companies and wonders why larger firms aren't more active in this space.
[00:15] The focus is on market competition, management, and team evaluation, introducing governance playbooks for strategic guidance.
[00:37] Introduction to Javar Avery and Sun and Moon Capital's focus on microcap investing, targeting companies with $1 million to $2 million of EBITDA.
[01:07] Exploring the opportunities and challenges in microcap investing, and Avery's emphasis on the use of playbooks for business implementation.
[01:37] Avery provides a brief overview of his background, his role at Sun and Moon Capital, and his personal life.
[02:59] Discussion on common mistakes in Private Equity and the necessity for having a clear rationale and strategy for deals.
[03:26] Avery shares an experience with a deal that lacked rationale and emphasizes the importance of having a structured due diligence process.
[04:47] The significance of playbooks in overcoming integration challenges and maintaining structured operations post-acquisition.
[06:35] Avery discusses his interest in micro-cap investing, influenced by recognizing the potential value and challenges in smaller businesses.
[08:30] Reasons behind choosing micro-cap investing include less competition, potential for significant value addition, and the unique challenges of smaller businesses.
[12:46] Details on Sun and Moon Capital's due diligence process, tailored to their investment rationale and focused on commercial, financial, and management evaluations.
[15:12] The ECE strategy used by Sun and Moon Capital to provide operational support without running the companies directly.
[17:06] Key risk factors in micro-cap investing, such as key man risk and concentration risks, and strategies to mitigate these risks including retaining skin in the game for owners.
[19:34] Avery shares his reading interests, emphasizing autobiographies, business insights from books like "Moneyball," and his passion for learning outside his expertise.
[23:32] Recommendations for books and influences, highlighting the importance of different perspectives and personal development.
[28:14] Contact information for Javar Avery and an invitation for listeners interested in learning more or seeking investment opportunities to reach out.
[29:10] Closing remarks, thanking Javar Avery for his insights into micro-cap investing and the critical role of operational playbooks.

You can connect with Javar Avery on LinkedIn by visiting his LinkedIn Page.

Thank you for tuning in!

To get the newest Private Equity episodes, you can subscribe on iTunes or Spotify here.

Lastly, if you have any feedback on the podcast or want to reach out to Al