Independently Sponsored: NewOrigin Investments

What is your investment thesis or value proposition?

Due to increased life expectancy; the Baby Boomer generation reaching retirement age; and historically, high disposable income, the aging market is ripe with investment opportunity. Private equity already heavily invests in-home healthcare, senior housing, and other areas. However, products and services increasing mobility, communication, education, mental health, and fiscal management in eldercare remains fragmented and severely underinvested. This is where NewOrigin focuses.

Our value proposition for Sellers is a long-term commitment to partnership beyond the typical hold period, the option to assess the relationship with a smaller initial investment, and opening of our vast network of other founders, C-Suite executives, lenders, and service providers throughout the relationship. Our focus is to build on the current ownership’s legacy by ensuring the continued success of the business, the development of its employees, and the implementation of strategic initiatives to accelerate the business beyond the next level of growth.

Our value proposition to capital providers is direct, candid communication on a consistent basis forming a true partnership that includes the portfolio company’s leadership. We strive to break down walls, increasing transparency. Also, NewOrigin collaborates with other seasoned private equity investors, expanding our areas of operational expertise manifold.

Any notable differentiators for the firm?

NewOrigin takes a very flexible approach to investing. In certain cases, we may make a smaller minority investment in a platform with an option to increase that investment at a fixed valuation. This eliminates much of the pressure associated with a typical deal close since certain terms, conditions, and due diligence has already been completed. Most importantly, NewOrigin provides growth capital to founder led companies for only 4 purposes: (i) liquidity – rolling over 20 – 40%, (ii) acquisition capital – usually first time, (iii) hiring of additional talent – C-suite level execs, and (iv) technology improvement – CRM, ERP, KPI (plus a host of other acronyms). These are the areas where we can add the most value with significant experience in the marketplace in each. The potential to invest more capital later provides us with the time to get this right and even with no option, we usually are speaking with founders’ years before the transaction to plan.

What are you looking for, and where are you seeing opportunities?

We’re looking for passion from owners. It’s not easy to take on a growth partner even with years of a relationship. Whether due to generational transition, desire for institutional professionalization, identification of an acquisition or estate planning, a Seller’s rationale for a transaction is unique and we treat it as such. We want them to remain engaged after the transaction since we know not everything will go as planned or wished – see pandemic, inflation, interest rates, and labor costs for examples.

We’re especially seeing opportunities with new and improved products to help people “age in place”, anything from modular, portable wheelchair ramps to electronically guided walkers, to fall detection cameras. We take a grassroots approach to deal sourcing by attending little known conferences, CEO peer-to-peer networking groups, and constantly talking to entrepreneurs in the aging space.

Finally, can you regale us with an interesting or funny M&A story?

During a due diligence site visit for a data center serving Disneyland (directly below the park), I happened to meet several Disney characters since the facility was next to the costume changing area. Although it was jarring to see Snow White, Peter Pan and Minnie Mouse taking drags from cigarettes while playing poker, they provided invaluable, unfiltered intel on the inner workings of the park and interconnectivity of the technology system. Trust me, I was dubious at first but took copious notes, fact-checked them with an engineer, double-checked with industry executives, and we ended up investing in a much higher stake. A customer data center is not the easiest investment to get comfortable with, so who better to ask than the beneficiaries on the ground (or in this case underground)? I tried to find them again to “consult” on another transaction, but unfortunately I kept only their stage names in my contacts.