On this week’s episode of M&A Masters, we sit down with Samantha Ory to talk about choosing partnership over buyout. Samantha’s company, Ouroboros Group, is a private investment firm specializing in middle market corporate acquisitions and operations in the manufacturing, healthcare, and consumer sectors.
Samantha says, “I found that there is this segment of outlier companies and CEOs who are looking for something a little bit different. We cater a lot to the CEOs. We always ask ‘what can we do for you?’ It builds trust, but it’s also very genuine… we really want to know.”
Listen as she walks us through:
Patrick Stroth: Hello there. I’m Patrick Stroth, trusted authority in executive and transactional liability and president of Rubicon M&A Insurance Services. Now a proud member of The Liberty Company Insurance Group of Brokers. Welcome to M&A Masters, where speak with the leading experts in mergers and acquisitions. And we’re all about one thing here. That’s a clean exit for owners, founders and their investors. Today I’m joined by Samantha Ory, Founder and General Partner of Ouroboros Group. Ouroboros Group is a private investment firm specializing in middle market acquisitions and operations within the healthcare, consumer, manufacturing and distribution spaces. The firm has offices in Boston and New York.
And in addition to their middle market buyout practice also has a minority investment arm specializing in early stage and minority investments within the consumer vertical. And as of this recording, today, there are over 5000 private equity firms in the US. Most people outside of M&A think of private equity as a monolithic even within mergers and acquisitions. A lot of professionals think of private equity by either size, sector or region. I gotta tell you that that’s contrary to the truth really, and is no better personified by Samantha today is that when you see one private equity firm, you’ve seen one private equity firm. Their owners and founders are unique and have a great story. And this is why I wanted to do the podcast, quite frankly, is because nobody tells these stories better. And I’m really thrilled to have you. Sam, thanks for being here. Thanks for joining me.
Samantha Ory: And Patrick, thank you so much for having me. This is wonderful, this is exciting.
Patrick: It’s gonna it’s gonna be a lot of fun, because a lot, there’s a lot to get into what you in Ouroboros Group are doing. But before we get into all that, let’s just set the table real quick. Let’s talk about you. What got you to this point in your career?
Samantha: Yeah, so it’s a great question. You know, I think that I’m going through a lot of different events within the financial industry, and also just kind of being molded in a very non conventional way to begin with. So many people don’t know this about me, but I actually didn’t start in finance, I started in art. And believe it or not, as the painting suggests, behind you, I actually used to do that. And I was one of the people that you know, would go take six hour drawing courses and paint in various mediums, pastels, oils, do photography, and just really be kind of that creative talent. And my path was much more towards going to the Pixar or Google or even an Apple, but more kind of a design or a tech track.
And you know, I was probably halfway through my undergraduate degree at Parsons that I realized that it was more of a hobby, but less of something that I wanted to pursue in a work capacity. And I had been doing all of these internships. And my last job prior to exiting the school world was Prada. And I was actually a buyer for for Prada within their shoe departments at Bloomingdale’s, and Saks and Bergdorf. And I was one of their kind of account analysts that would go in and start to barter for the different prices, and also keep track of all of the different SKUs, and even really place the items within the showroom and could go through the curation process. I loved it. But I really like the math behind it. And I like to finance behind it. And I like the idea of how to maximize your profits with in one segment.
So a lot of friends who they were at NYU, and they were really, really interested in kind of your typical ibanking track right thing, Goldman Sachs Bank of America, Morgan Stanley. So they got me into the finance circuit. They said, well, if you like finance so much, why don’t you give it a whirl one summer for your very last internship before you graduate. So I pretty much begged Needham & Company, middle market investment bank to give me an internship one summer. I think they looked at me and they said, oh my goodness. what do you know about finance? And I said, not much but I know something about consumer. And you know, perhaps we can kind of strike a little bit of a happy medium here where you know, I can help with the research and the consumer perspective and you can teach me how to model and teach me kind of the ropes.
It was probably one of the most interesting summers of my life. Juxtaposed between painting and drawing for my final classes and executing different graphic design projects and modeling and for potential mergers and acquisitions that we were doing at Needham & Company. And that summer, we actually floated Zipcar as the tertiary underwriter. And I got to be a part of that, which was fantastic. It gave me something to talk about, it was an interesting bridge between consumer and between finance. And that really launched my career into finance, and really created this viewpoint of how I felt, you know, finance should be from from the lens of someone who didn’t have that package background. So that was kind of the beginning of it all.
Patrick: I imagine it’s just that common denominator is the number, the number speak to you. And everybody thinks of numbers on one level, and as this cold objective viewpoint, and you inject an art and and context it. That’s amazing. So then you move on, you get get out to form Ouroboros Group from this experience, okay. Clearly, you didn’t name it, Ory group, okay, you put it out there. Talk about now Ouroboros Group, but I always like to ask, you know, first of all, where did you come up with the name?
Samantha: It’s a great question. And it’s so funny you say that, actually, because everybody asks me, well, is it your street address? Or is it is it a golf course that you like to golf at? I mean, that’s really where the, the manifestation of a lot of these company names and the hedge fund and private equity world come from, and not to knock them. Um, but given my very creative background, I said, well, you know, I have half a brand new degree, you know, from from one of the world’s best art schools, why don’t I, you know, use that to my advantage when I’m creating my own company. So I wanted to do something that resonated from an international perspective, because I knew that we were going to be looking at deals like the outside of the country given globalization.
And I also, you know, wanting to be a kind of a talking piece, where people would ask me, and it’s a really nice icebreaker in finance, you kind of get the same conversation over and over and over again. And I find that you really get to bring out people’s personality, when it’s just kind of a, hey, how’d you come up with your name, and then you start, you know, gabbing away and before you know it, you know, you’re fast friends. So it was it was intentional. But the name being close to my last name was not completely unintentional. So Ouroboros means infinite returns in ancient Greek, there are two delineations. One is a dragon eating its tail. And the other is the serpent eating its tail, more of the Eastern European delineation, and I went with the Asian version.
Patrick: Okay, I just infinite returns is always a nice picture for people to have as they out there. And you’re in you’re diverse and a lot of the sectors that you’re looking at, however, you’re more tilted toward the middle market, as opposed to the lower middle market, like a lot of my guests, but you’re in more than middle market. Let’s talk about that as what is Ouroboros Group, bringing to companies in that middle market space? Talk about you know, your target size, but don’t limit it to that. Just what then are you bringing, because you really do have a unique perspective. And I really liked that approach.
Samantha: No, thank you. I really appreciate that, Patrick. You know, I think that’s for me, and you know, going all the way back again, I saw a lot of interesting arbitrage opportunities coming from the non traditional background. You start to see things that you love about the industry, and also things that you think you can, you know, change could could be better. And a couple of things that I saw, you know, were that every private equity shop structures deals in the same way. And they will also think about their post close strategy in the same way. They also go through the acquisition process in the same way with the CEO. It’s kind of the same song and dance, and it works really well, you know, for many companies, but I found that there’s the segment of kind of outlier companies. And outlier CEOs who are looking for something a little bit different.
So we cater more towards the CEO, when I think it wins a lot of trust over, you know, to them. We always ask, you know, what can we do for you? And they always look at us a little stunned and they say, well, what? You’re asking us? You’re, you’re pitching us on you, this is very different. And they like that it builds trust, but it’s also very genuine, because we really want to know, because post close, our goal isn’t to put, you know, six plus turns of leverage on a company. You know, we really stay between you know, that three to four range at the very max and really organically grow this company post close. And create a very sustainable growth strategy with a surrounding of operating partners. They could be retired CEOs, current CEOs, current C suite, and you know, we give them board positions course. And they help us and guide us, you know, through their rolodexes through their experiences to help take the company to the next level.
The other thing that we do that was a little bit different. So typically in private equity, it’s usually 100% buyout. You’re not, you don’t always see rollover. And if you do, it’s more for kind of just a transitionary period, or you’re seeing like the CEO, you know, it basically has kind of a final exit strategy in mind. But we’re actually, you know, really going for like 20 plus percent in some cases, the more the merrier is what we say. We want the CEOs to really believe in their company and believe in that strategy post closing and kind of, you know, feel like this is a partnership and not buy out, if that makes sense.
Patrick: Is it? Is it fair to say in that a person, you’re not necessarily looking for CEOs who want to actually you’re looking for CEOs that are at that inflection point where they’re, they’re too big to be small, but they’re too small to be enterprise? And they want to they want to stick around?
Samantha: 100%? It’s very counterintuitive. Yeah. But yeah.
Patrick: Okay, that’s it. I’m sorry, I slowed your roll, please continue.
Samantha: No, no, this is fantastic. I’m glad you clarified actually, because it’s very counterintuitive. That’s probably one of the biggest things that we do. It’s a bit different, I would say from a post close. And also from kind of a diligence perspective, we’re really making friends with the CEO. We’re flying there multiple times, and really getting kind of a sound look at their company, and really just making sure that they like us as much as we like them. Because this is something that you know, you’re in bed with, with the CEO for, you know, five plus years, and it keeps getting longer and longer as the trends go on. So it’s very important. Another thing that we do, which is a bit atypical, is we source all of our own deals. So it’s not to say that we don’t look at bank led deals we we do look at them.
But I would say that 98% of deals and deals that we’ve done in the past, deals that are currently in our pipeline, deals were under LOI with, they come from an algorithmic deal strategy. There’s three algorithmic deal strategies that we’ve actually come up with, I used to work for a hedge fund. And you know, for me, I developed these different methodologies. I’m actually uh, unbeknownst to most people, I’m a coder. I am a used to and still do code and about six different languages. And I’m able to kind of parlay that public market experience that I had when I was at Morgan Stanley and my hedge fund into more of the private equity world. So we have these algorithms that find us companies.
And if I, if I go too deep, I’d have to, I’d have to kill you, if I told you all of the algorithmic deal secrets. But I would say that for the most part, you know, it’s been incredibly successful. We’re finding exactly what we’re looking for from an EBITDA perspective, from a sector perspective. We’re able to reach out to these CEOs who don’t even necessarily know that they want to sell their company yet and then we’re able to pitch our story organically. What we actually would like to do, and then post close, you know, execute on it. So it’s very atypical, because typically private equity, you know, that you bank led deals, and they don’t have their own sourcing teams.
Patrick: So when you’re doing that, you’re you’re actually finding you’re pre empting, you know, other prospective acquirers because you’re, you’re approaching these people probably early in the stage where they don’t even realize they’re going out yet, and so forth. And one of the things that comes across in our conversations before is, it’s a thing that we really believe over a Rubicon and now with Liberty is this commitment to service. To serving our clients. And you got you’re bringing that in spades because you’re approaching the CEO saying, literally, how can we serve you, and then it’s not just some big, you know, check that they’re going to get, but there’s more to it. And I think is what resonates is the saying that I that I’ve come across that I think comes with Ouroboros too, and I tell me if this, you know, connects with you. But you know, a lot of these CEOs are going to be saying, you know, what, I don’t care how much you know, until I know how much you care. And I think that that you’re already with that attitude of service, you’re already coming in that way.
Samantha: 100%. You know, and I think that I mean, the CEOs, usually all love us because of this and at first they think we’re being disingenuous because they’re like, my goodness, this is everything that I have ever wanted and could you know, ask for and then they get to know us and they go oh my god, this is like unbelievable. And what’s nice is that you’re developing just a really organic partnership and you know, they’re telling you what they actually need, which is opposed to just kind of giving you lip service and then post close you’re stuck with a bit of a mess. And so the LPs love it too, because we tend to get you know, much more of a quality opportunity.
And I would say it’s one where the LPs, you know, come to us, and it’s just, they have usually a purpose for why they want to be in the deal. They’ve either done a transaction that’s similar, they have a buy and build strategy, or, you know, a family in the family office segments, you know, has made their money in a similar way. So it’s, that’s the best, of course, because they really, truly understand what it means to be a part of this company. So and, you know, I’d say that we tend to have very fair valuations, we’re definitely not value investors, and we’re certainly not, you know, paying a premium. I would say that everyone walks away, you know, from a transaction, feeling that this has been a fair, a fair multiple, which is really, you know, how it should be done. No one should feel robbed on either side of the table, so.
Patrick: I kind of look at it as got the multiple figures out there, and people may have those, you know, in their head, but really is going to be the long run on, where are we going to bring this you know, from point A to point B. An approach that you guys have is you are not financially reengineering, or trying to grow profits by cutting expenses. You focus on an area that’s near and dear to my heart, which is marketing. You’re improving marketing, and the sales production in that. And so we could talk about that in one aspect. And I’m just wondering, as you come on board with this with the management team, and they brought you in, and now you’re together. Tell me about any epiphanies that you’ve witnessed them have, where they’re sitting down, saying, okay, I trust you show, show us what to do, you lay out the approach, and you just, you can visually see them with the light bulbs going off. Give us some of those examples, if you could.
Samantha: Sure. Um, so yeah, I mean, we’re working on closing a franchisor right now. And it’s been really interesting, because we’re seeing a CEO who has built this company, just absolutely organically. And, you know, he has seen decades of iteration here, and it’s just his knowledge is just so incredible to us. And we’re able to, you know, kind of share the experience of, you know, the old and the new, and you just kind of see these light bulbs, you know, flickering, you know, going oh, my gosh, this is what the next iteration of my company could be like, but I, you know, I don’t know that I have the energy at this point to do that. But I still really want to be a part of this. And this is one of the rare cases where we are bringing on a new CEO, but really, it’s gonna be kind of a collaboration, you know, post close. And you kind of see the new CEO, and you see the founder, you know, kind of sitting there, and they have just these incredible ideas for what this concept could be. But also maintaining the the authenticity, and this this kind of retro modern approach.
Samantha: Exactly, 100%. And I think that that is just it’s so special, to kind of see the old and the new come together. It happened again, on another transaction that we worked on, in the workwear space, you know, where we’re sitting there, and, you know, going my gosh, this is this is already a multinational company. But let’s start to kind of hone in on specific sectors that maybe could be complementary, you know, and a CEO is just going well, we tried this, and this didn’t work, we tried this. And that didn’t work. But maybe if we did this way, this could work. And then we’re bringing in our ops talent who are like, well, I did this with my last company, maybe we can try this. And just seeing this think tank come together. And I personally have learned just a tremendous amount. And what I love most about private equity is that you’re never done learning. It’s one of those, those those industries, where you have to just be prepared to always be humble, because you are never ever going to be a master of this craft.
Patrick: Why I kind of look at it as if you’re in construction, and you just have your head down, you’re banging on a nail, you know, all day long. And you just, you know, you can get down on yourself saying, I’m just doing this little thing, but then you step back at the end of the day. And there’s something larger than when you started. And I could just see the same thing with you guys where it’s just not another deal. We were building the, we’re building something from nothing, but there’s something there but even more. So that’s got to be gratifying. And and, you know, as we go through that. As I mentioned in the opening, you are in the healthcare, consumer, distribution, you know, you’re in a lot of different sectors. Okay. And so they could, but they could spread you out a bit. But, you know, give us an idea about, you know, where you are in terms of what’s an ideal client for you. Ideal target. Explain what that is because I think anybody is listening that has a mid market company, they’re already getting a little bit, you know, interested.
Samantha: Thank you. Yeah, absolutely. So I would say you know, ideal client is, um, you know, CEO who, you know, basically built this company. Typically, if there’s some family edge too, we love that we love, you know, multi generational families. We love family businesses. I myself came from a family business background. So I certainly emphasize and, and know what it takes. So family, family business, you know, CEOs, you know, organically creating the company, you know, typically, you know, they’ve been doing this for, you know, 10 plus years. You know, and a CEO who’s looking to stay on and really taking another bite of the apple, and is maybe looking to roll call it 15 to 20% equity.
And also, as you mentioned, within the healthcare, consumer, and manufacturing and distribution spaces. We are completely geographically agnostic. So we will look all over the world for interesting opportunities. And I would also say that we’re looking, you know, mainly for for strategies that, you know, can be, you know, a three plus year, sort of hold, buy and build strategies, and just in general, you know, really compliment our operating partners’ skills, too. So we’re coming in from that angle.
Patrick: Okay. And in terms of value size, what kind of range are we looking at?
Samantha: 5 million EBITDA and above.
Patrick: 5 million EBITDA and above. Okay, excellent. One of the things has happened with that particular class of businesses help the transactions move a lot more efficiently is how risk has been able to be transferred away from the parties so that the, the deals can actually go forward without, you know, the big downside. And what I’m talking about with that is, there’s an insurance program called reps and warranties, which has been in that middle market space, even more so than ever, in the last five years. And you know, it’s done wonders for the middle market, not just the billion dollar but down, but don’t take my word for it. Samantha, good, bad or indifferent, what experiences have you had with rep and warranty on your deals?
Samantha: Well, we love reps and warranties. I mean, I would say that the ideal candidate, at least from our perspective, for reps and warranties are deals that are a little bit bigger, you know. The reps and warranties are tough for smaller deals, I would say just because you know, it’s expensive. But I would say that when you’re doing bigger deals, it’s almost a must, especially if there’s any sort of risk. Anything that you know, has any sort of, you know, pre close, post close risk that you’re kind of identifying, you know, anything distressed, that has kind of that economies of scale already, you should certainly know reps and warranties and insurance. And I would say that, you know, in general, especially in this really frothy market, it’s really important to definitely consider it. You know, when you’re buying out a company.
Patrick: I would say one of the great things about the platform for this podcast is also to get the word out that reps and warranties was originally the prime domain for 100 million dollar plus transaction. And now that has gone down market to where, you know, a transactions in the you know, $25 million valuation realm can be eligible. There are costs associated, which is why now there’s a brand new program out there for the micro market, and is called TLPE. And it insures deals from half a million transaction value to 10 million, which is a little bit below Ouroboros’ threshold, however it could be for add on. So it’s one thing out there for the guests to consider is that just because you’re not a $50 million, you know, transaction, there may still be alternatives out there. So I appreciate you know, your comments on this. And it’s great to see I’ve seen a consistent response here where, and it’s good for the insurance industry that we actually have a tool that is helpful as opposed to a hindrance for deals happening. Now, Samantha, I’m a father of two teenage daughters.
So I’m keenly aware of what’s happening with you know, women in the presence of finance sectors and so forth. And I really wanted to ask you this, because you also have a unique perspective as a background of a non finance person who came from the art sector. You know, in your background, as you came in you from the surface, it looks like you had no hindrance whatsoever, or barrier to entry getting in as a woman into the finance world. But share with me your thoughts because I believe still that women are underrepresented in finance and in M&A. And I’d like your insights on this because you bring something to the table that the standard, you know, profile doesn’t bring, but talk to me on that on that area.
Samantha: I appreciate you saying that. Thank you, Patrick. You know, I think that um, I was acutely aware of it just you know, switching industries, um, you know, at a young age and you’re aware of it, I think when you’re at the beginning of your career. And then as you mature, and you build your toolkit, as I like to say, where you know, you have more and more skills, whether it be kind of the front ends, you know, bizdev, to the, to the modeling skills, to doing IR to doing admin stuff, and you kind of get that suite ability to just kind of wear all of these different hats. You kind of get so busy, you kind of forget, you know, that you’re a woman, honestly. Because it’s such a male dominated industry.
And when I was younger, I was much more aware of it. And it was a little bit stifling to me. And I, you know, I came off a little awkward, um, you know, at times, but then kind of as you mature, and as you, you know, build confidence, you think of yourself just as a person, and that makes it just, from kind of a, an aura standpoint, just more palatable. You know, when you’re in a room at a conference and, and one on, you just don’t think of gender anymore. And you’re more kind of thinking of, you know, oh, how can we collaborate on this and partnership. And I think a lot of that does come from the fact that, you know, so many males are in this industry, that you just kind of have to shut it off at some point. And everyone else is aware, you’re a woman, but you aren’t.
And I think that that really is truly an advantage. Because a lot of women tend to have a chip on their shoulder, you know, is they’re like, huh, well, I’m a woman in this industry. And I used to be like that, too. And then, you know, you get older and, you know, it doesn’t serve you very well. And, you know, I think it is changing slowly, you know, kind of as we go into things, but I think that, um, the industry is just really, it’s a grueling industry, you know, and it’s one where, you know, you kind of, as you get older, it leaves everybody out. Men and women, and they go into different segments, so.
Patrick: Okay, yeah, I just think that as, as you know, the numbers in your view, and numbers and love numbers and so forth, transcended, you know, the the barriers that would have been there with finance and in art, and so forth. I think just in the nature of mergers and acquisitions is just, if you’ve got a better idea, the world’s going to beat a path to your door. And I mean, coming from Silicon Valley, it didn’t matter where you come from, you do not have to be a blueblood or someone that’s in the club in Silicon Valley to do very, very well. And that is, you know, infectious out there. And I think it’s the same thing. And what’s nice is, you know, money is going to go where success is. And so that’s, that’s one thing that’s, you know, you can’t deny it is just great seeing, you know, professionals like yourself out there serving it, you know, while you didn’t intend to be you are role models for the next generation coming on through and I really, really do appreciate that.
Samantha: I agree. And thank you.
Patrick: Yeah. So, you know, Samantha, we’re coming up on 2022. And, you know, this 2021, blinked right by. The pandemic is less of an issue now, it’s not gone. But it you know, we’ve, we’ve adapted. What trends do you see going forward, either in the middle market, or any of the sectors that you’re in, because you are also in the entry level in the consumer vertical. So talk to that, if you could.
Samantha: Absolutely, I think you’re seeing gigantic paradigm shifts, and almost every industry honestly, and COVID, has really sped up these trends. And you’re seeing it, especially in the consumer sector, where already we’re kind of seeing the death of brick and mortar, if you will, and more of these experiential concepts coming up and more ecommerce. And I mean, it just completely, was ravaged and COVID and became much more cyberspace driven, less brick and mortar, even more experiential, just to kind of get the client in the door to buy the product. You know, I think that you’re really seeing the trends too, and healthcare and telemedicine and no longer needing to go to your specific doctor, but kind of having more of this fragmented branch out of going to an urgent care or having the televisit online first, to just kind of determine whether or not you should, you know, go to your primary or, you know, be triaged somewhere else.
And in manufacturing and distribution, you’re seeing just massive supply chain disruptions right now and everybody you know, you didn’t even have to be in the sector to know what’s going on. When you go into CVS and you can’t find the Advil. It’s really striking. You know, and it’s gonna probably go on for another six months to a year as things normalize. But I’d say the big, overarching trending scene within private equity and white collar jobs is work from home situation. It doesn’t seem to be going away, it seems to actually be becoming more of a hybrid situation where maybe you go into the office two to three days a week, and then you know, the rest of the time, you know, you’re at home, or maybe you’re working remotely, permanently, you know, in a different area of the country or a different area all together. It’s really fascinating. And they think that it’s going to create a really ferocious talent pool, where suddenly you don’t have to move to one of these cities, you can be top talents, you know, working from, you know, Asia or working from, you know, Texas if you’re based in Boston. So it’s really striking. You know, what’s happened. And I think it’s just going to continue to increase within the next year.
Patrick: And I didn’t want to bring my own personal life into these interviews and everything is about you. But as somebody who had to wait seven weeks for a replacement refrigerator when ours died, yeah, those those, you know, supply chain, things are going to be something going in. I also agree with you, I think that not only in this but in mergers and acquisitions. As more innovations happen, as more collaborations happen. Mergers and acquisitions are only going to continue at this pace because of demographics as well. Because you’ve got CEOs that want to make a final change, whether there’s an exit, or it’s either now or never, we got to get up and change change what we’re doing. And they’re looking to organizations like Ouroboros to do that. And so, you know, we’ll we’ll see what happens but it but things are all positive, which I like, which which is always fun. Samantha, how can our audience members find you?
Samantha: Via my email. Um, Patrick, you’re more than welcome to share my email, to share the website, you know, would absolutely love to connect. We’re in the business, it’s a relationship business, so please don’t hesitate to reach out to me for any purpose. It’s just always nice to make new contacts in the industry and find new ways to partner and work together either now or in the future.
Patrick: We’ll have everything in the show notes. So we’ll have that all set. Samantha Ory from the Ouroboros Group. Thanks so much for being a guest. It’s just been a lot of fun.
Samantha: Thank you so much for having me, Patrick. Such a pleasure.