Closing the Deal: How NCA’s Investment Team supports our Searchers

Meet Taylor Perry – Head of NCA’s Investment Team

Taylor Perry joined NCA in late 2022 with over a decade of financial experience that traversed traditional investment banking and private equity, along with working as CFO for a finance startup. “What I love most about my role at NCA is that we’re supporting both small businesses and our Searchers,” he said. “NCA Searchers want to do something different by betting on themselves while supporting family-owned and small businesses at the same time.”

Taylor leads NCA’s global, multilingual Investment Team, composed of 12 people—including 4 legal M&A resources—who share extensive financial experience and a more personal connection to family or small businesses. Taylor’s team focuses on training and assisting NCA Searchers throughout the acquisition process, from initial analysis to valuation, structuring, negotiations, due diligence, debt financing, and execution to secure optimal deals and help reduce unforeseen risks. “Our goal is to be the hand-in-hand partner or the Chief Lieutenant to our Searchers, from the first time they hear of a business to the point of signing the dotted line and then continuing that support as they start the journey of running that business,” he added.

Every Searcher joining the NCA Program is paired with a member of the Investment Team, who becomes their day-to-day contact throughout their search and beyond, once the Searcher has successfully acquired a company. New NCA Searchers meet the Investment Team during onboarding, when the team shares key parameters investors are looking for to help guide the process. “The onboarding information we give Searchers helps them narrow down the assortment of companies they’re evaluating, helping them calibrate to find a good opportunity,” explained Taylor.

The Investment Team becomes more involved once a Searcher has an official Target Company, which is when due diligence kicks off and the Searcher transitions to the Acquisition Phase of the NCA Program.

What Makes NCA’s Due Diligence Process Unique

NCA’s commercial and confirmatory due diligence processes are incredibly thorough, having been rigorously refined since the company’s founding in 2019. With 22 company acquisitions to date in NCA’s portfolio, the sheer number of companies the Investment Team has reviewed—combined with the growing number of NCA Searchers actively looking for businesses—has given the Investment Team a deep, highly specialized expertise.

This expertise saves Searchers early on from spending too much time on any problematic deals. “Considering how many companies we’ve looked at, we approach any potential de

al with a wealth of knowledge on the front end,” Taylor explained. “We understand the more obvious red flags or big pitfalls and look for those right away, so we can move on if there are issues. As we go deeper into the process, we are also able to understand fair market pricing and solid deal structures that can help de-risk certain things within the targets we’re pursuing,” he added. “We keep an eye on the company’s monthly sales while we’re under contract to make sure their performance is holding up, and our third-party partners also dig into the details to confirm everything we’ve seen and been told up until that point holds true.”

As NCA has a focus on solving SME succession issues, Taylor’s team also understands the unique impact that has on the transfer of company ownership, as those sellers are often still very actively involved. “When there’s a succession challenge, we know we have to examine the human capital side of the business to understand what holes will be left when the seller actually does retire,” said Taylor. “We want them to be able to do that—that’s the whole reason we are here—but we need to make sure that any critical areas they’re covering can be taken over by somebody else in the company or our Searcher, and if not, we can be prepared to hire somebody for that role.”

More often than not, due diligence reveals that things are as they seemed, but there are cases when issues come up. “When they do come up, we are well equipped to navigate them with our Searcher and the Sellers”, added Taylor.

Driving Success for NCA’s Operator-Led Search Fund Program

According to the Stanford Graduate School of Business’ 2024 Search Fund Study, 43% of traditional search funds end without any acquisition, but NCA’s Program tells a very different story, with a near 80% acquisition success rate. Taylor was quick to point out some key factors driving NCA’s success, including the quality of NCA Searchers, NCA’s extensive network, and the support offered by NCA’s highly specialized teams.

“The scale we’re achieving is thanks to the many expert teams within NCA and the super high quality of our Searchers,” explained Taylor. “NCA Searchers have at least 15 or 20 years’ experience and are looking for businesses in the same industries they’ve spent their careers in, so they come to the table as experts with deep market intelligence. A lot of private equity firms have to hire somebody like that on a contracting basis for specific targets, but we already have them in-house. Our experienced Searchers speak for themselves when they show up in the room with the seller, and that sets us apart from both traditional private equity and traditional search funds, where the Searcher is often fresh out of undergrad, hasn’t really developed any industry specialization, and has probably spent less time operating.”

NCA Searchers are not typically M&A professionals, so the Investment Teams’ specialization and strong network provide crucial support. “Our team’s expertise gives our Searchers the confidence they need to ‘talk the talk’ to show sellers we can actually execute, and our track record proves we deliver on our promises,” Taylor added. “Post-acquisition, when we need to hire new people, we can also leverage our network to quickly bring on resources to support our Searchers. We’ve found that the organizations we’re working with typically need additional talent, which is exciting. We’re almost always adding headcount and creating more jobs.”

A Long-Term Approach to Solving Succession Challenges

While many sellers hope their children will step up to run the business when the

y retire, that is often not the case. Search funds in general offer a solution, Taylor says, but NCA takes it a step further because NCA’s Searchers are already industry experts and the Program structure avoids the strings often attached to private equity. “More often than not, with private equity the seller has to keep working for at least 2 to 3 years and they have to trust the purchasing organization to keep the company culture,” he explained. “Private equity funds answer to investors, so they tend to prioritize short term numbers over respecting the culture of a business and thinking more long term. I believe maintaining the culture in these businesses results in the best investment return in the long run, which differentiates NCA’s approach from that of traditional private equity.”

Sellers working with NCA Searchers value the

trust and personal relationships that are built throughout the process. “We’re not the type of people who go from boardroom to boardroom,” added Taylor. “We really want to understand what sellers care about in their business when they’re ready to sell. Our Searchers don’t see this as ‘just another job.’ Many of them are in it for the long haul, and I think the sellers we work with can see that. I believe as the owner-operator community starts to understand search funds more broadly, we’re going to see sellers become much more interested in this space.”

For more information about NCA, please visit www.novastone-ca.com