Page 304 - James Caan - The Real Deal

The Real Deal

research really seriously and tapped into the YPO network. I
talked to several people who ran their own private equity firms
and asked if I could buy them lunch.
‘What issues do you face? How do you broker your deals? How
long does the due diligence take?’ Questions, questions, questions.
I was formulating a vision of the kind of company I wanted to
start, and, just as I had done sitting in Aisha’s boutique twenty
years before, I was looking for a USP. What could I do differently?
What could I do better? Where was the flaw? I looked at the
journey of the typical private equity deal and I identified five key
skills that were needed: origination, financial analysis, market and
competitive research, valuation and negotiation and the legal, due
diligence and documentation skills that finalise the deals. In every
firm I visited one person saw a transaction through from the
beginning to the end. My second light-bulb moment was this: each
of those were distinct skills and I didn’t think you could be
brilliant at all of them. That meant that – taking the deal as a
whole – people in private equity would only perform averagely. If
I got a specialist to find the deals, a financial analyst to assess the
market, a researcher who could investigate the target companies
forensically and so on, I could have a team that would be
extremely well placed to maximise any opportunity that came our
way. However, I was a bit confused. What I had come up with
seemed to make so much sense that I couldn’t believe someone else
hadn’t already tried to do private equity that way. I supposed that
people were just doing what they had always done and in Britain
we’re not very good at challenging the Establishment. I’m the
opposite: I’m always looking for something to challenge. Still, I
decided to talk over my strategy with a friend at a top accountancy
firm, just in case I had overlooked something obvious.
‘What do you think?’ I asked after I’d revealed my plan.
‘It’s a bit dramatic – that’s not how private equity works.’
‘Let me ask you a question – do you think one guy can do it all?’

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