Private Equity Story Time: LOIs, Love, Loss, and Legacy

Story #3 in my new series Private Equity Story Time

I worked with some of the top private equity practitioners as a BigLaw lawyer. They were sharp, strategic, and often ruthless. Watching them work was incredible.

Here is the third short story in my new installment: Private Equity Story Time. These stories are to pass along the lessons I learned from some of the sharpest PE practitioners in the world that can be applied to independent sponsors and small buyers.

A couple of years ago I got a call from my PE client. He wanted to submit an LOI for a target. This business was owned by one man, Jim Roberts (not his real name) who took over from his father. Jim ran it for the past 40 years and grew to be a titan in its industry. The company was strong, enduring, and had significant growth potential.

Problematically, this target was very sought-after. My client had been courting this seller every few months for three years. They went out for lunch and talked about a sale, but the seller was insistent on running an auction process and choosing the best price and terms. Some of the big PE shops were also circling and had submitted above-market offers.

My client did not have approval from Investment Committee to match those offers.

We had a call and brainstormed about how to make the offer more competitive. We came up with very little.

Then I said, I know it is a long shot, but what is the seller passionate about outside of work.

My client was quiet and then said, Oh my God, I know and hung up.

I didn’t hear from him for a week.

A week later, my client sent a scanned LOI with Jim’s signature at the bottom.

I was shocked.

I looked at the LOI for any changes. The offer price and terms remained the same. But there was a paragraph added at the bottom.

"At Closing, Buyer will donate $1,000,000 to the Breast Cancer Center at [**] Hospital in memory of Anne Marie Roberts.”

I called my client to congratulate him and asked, how did you know?!

He said: I knew that Jim’s wife had passed away from breast cancer complications two years ago. It was at that time, he lost his energy to run the business. He told me he always did it for her.

Jim told me how he spent days, weeks, and months sleeping on a hard hospital couch by Anne Marie's side. Even though he lost her, Jim remained deeply grateful to the hospital and the staff. When you asked me what is important to Jim, I realized that I knew what would be meaningful to him. I wanted Jim to know that I care about what he cares about.

Last year I found myself at the university connected to that hospital. I went into the hospital, and asked to be directed to the Breast Cancer Center.

On the wall at the entrance to the Center, there was a plaque that read, “This new Breast Cancer Center has been dedicated in loving memory of Anne Marie Roberts.”