Wealth & Finance International - Fund Awards 2016

Fund Awards 2016 36 Best Data-Driven Private Equity Firm 2016 & Best for Special Situation Lower Middle Market Investments Prophet Equity is a private equity firm that uses proven, data-driven analytical techniques coupled with over 100 years of investment and management experience to invest in, unlock and realize future value today. We caught up with Ross Gatlin to learn more. Company: Prophet Equity Name: Ross Gatlin Email: [email protected] Web Address: www.prophetequity.com Address: 1460 Main St Suite 200 Southlake, TX 76092 USA Telephone: 817-898-1500 Over the last sixteen years Prophet Equity’s Principals have invested control equity in special situation, lower middle market companies creating over $2B in value across entities with over $4B in revenue. Currently the firm is deploying capital from Prophet Equity II LP ($345M fund), the focus of which Ross outlines in more details. “Prophet Equity’s principals use proven value creation methods and rely on cross functional knowledge to make control investments and drive improvements in both profits and balance sheets. Collaborating with owners, management teams, outside advisors and leading industry experts, our principals have experience in highly complex, special situ- ations and use an advanced strategic and operational toolkit to identify and unlock value. “Through this collaborative approach our team of experts utilizes a Holistic Value Creation™ (HVC™) strategy and Prophet Full Potential Value™ (PFPV™) system that is Fortune 500 tested and private equity proven to diagnose and drive dramatic value creation.” Within the wider fund industry currently, while larger acquisition financing opportunities (companies with EBITDA north of $50M) are experiencing credit challenges, the middle market space in which Prophet Equity focuses, continues to see a robust financing environ- ment. Debt providers are particularly interested in finding transactions that are non-energy, non-metals related, and are offering very attractive financing options for those type of opportunities. As such, Ross believes that staying ahead of the latest industry develop- ments and working to identify the most suitable investments is crucial. “Identifying and closing unique investment opportunities is the lifeblood of our business. Therefore, the Prophet Equity team has developed a robust sourcing process whereby every person on the team plays an LA16007 important role in building the Prophet Equity brand among thousands of intermediaries across North America to ensure we are seeing every opportunity that fits within our investment parameters. Additionally, we have developed a team and a track record for moving faster than our competitors on fast-paced transactions that have to close within an expedited timeline. As a result, we have been able to uncover unique value through our efficient and thorough due diligence process.” “Fundamentally Prophet Equity’s success is driven by Prophet Equity’s team, which has senior level expertise in operations, strategy and deal execution. They are able to identify strategically strong, yet underper- forming companies, develop and implement value creation plans that significantly improve cash flow over the life of our investments and acquire companies at reasonable valuations. As investors in the lower middle market, we surround our executive teams with Prophet Equity employees to implement and monitor value creation initiatives in a collaborative way. Moreover, we align incentives with our management teams and investors by not charging management fees to our portfolio companies. Instead, incentives are aligned to generate equity value for all stakeholders.” As his concluding comment Ross outlines the firm’s predictions for the future of the industry and how it will adapt around these developments. “Moving forward, private equity will continue to require more and more operational improvement capabilities within the general partnership, rather than relying on third party operating partners. Identifying value creation initiatives on the front end of an investment from a team that has implemented the initiatives first hand drives certainty of success during the investment period, and we are confident that we can achieve this through our innovative approach.”