Answers to all your questions
Are you a private equity (PE) firm?
No, August Spark is a family office. The benefit of the family office model is we have our own committed capital and are not beholden to limited partnerships (such as pension funds, etc.), meaning we can focus our time on finding great companies and then supporting them. As a family office, we can take a much longer-term view than PE, which can sometimes be forced to sell a company before it is ready. Since this is our own committed capital, we can be more flexible in deal structure and making subsequent investments along the way.
What types of investments do you make?
August Spark typically acquires 60-80% of a company. We think it is important for the current owners/management to maintain meaningful equity. As the individual(s) who built the business, we want you to remain connected to the organization and support it moving forward, in either a formal or informal capacity. Having an equity stake allows for that. Not to mention, you get to share in the upside as the business grows.
Do you have prioritized sectors or industry verticals?
We favor business-service and tech-enabled service companies. Examples include advertising and PR agencies, analytics and research firms, recruiting and staffing companies, experiential, event and AV firms, IT consulting firms, and software development companies.
What multiples or prices will you pay?
Most of the businesses we evaluate have EBITDA multiples between 4 and 8 times the prior year’s earnings.
How do you evaluate a business for sale?
Most investment groups begin by developing a model and determining if they can make the financial return. Conversely, August Spark starts by learning about the company, meeting the people involved, and identifying opportunities for growth. We take a more qualitative approach and then perform the diligence necessary to confirm our theses and finalize acquisitions.
Do you work with investment banks/brokers?
Absolutely. The majority of companies for sale come through an intermediary. We value and appreciate the banker/broker relationship and do our best to be responsive, provide direct feedback, and come well prepared to ensure productive discussions.
Do you make minority or co-investments?
We will consider them under the right circumstances. The company must be poised for growth, have a strong and capable management team in place, and also provide an opportunity for us to be helpful and involved. We are not passive investors, so it's important that we have a voice.
Will you run the companies you invest in?
No, we are owners and board members who work hard to support management. We provide expertise on strategy, sales/marketing, culture/people, and digitization. However, we are not the day-to-day decision makers.
What is your geographical focus?
We evaluate opportunities across the United States, although our preference is to make investments in companies within a few hours of New York City.
Have you made any investments?
Yes, we are excited to announce the addition of BVAccel to our portfolio. Headquartered in San Diego, BVAccel is one of the fastest growing eCommerce design, development and marketing agencies.
Why work with August Spark?
Our value proposition is simple: what you see is what you get. Our principles, Stephen and Mike, possess invaluable experiences and bring unique approaches relevant to the business owners they work with. We have met payroll, integrated acquisitions, led rebrands, built new products, and made software migrations. Our firsthand, working knowledge of the middle market is a strength most other groups do not possess.