Ziad K. Abdelnour is a leading Wall Street dealmaker, trader and financier with 20+ years experience in merchant banking, private equity, alternative investments and physical commodities trading. Throughout his career, Mr. Abdelnour worked on more than 125 transactions representing approximately $30 billion in value and ranging in size from $5 million – $5 billion while raising in the process in excess of $3.5 billion in privately placed debt and equity financing for more than 100 companies.
Mr. Abdelnour is currently President & CEO of Blackhawk Partners, Inc., a New York based venture capital “family office” that focuses on originating, structuring and acting as equity investor in management-led buyouts, strategic minority equity investments, equity private placements, consolidations and buildups, and growth capital financings mainly in the global energy and technology sectors.
Yaron Bazaz: Hi Ziad, how did you find yourself involved with investment banking and private equity activities?
Ziad K. Abdelnour: “You don’t find yourself involved with such activities. You either want to do it real bad, as I did, and aggressively go for it or you don’t. Both the private equity and the investment banking businesses are very time intensive. If you cannot allocate a significant amount of hours to either; especially in the early years, don’t do it. Lots of sacrifice involved to build a real business. You are building a career not just finding a job.”
Y.B: What distinguish Blackhawk Partners from other PEs and Investment Banks in the New York area?
Ziad K. Abdelnour: “We are not really an investment bank though we undertake such activities through Terra Nova Capital Partners; our investment banking affiliate. We are a private “family office” that basically focuses on originating, structuring and acting as equity investor in management-led buyouts, strategic minority equity investments, equity private placements, consolidations and buildups, and growth capital financings mainly in the global energy and technology sectors.
Our Mission is to generate significant capital growth through “global ” early stage investments (no start-ups or pre-revenue companies) mainly in the areas of asset management services including funds management throughout the asset class sectors, “clean fuel” and other alternative energy technologies and projects, global broadband telecom and networking infrastructure, global security and intelligence services including software applications and materials sciences and last but not least healthcare delivery and processing services including ambulatory surgical centers, data and billing management and claims processing.
We work with these early stage companies to attract complementary skills to insure commercial success, to develop high margin products to address large growing markets, to develop business plans with significant milestones, and to build investor syndicates to fund to positive cash flow. Please check out more at http://www.blackhawkpartners.com
Y.B: What kind of deals you currently looking for?
Ziad K. Abdelnour: “We are seriously looking at a dozen roll-ups in the home land security and information technology sectors along with a number of potential investments in emerging markets such as Turkey. Capital needs of such companies over the next 18 months varies between $5 million on the low end to $100 million on the high end for each deal.”
Y.B: How you define your value proposition for your clients?
Ziad K. Abdelnour: “We don’t back ideas but operators with a track record of executing. There is a zillion ideas out there but only a handful of serial entrepreneurs who know exactly what it takes to take those ideas and commercialize them to the point of creating a significant company. Those are the kind of people we work with ….plus the fact that given our extensive relationships on a global basis, we have the ability and do open up doors for those companies with the highest levels of both the business and government establishments in those countries to market their products and significantly impact both their respective top and bottom lines.”
Y.B: Does Blackhawk Partners get involved with direct private equity placements? If so, what is your investment focus?
Ziad K. Abdelnour: “We do not invest in funds…..only in direct equity placements and investments. Our investment approach as a “private family office” consists of filling in the funding gap between angel funding and major private equity groups by being the LEAD investor and supplying all the capital required through exit. We work with top operators to build great businesses, first last and foremost with respect for the individual paramount. Our “sweet spot” in terms of “global” private or public equity investments mainly consists of investing in growth companies already cash flowing or 6-12 months away from positive cash flow. We will look at opportunities BOTH in the U.S at large AND in emerging markets with a particular emphasis on the MENA (Middle East- North Africa) region where we could be either LEAD Investor OR part of a syndicate.”
Y.B: With a finger on the private equity arena pulse, what are the most significant trends/ developments we are witnessing now and about to witness at the near future?
Ziad K. Abdelnour: “I think there’ll definitely be a shakeout in the private equity industry over the next 5-10 years, in large part because there’ll be differential performance. Also, as the size of their portfolios have significantly shrunk, public pension funds and other asset managers will no longer have their alternative asset category growing as rapidly. In some cases it’ll be shrinking, along with all of their total assets, and they’ll have to be much more selective in terms of who they give money to. I think that firms like the top tier private equity groups, to the extent that they continue to have a strong record in all of their various products, will be a major beneficiary of that trend. As individual asset allocators become more risk averse they’ll go with branded names of firms with very good performance. And we’re experiencing that now.
As to returns, they are depressed not because of the supply and demand for money per se. Returns in private equity are basically keyed to a spread over the S&P and most people may well have noticed that in since 1997 there has been no return to the S&P. In fact it has been strongly negative. So in a world where the average equity investor has received no return, to not expect a diminished return from private equity would be absurd on the face.
When returns on the S&P were for 5 years compounding around 18%, the return on private equity went up to a huge spread. Most good firms were making 40-50% compounded on a gross basis so that would be more than 2000-3000 basis points over the S&P. If the S&P is flat, to be earning 1000 basis points over would be a 10% return and you’d say that that is gravely diminished. It’s still 1000 points over. If you were 2000 points over, that would be 20% and that would be not dissimilar in terms of its spread to the S&P in the good times. So I think that people who believe that the private equity business is an absolute return business per se are wrong. As much as they would like to be right, they are wrong.”
Y.B: Any tips you would like to contribute for other investment bankers?
Ziad K. Abdelnour: “Understand how we do due diligence on companies and please don’t just forward us business plans where you haven’t done any due diligence on your clients….It is a waste of time for both of us. Do the job you are supposed to do.
In my opinion, due diligence is:
A process designed to get a 360 degree view of the business.
An evaluation of an entrepreneurs’ ability to ascertain strength AND weakness.
An opportunity to validate true customer demand.
The beginning foundation of trust and partnership.
Due diligence is NOT:
Slow torture in the form of a lengthy checklist.
A stress test for the executive team.
A chance to prove we are smarter than you are.
A justification to ding your valuation.
A delay tactic until another fund takes interest.
Y.B: Any tips for owners seeking for PE investments?
Ziad K. Abdelnour: “When asking for money from private equity investors such as ourselves, here are some practical tips to keep in mind:
Continually take temperature. Only 5-10% of entrepreneurs I work with ask closing questions like: Have I answered all of your key questions? Or, even better: How do I compare with the other 100 business plans on your desk and what is the likelihood we’ll reach serious due diligence? Get to the truth early. Waste no time.
Course-correct based on feedback. Chances are objections you hear at one private equity group will be concerns at another. Incorporate the feedback you hear-either by adding it or refuting it. Think of this feedback as sparring practice. It is like training that makes you stronger in fighting real challengers to your success.
Conduct your own due diligence. This process is the foundation for the long term partnership. Experienced entrepreneurs know that the investor relationship is akin to marriage.
Finally, don’t sign the deal unless you can comfortably answer the question: Will they be a good partner when things don’t go according to plan? Because we all know, they never do.
Y.B: Out of office, what are your preferred leisure time activities?
Ziad K. Abdelnour: “Very intense sports such as yachting, extreme skiing and horse back riding.”
Y.B: You are the Founder and President at U.S Committee for a Free Lebanon, can you elaborate on that?
Ziad K. Abdelnour: “The United States Committee for a Free Lebanon (”USCFL”) is a non-profit, non-sectarian think tank I founded in 1997 along with 56 other Lebanese American activists, to educate the American public as to Lebanon’s strategic and moral significance as an ally of the United States and an outpost of Western values in the Middle East.
We basically hold that the United States has vital interests in the Middle East and see the region, with its profusion of dictatorships, radical ideologies, existential conflicts, border disagreements, political violence, and weapons of mass destruction as a major source of problems for the Free World. Toward this end, we seek to help shape the intellectual climate in which U.S. foreign policy is made by addressing key issues regarding the region in an accessible way and for a sophisticated public.
We also function as a resource for individuals and institutions seeking not only accurate and reliable information, but also new and fresh perspectives, combined with innovative and effective solutions, for Lebanon and the Lebanese people. Consequently, we serve as a vehicle to disseminate “intelligence” and “out-of-the box” ideas to institutions and policymakers in the United States and abroad that are capable of exercising political, economic, military or spiritual leverage to bring these abuses to an end and hold those responsible to account. We finally mobilize interested parties for the purpose of protests and media campaigns to combat the injustice and corruption that is now prevailing in the post-Taif Lebanese regime and its benefactors.
Y.B: What’s next for you Ziad, where you intend to invest most of your time and efforts?
Ziad K. Abdelnour: “What’s in store for the future is keep making the world a better place by fostering innovation and empowering “best of breed” business and political activists who want to “change the order of things” and make it while doing loads of money.
I believe you have reached the pinnacle of success as soon as you become uninterested in money, compliments or publicity.”
Y.B: Thanks a lot for your time Mr. Abdelnour
Ziad K. Abdelnour: “It was my pleasure”
Ziad K. Abdelnour is President & CEO of Blackhawk Partners, Inc. , http://blackhawkpartners.com/ , Founder & President of the Financial Policy Council http://www.financialpolicycouncil.org/ and Author of Economic Warfare: Secrets of Wealth Creation in the Age of Welfare Politics http://www.amazon.com/Secrets-Economic-Warfare-Creating-Regulation/dp/1118150120/ref=sr_1_2?ie=UTF8&qid=1311437307&sr=8-2