Case study: How Saratoga Investment Corp. uses PitchBook for business development
January 20, 2018
Business development for a business development company. That’s what Joe Burkhart, managing director and head of business development, and Marissa Mann, senior associate, do at Saratoga Investment Corp. Based in New York, the company partners with financial sponsors to invest in lower middle market companies via leveraged buyouts, recapitalizations, debt refinancings as well as growth, acquisition and transitional financings.
To ensure Saratoga reaches its goals and stays ahead of its competitors, Joe and Marissa need to find the best deals. Their success hinges on understanding everything happening in their space—every deal that closes, every move their competition makes, every financial sponsor that could be a client. To get that insight, they turned to PitchBook.
3 ways Saratoga uses PitchBook:
To track all deals happening in their space to find potential clients
To beat competitors to top opportunities via proactive deal sourcing
To network smarter by targeting only promising financial sponsors
Staying on top of the market
Following market activity is critical for Joe to shape his business development strategy. Before PitchBook, he relied on news articles and word of mouth to learn about new deals that closed in Saratoga’s space. Often, deals went undetected and details about deals went unknown.
Now, Joe never misses a deal. Every Monday morning, he searches PitchBook for private equity deals that recently closed in Saratoga’s target industries. He sees the deals Saratoga did, the deals he looked at but passed on, and the deals he wasn’t even aware of—a holistic view.
To “get smarter” about a specific deal, he uses PitchBook to uncover hard-to-find details, like deal size, debt amount, multiples, as well as the company, lender and financial sponsor involved.
Any financial sponsor active in Saratoga’s space is a potential client. With PitchBook, Joe can quickly identify prospects and then evaluate their investments, AUM and fund size to determine whether they’re truly a good fit for Saratoga.
“When we see a sponsor use another BDC for financing, PitchBook absolutely helps us figure out if they’re worthy of coverage.”
– Joe Burkhart
If Saratoga is going to beat its competitors to the best opportunities, Joe and Marissa need to keep tabs on everyone doing deals in their space—a difficult task.
That’s why they rely on PitchBook to track business development companies (BDCs), lenders, debt providers, small business investments companies (SBICs) and other similar entities. The sponsors these competitors work with could just as easily work with Saratoga.
“When we see a sponsor use another BDC for financing, it absolutely helps us figure out if they’re worthy of coverage,” says Joe, a PitchBook user since 2013.
Joe and Marissa also look at their competitors’ previous deals to find opportunities. For example, if a lender did a deal two years ago, the sponsor they worked with probably wants to refinance. So, Saratoga will reach out with that opportunity before another BDC.
This proactive deal sourcing tactic, which Joe likens to “hunting, not fishing,” increases Saratoga’s efficiency. Joe and Marissa are only pursuing prospects that are ready to do a deal, instead of spending time on leads with less potential.
Networking in different cities
Marissa often travels across the country to meet financial sponsors that Saratoga may want to work with on upcoming deals. To make the most of her time, she only wants to talk to prime prospects. The problem is they can be difficult to find—especially in a city where she doesn’t have a robust network.
So before Marissa goes to a new city, she searches PitchBook for sponsors like private equity firms, merchant banks, investment banks and family offices based on criteria like fund size, AUM, location and number of recent investments.
“I also look at lenders a firm has worked with in the past to provide an extra level of certainty that we would be a good match. And I utilize the company description to see if they invest in our target industries,” explains Marissa, who’s been at Saratoga since 2014.
After she narrows down her list of targets, Marissa reaches out using contact information from PitchBook, which she says has completely changed how she networks. Now, Marissa can quickly find new sponsors to connect with and expand Saratoga’s reach to untapped regions.
More efficient business development
PitchBook helps Joe and Marissa find clients they may have otherwise missed, identify opportunities before their competitors and expand their network. All of which means more efficient business development—and better deals—for Saratoga Investment Corp.