Strategic Partnerships and Predictive Analytics

One of the advantages of being a family office ourselves, real estate professionals, business leaders, other related professionals, and other family offices contact us daily looking for strategic relationships and to discuss various matters of business.

Occasionally, we come across some scenarios that fit within our principal strategies, and more often than not, we see a lot of opportunities that do not interest us internally.

Selectively, we might be able to bring together alignments of interest if you are looking to build something bigger and more meaningful long-term rather than squeeze out every penny and fight for higher promotes short-term.

To make ourselves clear, we are not in the capital raising business nor do we mass promote transactions in the marketplace.  We are not the professionals you hire to find money.   That is a completely different industry and discipline.   There are plenty of mortgage brokers or investment bankers available for hire.

Our day job is running our Family Office and managing our own portfolio, businesses, and investment grade development activities.

This is our top priority each day.

With this being understood, if we are approached respectfully and our time is respected, we might be willing to listen and see where we can align interests between two parties.

Our family office is friendly with other family offices and industry professionals as well.   We serve together on panels, collaborate on our collective expertise, exchange information, and share scenarios.    The bottom line is that we talk a lot more with each other than in the past.

This is the level of differentiation we can offer.   The difference is the relationships.  As family offices, we are more likely to direct our attention on situations from another family office rather than a cold-relationship from a broker.

We do not respond to brokers or developers who simply drop a generic two-page executive summary or a 30-page business plan into our lap and expect the checkbook to open.   As stated above, that is an entirely different industry to us and there are plenty of professionals to hire for that activity.

What does gain our attention and respect is the operator or developer who contacts us in a respectful manner to introduce themselves, discuss their backstory, their most recent exits, future objectives, what they desire in a strategic partner, and where they see their challenges.    Arrivato is always willing to work with this professional if we believe there could be a strategic alignment of interest with a specific family office or similar entity among our personal relationships.

Now that it is clear on the value Arrivato and our family of companies provide, let’s discuss our perspective on the new wave of developers and strategic relationships coming together in the market.

Real Estate Strategic Relationships:

There are a few types of developers in the commercial real estate industry – including the traditional developer who syndicates capital from several affluent or high net worth investors, commonly referred to as country club money.   On the other side of the spectrum, the larger developers attract an institutional partner in today’s very active market activity.

Traditionally, both above-mentioned developers pay their investors low returns.   While they believe they are hitting a home run, they are not winning the game.

Through our frequent dialogue, a new wave of developers has been emerging who see a broader picture.   They enjoy working with Ultra-High Net Worth Private Family Partners.  These could be Single-Family Offices, Multi-Family Offices, or Private Equity Firms that are backed by one or several Ultra-High Net Worth Families.

Since we are a Single Family Office ourselves, we hear the same story on a daily basis from developers – they all want to partner with Ultra-High Net Worth Family Offices.  What developers often do not understand is that the model is much different than the traditional country club syndication or institutional money.   The true family office money is often a higher cost of capital.   With that being said, those developers who see the broader picture find the benefits far exceed hitting a home run at a time.

While the new wave developer gives up some of the economics, they will save a lot of time not having to chase money, create the scalability to accelerate their portfolio, and the this developer will earn 2x to 3x of revenues compared to the developer of yesterday.

On the other hand, there are very strong developers who regularly attract institutional money, but without a true sense of a strategic relationship, although they have become immune to it as long as they are hitting a home run when the project is over.

Unfortunately, they are forgetting one key component in their long-term thought process…what happens when the market cycle turns over?   As more distressed opportunities with high margins reach the marketplace, the developer will need a strategic relationship that most institutions are unwilling to provide.  They will need an aligned relationship with alternative partners who understand a distressed market and someone who is willing to take some entitlement risk.  We believe it is always best to establish those relationships well-before they are needed.

Lower Middle Market Corporate Strategic Relationships:

Arrivato aligns with seasoned lower middle-market companies that have not been widely exposed to the market who need internal support pursuant to execution, growth, partnerships, planned exits, and other core processes. The primary type of companies we partner with include healthcare, manufacturing, industrial, packaging, distribution, logistics, automotive, transportation, food & beverage, IT services, technology-based services, business services, and credit – conventional businesses that remain the drivers of our economic revival through every day demand. Our leadership team has a wide depth and breadth of experience in a varying degree of lower middle-market structured finance scenarios.

Through our relationships in the ultra-high net worth environment, we can align strategic partnerships that are supportive and more long-term in nature than those in the commercial structuring environment for debt and equity. Our philosophy is to create your own destiny which through executing on a clear and precise path to success. We look for talented management teams with strong character that have been able to generate a positive cash-flow and reasonable EBITDA or selectively on a clear path to do so, but have challenges where our leadership and strategies will solve problems, create true value creation, and significantly grow EBITDA.

Long-Term Growth through Predictive Analytic Strategies:

Through our long-term philosophies, we work with commercial real estate developers, early-stage technology companies, REITs, hedge funds, other growing fund managers, community banks, growth companies, entertainment firms, entrepreneurs, and business leaders who have their existing base of investors, but have reached a stage where they need to significantly expand their audience as they seek to scale liquidity and/or customers/clients.

Most of these above-mentioned professionals have typically raised their capital through investment advisors, High-Net Worth Individuals, and small Family Offices. They have reached the stage where they need to scale up and look for new sources of capital relationships and perhaps reach a higher-level audience for more clients.

With the JOBs Act, many people have turned to crowd funding. It works for some, but has been a hit or miss strategy for many other firms who lack a sophisticated infrastructure.  This old method of third party marketing, let alone those of investment banks and broker dealers is outdated, the cost of capital is high, and you never truly control the relationships.

We offer a different and more modern approach that is unique and a more predictive alternative compared to outdated methods.  It does work within the parameters of the JOBs Act, but is a more sustained, predictive analytics model based on demographics and historical behaviors.

Outside of early-stage companies, we see many business and commercial real estate developers that are growing beyond their friends, family, and country club investors, but they do not fit the Ultra-High Net Worth formal Family Office or Private Equity model.

These are firms that likely have a base of 20-100 investors, but need much larger audience to continue their growth and scale to the next level. We do not believe posting a listing on a portal or platform alongside several other firms is the most sustainable process for most companies.

What we do is unique to the marketplace. We turn our client’s existing circle of 20-100 investors into hundreds, thousands, and sometimes, tens of thousands of personal proprietary relationships through a predictive analytics model through a process that is very math-oriented and based upon proven algorithms over a long-term methodology whereas you can calculate the probability of results.

***These predictive analytical services are performed through a specialized advertising company that works closely with broker-dealers, lawyers and other compliance professionals to conform to all prevailing regulations in Reg D and Reg A+ offerings. They are not a broker-dealer and therefore cannot accept performance-based compensation. They team with several broker-dealers, which handle the physical capital raise, escrow, AML suitability and other critical regulatory functions.