On March 4, 2019, Michael Williamson, a 2015 IUP graduate, gave a presentation in Daniel Lawson’s Finance Seminar class (FIN 422).
Williamson is currently an associate at Tecum Capital—a Pittsburgh-based private-equity firm that focuses on investing in private companies that generate $3 to 9 million in EBITDA (earnings before interest tax depreciation and amortization). While at
IUP, Williamson served as Bloomberg Lab manager and participated in the Student Managed Investment Portfolio.
Williamson was able to make connections at his current employer through the Association for Corporate Growth Cup—a finance case-study competition in which students are tasked with providing investment-banking/private-equity advice. This includes things
such as private-company valuations based on comparable transactions, modeling leveraged buy-outs, and mitigating risk in the investment. A Tecum capital employee was one of the judges at the second round of the competition—through that Williamson
was able to make the connection.
Photo, from left: Seth Thomas ’20, Michael Williamson, Ben Putnam ’19, and Colton
Williamson gave a strong overview of the private-equity market. He explained how the value of a company isn’t necessarily transparent. The value of a private business is similar to the value of a house – you can compare it to similar houses and have it
appraised, but it does not have an actual value until it is sold and negotiated. He also stated that, unlike in the public market, business owners must seek investment firms (or vice versa) in order to find buyers for their business. This “deal-sourcing”
can be a very challenging aspect of the business—firms must attend conferences and network in order to find potential clients. Because of the lack of true transparency in the market there is usually an above-market-return to be made.
Williamson also explained the different levels of debt that firms may use to finance the stake they take in the company. Senior-Level debt usually receives a lower rate of return, which is proportional to the risk they take on. If the company enters a
distressed situation the Senior-Level gets paid first. Below senior is subordinated debt and then equity. Williamson explained that based on the situation and company firms may decide to purchase a unique combination of debt/equity from the company.
Haylee Peters, a Senior finance student summarized, “It was really interesting listening to Mr. Williamson speak about the valuation process of private companies. He provided a lot of insight about his role at Tecum Capital. It was encouraging to listen
to a recent alumnus who works for such a prominent investment firm.
Eberly College of Business and Information Technology