Latest / The PE Podcast / What Does a Capital Advisory Firm Do? | Jesse Welch, MidCap Global

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What Does a Capital Advisory Firm Do? | Jesse Welch, MidCap Global · The PE Podcast

• 0:00
  Joshua Wilson: All right, Jesse, for the PE podcast, why don't you tell us a little bit about your group and what kind of things do you like to focus on on?
• 0:07
  Jesse Welch: Yeah, so I'm Jesse Welch. I run MidCap Global, a boutique capital advisory investment bank. we work on companies $1 million to $50 million in EBITDA. I work both buy side and sell side and the financing. The sectors that we like are entertainment. That's mostly because of my background.
• 0:30
  Jesse Welch: So video games, music, IP, roll ups, feature films, television here and there. And then I really like trade businesses.
• 0:36
  Jesse Welch: I like blue collar, boring businesses.
• 0:38
  Jesse Welch: I think that's because I like the operators the most.
• 0:42
  Jesse Welch: I just I tend to get along with them.
• 0:44
  Jesse Welch: They tend to make the most money as well.
• 0:47
  Jesse Welch: like I mentioned, my background's in entertainment.
• 0:50
  Jesse Welch: It took a weird road to get here.
• 0:52
  Jesse Welch: I was a film producer, then I moved into tech.
• 0:56
  Jesse Welch: I was fortunate enough to found a couple of AI companies, exited some of those sadly about 10 years too early to become a billionaire. and then I moved into finance in 2019 when I launched MidCap. I would say a a good example of of what what we do on the more interesting side.
• 1:13
  Jesse Welch: We had a music IP roll up about a couple of years ago, thirty million dollars. sponsor brought a meaningful chunk of equity.
• 1:21
  Jesse Welch: And we did something off balance sheet.
• 1:23
  Jesse Welch: So we set up an SPV, which owned the music and the IP, and the fund that brought in the debt and some pref some pref equity as well. They owned that or 85% of it.
• 1:34
  Jesse Welch: And they kept 85% of the profits.
• 1:36
  Jesse Welch: and then we had our operating company, which charged that fund or that SPV a fee to manage those those songs.
• 1:42
  Jesse Welch: Cause songs they don't they don't make any money if you don't get into video games and commercials and stuff.
• 1:49
  Jesse Welch: And we also set up a ratchet.
• 1:50
  Jesse Welch: So as we paid that pref down, more and more of the equity flipped back to my clients.
• 1:55
  Jesse Welch: So it only really worked. We only ever owned the IP if if everything worked and and and we paid everybody off.
• 2:01
  Jesse Welch: And then we also had a little bit of senior debt on top of the holding company as well.
• 2:06
  Jesse Welch: So that was pretty structured, pretty novel, worked out well.
• 2:09
  Jesse Welch: And then the other half of what I do is Capital Love Letters. That's a media company. We just talk about private equity strategy.
• 2:15
  Jesse Welch: I break down clauses.
• 2:17
  Jesse Welch: on camera so operators can see what the actual wording is of who gets paid and what and when.