Lower Middle Market Buyouts and the Art of Investor Communications
On The Investor Relations Podcast, host Joshua Wilson spoke with Borgman Capital Founder and CEO Sequoya Borgman alongside Director of Investor Relations Marit Harm. The conversation focuses on how Borgman Capital built its independent sponsor model and developed an institutional investor relations practice. Sequoya explains why the firm focuses on family- and founder-owned lower-middle-market businesses with revenues under $200 million and EBITDA under $20 million. He outlines how moving away from a traditional fund structure gives the firm flexibility on deal terms and holding periods. Marit shares how her background in membership and fundraising helped translate early deal-by-deal fundraising into PassTheHat.com, the firm’s dedicated investor platform. Together, they highlight why frequent, direct communication builds lasting investor trust.
Listen to the conversation to hear how transparent reporting and flexible capital structures support long-term business growth.
Key Takeaways
Independent sponsorship provides operational flexibility for sellers and investors
Transitioning away from a rigid fund structure allows an investment firm to tailor transactions to specific founder needs. Traditional funds often operate under strict timelines that mandate exits within three to five years. An independent sponsor structure enables longer hold periods for high-quality businesses while giving investors direct choice over where their capital is deployed.
Over-communication establishes trust and long-term capital relationships
Investor relations is a strategic relationship discipline rather than a back-office administrative task. Maintaining a predictable cadence of quarterly reports, financial updates, webcasts, and direct availability ensures investors fully understand portfolio performance, underlying risks, and strategy. Over time, informed investors become an active network that contributes deal leads, industry knowledge, and key introductions.
Bad news must be shared early, directly, and transparently
Credibility is tested when portfolio companies face operational challenges or market downturns. Waiting for year-end tax documentation to reveal problems damages trust. During periods of heightened uncertainty, increasing the cadence of updates to detail the exact challenges, worst-case scenarios, and practical solutions reassures stakeholders that leadership is taking decisive action.
Scaling capital formation requires dedicated operational infrastructure
Moving from informal deal-by-deal fundraising to a scalable platform requires structured systems. Establishing tailored communication processes, organizing investor data within a dedicated CRM, and developing an accessible platform like PassTheHat.com allows a firm to maintain high-touch relationships across hundreds of investors without losing personal alignment.
Questions Addressed in the Conversation
Why might a founder-owned business prefer an independent sponsor over a traditional private equity fund?
Sequoya explains that traditional private equity funds are governed by fixed investment mandates and short hold timelines. An independent sponsor can structure transactions around the founder's specific goals, including custom succession plans, community commitments, and patient, long-term ownership periods.
How should investment firms handle communicating bad news to their investors?
Sequoya emphasizes that bad news should be shared directly and without delay. Rather than minimizing issues or waiting for formal reporting periods, firms should clearly state the challenge, detail potential risk scenarios, and outline immediate corrective steps until the situation stabilizes.
How do investor networks add value to private equity firms beyond funding?
Sequoya notes that an engaged investor base serves as strategic infrastructure. Beyond providing equity, investors frequently share market insights, make warm executive introductions, and refer new acquisition opportunities.
From the Conversation
“If you plot our investors on a map of the U.S. when Sequoya first started out, they would all be concentrated in the Milwaukee, Wisconsin area; now we have coast to coast reach.
It’s really cool to see how that concept from early on, is starting to come to fruition.”
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This transcript has been edited for clarity and readability. Please refer to the original podcast recording for the complete conversation.
Introduction and Speaker Backgrounds
Joshua Wilson: Welcome to The Investor Relations Podcast. The mission is within the name: investor relations and relationships with investors. We have conversations across the spectrum, from family offices to institutional investors, as well as companies that work hand-in-hand with them. One of our joys is having conversations with people who have done it and then come back to share their successes.
We are going to share the story today of a group that started with SPVs and individual deals—starting with about 28 investors—and has scaled well over that number. Sequoya and Marit, welcome to The Investor Relations Podcast.
Sequoya Borgman: Thanks for having us.
Marit Harm: Thanks, Josh.
Joshua Wilson: If you are listening in, you might watch some clips on YouTube, but you are going to hear a few different voices. We are going to start with Sequoya. Sequoya, why don't you tell us a little bit about who you are and what you do?
Sequoya Borgman: Besides having a lot of fun looking at cool investment opportunities, I founded the firm about 10 years ago. We are a lower-middle-market leveraged buyout shop. Prior to founding the firm, I spent about 20 years in public accounting. I am a CPA by training, worked at Big Four firms, and focused on private equity transactions and M&A.
Since launching the firm, we have acquired over 20 businesses and grown the team. We now have offices around the country and have bought companies from the East Coast to the West Coast. We have 15 people on the team, including Marit, who leads our investor relations function.
Joshua Wilson: Super cool. Marit, shout out to you. You and I originally spoke a couple of weeks ago and had a great conversation about your background, your story, and what you have done as part of the growth story with Sequoya. Give us an introduction to yourself and where you put your focus within the group.
Marit Harm: I am based at our headquarters in Milwaukee. I am originally from Minnesota, moved to Milwaukee for college, studied journalism, and went into PR at a couple of marketing firms. Then I worked at a nonprofit for six years doing fundraising, which is a little different than what we do here at Borgman Capital.
The opportunity came to join Borgman Capital essentially as the office manager and marketing manager. To be honest, I did not even know what private equity was and never really saw myself in the financial services space. But what sold me on the firm was its entrepreneurial spirit. It was still pretty young at the time, and I was told that if I brought an entrepreneurial spirit and did well, I could go pretty far. That has definitely been the case.
When I joined four years ago, investor relations was not part of my role. It is a testament to how you can succeed in this firm if you find solutions to problems, which is exactly how I stepped into this IR role.
Transitioning from Accounting to Private Equity
Josh: We have two voices here: one went from CPA to LBOs, and the other went from nonprofit fundraising to for-profit fundraising. Sequoya, you started out as a CPA. What made you switch from billing hourly to a value-add business model? What was that transition like for you?
Sequoya: I always had the entrepreneurial itch and wanted to do something for myself. By that point in my career, I had been a partner for a long time and was looking for the next step. Even though you are a partner at a big firm, you have 1,000 other partners and do not have total latitude to drive strategy. I was working with private equity firms and seeing how transactions were done. In the early-to-mid 2010s, the private equity industry was really booming. It was a great time to step out and make the leap.
My wife thought I was crazy at the time, but it has all worked out. Looking back, I wish I had done it earlier in my career, but it has been a fun 10 years.
Josh: When taking that leap from security and stability into the unknown chasm, you had a feel for what could be because you worked with private equity groups. What was on the other side of that chasm that made you say, "It's worth the risk"? What was going through your mind?
Sequoya: I knew what the upside potential was for private equity. Spending 20 years in public accounting gave me a cushy lifestyle, and I was fortunate to save enough personal savings to take that leap. I know not everybody is in that situation, but I was able to fund my lifestyle for a long period while we got the firm up and running and completed the first couple of transactions before cash flow started being generated.
Before I took the leap, I had a company under LOI that I planned to purchase as our first deal. That first deal ended up falling apart. Not all of them are certainties. At that point, I did not have much of a backup plan, so I just had to go out and make it happen. Fortunate to find another nice company to buy about six months later, but when something like that happens, it is a punch in the gut that forces you to reevaluate your options. Being a professional in public accounting was my fallback—I could always return to a professional role.
Josh: Let's touch on that punch in the gut for a second. You took the leap, had savings, had your family, and had your first deal under LOI. Then it fell apart, and you watched savings go down with no money coming in. What goes through your mind, and what keeps someone going when faced with uncertainty and fear of loss?
Sequoya: Every year, something falls apart that we were hoping to get over the finish line, and it is a punch in the gut. You have to go home and tell your spouse that something you worked hard for and counted on is not going to happen. But you have to move on, wake up the next day, and put one step in front of the other to make it happen.
I tell the team it is really not the effort you put in; it is the results. You have to make sure those results come through. Fortunately, in this business, there are lots of opportunities and entrepreneurs with nice businesses; you just have to find the next opportunity.
Applying Fundraising Principles and Scaling Investor Relations
Josh: Marit, you went from nonprofit to for-profit. Are there similarities in fundraising, capital raising, and investor relations that were helpful coming from that background?
Marit: Definitely. My nonprofit was unique because it was a membership organization of high-powered women executives in Milwaukee. Assuming many were high-net-worth individuals, the communication style and interaction were very similar to what I now do with our investor group at Borgman Capital.
There are specific ways you engage with someone at that level and expectations they have. Something I became very good at in my previous role was remembering names, remembering people, and remembering small details about them. That is so useful now that we have 500 different investors. There are nuances with individual investors: this family office likes things done one way, or this individual prefers another. Having a good memory for those details has been very helpful.
Josh: People skills and emotional quotient are vital in investor relations alongside the numbers, systems, and structures. What is one thing you learned while growing from 28 retail investors to 500 that you wish you could go back and prepare yourself for?
Marit: When I came on board four years ago, we were at about 200 investors. The reason I became involved in investor relations was that I was asked to figure out a new CRM or investor platform and explore our options. It was a year-long process of exploring options, determining our needs, discussing internally, getting buy-in, and implementing the platform.
The reason I lead investor relations now is that once we implemented the platform, I was the one who knew how to use it. Looking back, what I wish I had known goes back to knowing your audience. As we grew from 28 to 500 investors, we segmented our communications for institutional investors, family offices, and those investing through IRAs to ensure clear, tailored messaging for each group.
The Independent Sponsor Model and Value Proposition
Josh: Sequoya, give us an overview of your business model regarding raising and deploying capital.
Sequoya: Our original plan was to follow the traditional lower-middle-market path: do a couple of deals and raise a fund. Our buy box centers on lower-middle-market family and founder businesses under $200 million in revenue and $20 million in EBITDA.
On our first deal, we had 28 investors, mostly people I knew whom I asked to step up. An investment banker friend jokingly asked, "What are you going to do, just pass the hat to get this done?" I said that was guess what we were going to do, and it worked.
We lined up a second deal right after that required significantly more equity, so we had about 85 investors. Seeing strong investor appetite, we decided to keep doing deals on a deal-by-deal basis rather than taking 12 to 18 months to raise a traditional fund. At the time, it was called the independent sponsor model.
Rather than raising a fund, we execute a Reg D filing for each separate platform. Twenty-plus platforms later, that model has worked out well. We even used that investment banker's quote to name our investor platform, PassTheHat.com. On our last two deals, we were three times and two times oversubscribed, showing strong interest from retail, small institutional, and family office investors wanting direct access to lower-middle-market deals. Unlike real estate or venture capital, very few firms offer this leveraged buyout structure for direct lower-middle-market deals.
Josh: Let's flip the value proposition. When you speak with a founder-owned business generating $20 million in EBITDA, why should they sell to Borgman Capital rather than another group, an ESOP, or keeping it?
Sequoya: Our model is much more flexible. We do not have a rigid fund mandate dictating equity deployment per deal, restricting industries or geographies, or requiring complex investment committee approvals. We can move quickly and structure transactions around what founders want for their succession plan, employees, and community.
Because we set up special purpose vehicles, they function like long-term continuation funds. We can hold these businesses much longer. Founders who have built companies over 30 or 40 years often do not want a buyer who will flip the business in three to five years and disrupt employees.
While they could sell to an ESOP, founders in an ESOP transaction often have to finance the deal themselves, carry more risk, take fewer chips off the table, and stay heavily involved. With us, owners often remain on the board, stay involved long-term, or roll over a significant chunk of equity. We provide flexibility around their goals.
Josh: Legacy preservation is clearly important to you and business owners. What led you to value longer-term holds, and how has that been received by sellers?
Sequoya: Many businesses we evaluate have been around for 100 years across three generations. In any given three-year window of a company's life, limited structural value is created; real growth takes time. When you own an established, highly profitable business, it makes little sense to sell it quickly.
If you sell a great business after three or five years, you have to redeploy that capital into another opportunity. If you are already invested in a great company, you would rather keep your capital there long-term, just like holding great assets in public markets.
Josh: How do you handle liquidity options or distributions for different investor types, like retail versus family offices?
Sequoya: Our model is flexible enough to accommodate recapitalizations or buy out individual investor positions if early liquidity is needed. We also pay regular distributions.
Additionally, Section 1202 offers tax benefits for investments in qualified small businesses under $75 million in gross assets held for five years, allowing capital gains to be excluded. Personally, I prefer keeping capital invested for at least five years, which aligns well with our investor base. Family offices and generational business owners invest for the long term, aligning directly with our investment philosophy for long-term value creation.
Operationalizing PassTheHat.com and Over-Communication Strategies
Josh: Marit, how have you aligned communications across different investor levels, and what adjustments were needed?
Marit: Shortly after I started, Sequoya emailed me saying he had an idea for an investor sourcing site called Pass the Hat, told me to buy the domain, and build it out. That speaks to our entrepreneurial environment.
I handled everything from acquiring the domain from Amazon on a shoestring budget to working with web developers, drafting content, and coordinating with legal for compliance. There was also a change management effort with our internal team and existing investors who wondered why we were expanding our network nationally.
Our communication focuses on educating investors on why alternative investments fit into a portfolio without being pushy. It takes time to build trust with investors who do not know Borgman Capital, and they often evaluate a few deals before committing. Originally, our investors were concentrated in Milwaukee and Wisconsin. Now, PassTheHat.com has expanded our investor footprint nationwide, with significant representation in Florida, Minnesota, Illinois, and across both coasts.
Josh: What have you learned about communicating with established family offices regarding alternative allocations?
Sequoya: Our core brand identity from the beginning has been to over-communicate. As an investor in other funds, it is frustrating to hear nothing until receiving a K-1 at year-end.
We provide extensive upfront communication, quarterly newsletters, quarterly portfolio updates, and quarterly financials. We host an annual investor summit in Milwaukee where investors meet portfolio company presidents, review strategy, and evaluate value creation plans.
When launching a deal, registered investors get full access to data rooms, diligence materials, and webcasts walking through the investment thesis. We publish written summaries of all Q&A sessions. I also make myself personally available to answer investor calls.
Our investor network generates substantial value beyond capital; investors frequently share industry insights, ideas, and deal introductions. That communication network is half the value of what we have built.
Josh: What occurs at your annual investor summit beyond presentations?
Sequoya: It requires significant effort from Marit and the team, but it is one of the best things we do. We host a dinner the night before and hold the main event at the Harley-Davidson Museum in Milwaukee.
Portfolio company presidents present their operations, and we walk through overall performance. While everyone strives for a Berkshire Hathaway-style gathering, we focus on providing a great experience and receiving direct feedback.
Additionally, family office relationships grow organically. When a family office or high-net-worth individual experiences good returns and transparent communication, they introduce us to colleagues and peers.
Crisis Communication and Recommended Resources
Josh: How do you handle communicating bad news or navigating operational crises with investors?
Sequoya: You cannot sit on bad news. I tell our portfolio company presidents to inform me immediately when problems arise, whereas good news can wait.
When COVID started, we shifted our quarterly updates to weekly updates for almost nine months. We detailed worst-case scenarios and outlined our concrete action plans. We held weekly calls with portfolio company presidents to share best practices, and all our companies weathered that period successfully.
Businesses do not grow in a straight line; they encounter quarterly challenges. You must be blunt and honest with investors about operational hurdles. Running a business is exceptionally difficult, and sharing challenges directly builds long-term trust.
Josh: To close out, what is one business or personal resource you recommend to our audience?
Marit: With two young kids, my free time is spent with Disney songs, Ms. Rachel, and Danny Go. Sequoya, why don't you go first while I think?
Sequoya: I am a big podcast fan. I highly recommend the Acquired podcast for four-to-six-hour deep dives into business histories. For something lighter, I listen to the All-In Podcast weekly. I appreciate what you are doing with this podcast, Josh.
Marit: My kids were singing "I Just Can't Wait to Be King" from The Lion King this morning, which might be fitting.
For a general resource, I love TikTok. I discovered it when I became a mom and had endless questions. Hearing directly from experienced people builds trust. It is a great platform for quick visual answers on almost any topic, including private equity and investing, provided you evaluate the source.
Josh: Viewers can search for Sequoya and Marit on YouTube and LinkedIn to access their educational materials, including articles on maximizing business value before a sale. Sequoya and Marit, thank you for being fantastic guests.
Marit: Thank you for having us.
Sequoya: Thanks, Josh.
