People-First Approach to Private Equity With Sequoya Borgman
Sequoya Borgman, Founder and CEO of Borgman Capital, joined host Dr. Jeremy Weisz on the Inspired Insider Podcast for a discussion on lower middle market investing, business ownership, and leadership. Building a Milwaukee-based private investment firm from the ground up, Sequoya has guided investments in more than 20 companies while expanding the firm's investor network to nearly 500 accredited investors and family offices.
In this conversation, Sequoya shares how his upbringing and nearly two decades in public accounting shaped his investment approach. He offers practical perspectives on evaluating founder-led businesses, managing risk during deal diligence, and aligning interests between business owners, management teams, and investors.
Listen to the full podcast conversation to learn how Borgman Capital evaluates lower middle market acquisitions and partners with business owners.
Key Takeaways
Personal work ethic establishes long-term perspective in dealmaking
Sequoya traces his capacity for hard work to growing up with a single mother who worked three minimum-wage jobs. Working 3:00 p.m. to 11:00 p.m. factory shifts during high school and paying his own way through college built a foundation that made later professional demands, such as 100-hour workweeks in public accounting, feel manageable. This background reinforces a practical approach to private equity: no matter how complex or stressful an investment situation becomes, keeping perspective and focusing on underlying business realities helps steady decision-making through uncertain economic cycles.
Founder transitions often require multiple hires, not a single successor
Replacing an extraordinary founder-owner is one of the most complex challenges in lower middle market acquisitions. Founders often possess deep customer relationships, institutional knowledge, and personal sales capabilities built over decades. When Borgman Capital acquired a material handling business, the retiring founder sold so much volume that replacing his direct output required hiring three separate salespeople in addition to a new company president. Successful handoffs require evaluating whether internal talent exists or bringing in professional leadership while preserving the existing workforce and company culture.
Founder alignment and personal trust must precede an LOI
Borgman Capital reviews approximately 1,500 companies annually but executes only a small number of acquisitions. Before entering a letter of intent (LOI), Sequoya prioritizes personal alignment with the owner. He evaluates whether the founder genuinely cares about employees, community continuity, and business legacy. If an owner only seeks the highest bidder without regard for post-acquisition operations, Borgman Capital steps away. Early trust establishes the groundwork for smooth leadership handoffs, rollover equity, and long-term operating success.
Questions Addressed in the Conversation
What primary factors cause private equity acquisitions to fall apart during diligence?
Deals most frequently fail because a target company's financial performance declines during the evaluation period or unexpected risks emerge that cannot be structured around. Uncovering unaddressed environmental liabilities or lower-than-reported EBITDA directly impacts bank financing and deal valuation. While valuation adjustments can sometimes bridge the gap, sellers who have a higher target price in mind often choose to retain the business until performance recovers.
How does Borgman Capital evaluate investment candidates and market sectors?
The firm targets established lower middle market companies typically generating 4 million dollars to 8 million dollars in EBITDA, with total transaction sizes ranging from roughly 3 million dollars to 16 million dollars in EBITDA. Borgman Capital focuses on cash-flowing, mature businesses in secondary markets across manufacturing, distribution, food, and equipment rental. The firm generally avoids high-multiple technology or healthcare companies and competitive auction processes.
How do macro disruptions like inflation and supply chain issues affect portfolio companies?
External shocks cannot be controlled, but business leaders can control operating fundamentals. During disruptions like COVID-19, high inflation, or supply chain bottlenecks, portfolio management requires addressing pricing, labor, and operational details directly. Because lower middle market companies under 100 million dollars in revenue represent a small market share, focused execution allows them to outwork competitors and maintain financial performance.
From the Conversation
“At the end of the day, it’s really about the people running the businesses and the management teams. These owners, these entrepreneurs, they’re a rare breed. You take care of the people, people take care of the customers.”
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This transcript has been edited for clarity and readability. Please refer to the original podcast recording for the complete conversation.
Podcast Introduction
Dr. Jeremy Weisz: Dr. Jeremy Weisz here, founder of InspiredInsider.com, where I talk with inspirational entrepreneurs and leaders. Today is no different. I have Sequoya Borgman—you can check him out at borgmancapital.com.
Before I formally introduce you, Sequoya, I always like to point out other episodes of the podcast people should check out. Since this is part of the top private equity series and the top Wisconsin leader series—because Sequoya and his team are located in Wisconsin—I had Lou Sakolovsky, who runs a private equity mastermind group, Opus Connect. Lou is great and has amazing people in the M&A space doing virtual and in-person events.
I’ve also had Adam Coffee, who has a couple of great books out there, and Vivian Gonzalez, who focuses on searches for private equity-backed companies to find leaders, because a big part of business is having good people. On the Wisconsin side, I’ve featured Troy Vosseller, who started the accelerator gener8tor, as well as Dan Oleszkiewicz from the entrepreneurship school at the University of Wisconsin, and Michael Smith, former CEO of Land's End, Nordstrom.com, and others. Check those out at InspiredInsider.com.
This episode is brought to you by Rise25, where we help businesses connect to their dream relationships through podcasting and strategic gifting. For me, relationships are the number one thing in life. You can email support@inspiredinsider.com to learn more.
I am super excited to introduce Sequoya Borgman, founder and CEO of Borgman Capital. It’s a Milwaukee-based private investment firm that partners with lower middle market business owners across the U.S. Since launching the firm in 2017, Sequoya has led investments in more than 20 businesses while growing Borgman Capital's investor network to nearly 500 accredited investors who invest alongside the firm. Sequoya, thanks for joining me.
Sequoya Borgman: Thanks for having me on the show. It sounds like you've had some great guests in the past, and I'm honored to be included.
Dr. Jeremy Weisz: I wanted to start with your humble beginnings. Talk a little bit about that and some of the things you went through to get to where you are.
Sequoya Borgman: I'm very fortunate at this point to understand and be introduced to the magic of capitalism here in the U.S., but I didn't start out that way. I was raised by a single mother who dropped out of high school and was a teenager when she got pregnant with me. She didn't have much chance to be introduced to the benefits of capitalism.
She raised me working three jobs at a time. Fortunately, I did well in school, went to college, got my graduate degree in accounting, and started out at Arthur Andersen—at the time, one of the largest public accounting firms in the country. That is where I got introduced to private equity, transactions, and deals. I worked with a lot of really smart individuals on very large transactions all over the country for almost 20 years in big public accounting firms working with some of the best private equity firms.
Working on hundreds of transactions, you see what works well and what doesn't. I always had an entrepreneurial itch. After almost two decades in public accounting—having made partner early in my career—I wanted to do something more. Working with private equity firms, I saw how well they were doing and that they saw the entire lifecycle of investments versus just getting the transaction over the finish line. That seemed like a lot more fun, so I took the risk, walked away from a nice career, and launched the firm here in Milwaukee almost 10 years ago.
Dr. Jeremy Weisz: What lessons did you learn from your mom that you observed or that she instilled in you?
Sequoya Borgman: Work ethic—either you have it or you don't. She did whatever it took to raise me and my younger sister on minimum wage jobs, and I brought that through my whole career.
In high school, I worked second shift at factories from 3:00 PM to 11:00 PM with adults whose career that was. I'd get off high school at 2:30 PM, work until 11:00 PM, get home at 11:30 PM, sleep a few hours, and go back to high school in the morning. Nothing I’ve done since graduate school has been as difficult as seeing what my mother went through and working those factory jobs and working my way through college.
In public accounting, people talk about working 100-hour weeks, but it didn't seem that difficult to me because I had built that muscle over decades. It’s all perspective.
Dr. Jeremy Weisz: How did you even have time to study or do extracurriculars?
Sequoya Borgman: Extracurriculars weren't really an option. I’ve been an avid reader my whole life, so even if I didn't have time to study, I usually tested very well. To this day, I read every day to stay ahead of what's going on in the business world. Having that background helped me get through high school and college—spending any spare minute trying to learn more.
Dr. Jeremy Weisz: Because of your work ethic, do you have a hard time turning it off?
Sequoya Borgman: People ask what my hobbies are, and it's work, more work, and work. With today's technology, you can work 24 hours a day. Even on vacation, you're checking email and taking calls. But I enjoy what I do; it's intellectually stimulating and fun. If you enjoy your career, it doesn't feel like work. Sometimes I'd rather be working and solving a business challenge than sitting on a beach.
Dr. Jeremy Weisz: Are there specific business, entrepreneurship, or leadership books that are your favorites?
Sequoya Borgman: I like biographies of the best business minds. I was just talking about Titan last night—that's a great one on Rockefeller. House of Morgan, Shoe Dog, Ray Kroc's book (Grinding It Out), Howard Schultz's book, and the Elon Musk biography are all great. You get something out of each life story and seeing how people did extraordinary things.
Lessons From First Deals and Early Challenges
Dr. Jeremy Weisz: With the inception of Borgman Capital, talk about what happened with your first deal.
Sequoya Borgman: At the end of the day, I'm an accountant, so I'm pretty conservative and my investment style is reserved. Before taking the leap, I put together everything needed to launch the firm about two years in advance. From talking to others in private equity, I knew you really need to find a deal before leaving a steady career.
I found a local company that wanted to sell, got it under LOI (Letter of Intent), and stepped away from public accounting to officially launch the firm. It takes about 90 days from LOI to closing. About a week before closing on that first deal, the owner decided he didn't want to sell. He talked to his son, who wanted to continue running the business, and he backed out.
That was a gut punch. It was extremely difficult and disappointing, but I had to move on. I had to go home and tell my wife that we weren't going to make any money for much longer than expected. Fortunately, I kept at it and reached out to every contact I had.
Dr. Jeremy Weisz: What was the actual first deal that closed, and what was the timing like?
Sequoya Borgman: About three or four months later, a commercial banker friend introduced me to a deal. I got it under LOI and closed it about three months after that—roughly nine months after I left public accounting.
That turned out to be a home-run investment and set us up for success. A lot of people who start firms run out of money after a year or two and have to go back to their prior careers, so I was fortunate to get that first transaction off the ground in nine months.
Dr. Jeremy Weisz: What types of businesses were those?
Sequoya Borgman: Both were in the material handling industry. The original one was a manufacturer, and the one that closed was a manufacturer and distributor. We held that business for five years and sold it to a much larger private equity firm, doing really well on the transaction.
Dr. Jeremy Weisz: Did the owner stay on, or did you hire new leadership?
Sequoya Borgman: The owner was in his 70s and stayed on for about six months to transition before stepping out. We hired a new president who had some overlap with him.
I still talk to that owner today, almost 10 years later. He was probably the best salesperson ever and was very difficult to replace. In all these investments, it's really about the management teams. He sold so much business that we had to hire three salespeople just to replace what he was selling individually.
Dr. Jeremy Weisz: When hiring a leader for a company, do you look internally or externally?
Sequoya Borgman: We prefer internal candidates and try to keep all employees. However, if the owner had someone internally who could run the business, they often would have promoted them already. More often than not, we bring in a professional president or CEO. Culturally, you want someone who fits the business and can fill the founder's shoes, which is tough.
Dr. Jeremy Weisz: What percentage do owners typically roll over into the deal?
Sequoya Borgman: We are very flexible. We prefer for owners to roll over equity so they keep skin in the game, participate in our upside, and maybe stay on the board. But it's not required.
That first owner took all his chips off the table because he was ready to retire and diversify. Transactions tend to do much better when owners trust us, roll over equity, and stay involved. We can do full buyouts, rollovers, earnouts, or seller notes—anything that aligns the seller's interests with ours.
Why Deals Fall Apart in Private Equity
Dr. Jeremy Weisz: You look at thousands of deals. What are some common reasons deals fall through right at the finish line?
Sequoya Borgman: We look at about 1,500 companies a year to buy two, three, or four, so we're pretty selective. For the deals that don't close after we go after them, it's usually because their financial numbers fall apart during diligence, or something comes up that is too risky for us to get comfortable with.
Dr. Jeremy Weisz: What would be an example of something in diligence that stops a deal?
Sequoya Borgman: An environmental liability we weren't aware of, or numbers turning out lower than expected. Lower numbers impact financing because banks don't want to finance based on a lower figure. Sometimes we can renegotiate to a lower valuation, but often a seller prefers to hold on until the company recovers. Once a seller gets a target valuation in their head, it's hard for them to accept less, especially given the economic uncertainty of the last couple of years.
Dr. Jeremy Weisz: What about from a personality or culture perspective?
Sequoya Borgman: We usually don't get a company under LOI until we trust the owner and build a relationship with them. The number one thing for me personally is making sure their vision aligns with ours and that they care about their employees, community, and legacy.
If an owner only cares about maximizing money and doesn't care what happens to the business or employees after the sale, we don't move forward. By the time a deal reaches LOI, we've already determined that the culture is solid and that there is alignment.
Borgman Capital’s Investment Criteria and Strategy
Dr. Jeremy Weisz: How has Borgman Capital's investment criteria changed over the years?
Sequoya Borgman: It hasn't changed that much, though we do larger transactions now. Most of our transactions are in the $4 million to $8 million EBITDA range, though we've done deals as small as $3 million EBITDA and up to $15 million or $16 million EBITDA.
Those businesses have enough infrastructure in place to afford a good management team. Staying under $15 million EBITDA also keeps us out of the hyper-competitive investment bank bidding processes where winning comes down to blind bidding.
Dr. Jeremy Weisz: What geographic regions and industries do you target?
Sequoya Borgman: Our primary focus is secondary markets in the Midwest where relationships matter. We have 15 people at the firm and five locations around the country, but we like places where you meet business owners through trusted advisors, local connections, or community involvement.
Industry-wise, we invest in established, older industries—food, manufacturing, distribution, and equipment rental. We target companies that have been around for 40, 50, or 100 years with strong cash flow, great employees, and a track record of navigating economic cycles. We don't do technology or high-growth healthcare, which carry higher multiples and more competition.
Dr. Jeremy Weisz: How did COVID-19 affect your portfolio companies?
Sequoya Borgman: It definitely increased my stress level at first! But after the first three months, our businesses actually thrived. There were supply chain and labor challenges, but as long as you focus on business fundamentals and what's in your control, you can navigate it.
All our portfolio companies came through in better shape. Inflation was actually a tougher challenge than COVID. But because our portfolio companies generate under $100 million in revenue and represent a small portion of their overall markets, outworking the competition allows them to thrive.
Timing Exits and the Investor Network
Dr. Jeremy Weisz: What is your criteria for deciding when to sell a portfolio company?
Sequoya Borgman: When a business is significantly exceeding our investment expectations or when proactive buyers approach us, that's usually the time to exit.
My primary responsibility is to maximize returns for our investors. The longer you hold a business, the harder it is to maintain a high IRR (Internal Rate of Return). Making a strong return in three or four years yields a much higher IRR than doing so over 10 or 12 years.
There are also tax benefits to holding businesses for five years under qualified small business stock rules, so five years is often our target hold period. However, depending on value creation and market conditions, hold periods can range from three to eight or ten years.
Dr. Jeremy Weisz: For listeners, can you briefly explain how IRR works in leveraged buyouts?
Sequoya Borgman: IRR is simply the annualized return on investment. If an investor puts money into a deal and we sell it five years later at a 20% to 30% return, that's what we target.
In private equity, part of that return comes from senior debt leverage. If you buy a company with 50% equity and 50% debt, and the company pays down that debt over five years, you double your equity value even before accounting for organic business growth. The key risk is ensuring the company has reliable cash flow to service that debt through any economic climate.
Dr. Jeremy Weisz: Today you have over 500 accredited investors. How did you raise capital for those early deals when starting out?
Sequoya Borgman: For the first transaction, we had 26 investors, and I asked virtually everyone I knew. Having spent nearly two decades in accounting and deal-making helped me build a network.
From there, it grew organically by word of mouth. Those original 26 investors told their friends, family offices, and contacts. Direct access to lower middle market private equity buyouts can be difficult to find outside of traditional funds with steep minimums.
A couple of years ago, we launched Pass The Hat (passthehat.com) to give accredited investors, family offices, and smaller institutions direct access to our deals. We use a fund administration platform called Asset Class to handle the back-office compliance and investor checks.
The name actually came from an investment banker friend who flippantly asked if I was going to "pass the hat" to fund deals without a formal fund. I bought the domain name, and it’s become a great platform. It’s modeled somewhat after the auto auction site Bring a Trailer, but for curated business investments.
Portfolio Highlight: Gilman Cheese Corporation
Dr. Jeremy Weisz: Can you share the story behind one of your portfolio companies, like Gilman Cheese?
Sequoya Borgman: Since we are based in Wisconsin, owning a cheese company is almost required! We acquired Gilman Cheese about eight years ago from a husband and wife who ran it as a family business. They still sit on our board today.
The husband was a West Point graduate who ran the company with military precision. He had purchased the business 20 years earlier and built it into a very profitable operation. When he was ready to retire, we built a great relationship over dinner. He chose us over other buyers because he wanted someone local who would take care of his employees and community.
In fact, he included a clause in the LOI specifying that we wouldn't lay off any employees for the first two years and that we would maintain funding for local high school scholarships and charitable organizations. We still support those town scholarships today.
About three or four years ago, we acquired Gilman's main competitor, Dairy Food USA, from an Austrian family office, more than doubling the business's size. Today, Gilman operates two facilities in Wisconsin, doing private label and branded products. If you ever get a cheese snack box on a major U.S. airline, that’s Gilman’s product.
Businesses built on taking care of their people and communities tend to have low turnover and perform exceptionally well over the long term.
Dr. Jeremy Weisz: Sequoya, thank you so much for sharing your journey and insights. Everyone can check out borgmancapital.com to learn more.
Sequoya Borgman: Thanks for having me, Jeremy.
