Co-founders Asad Berani and Jaison Thomas both grew up watching close family build up small businesses. They also share SMU as an alma mater, a career path that led them to private equity, a love of entrepreneurism, and have even been roommates since sophomore year. Now, the two are combining forces on their newest venture.
Last week, the pair of North Texas natives formally launched Dekos Capital, Dallas’ newest search fund, with the aim of finding a mid-market company to acquire and scale.
“We compared notes on what we like about private equity and what we didn’t like. What we came away with was that we really liked working with small companies, working with founders, working with people who can be entrepreneurial,” Thomas said. “We were always looking for ways to be closer to that action, to be closer to the operations of the business.”
Thomas describes the search fund concept as similar to a SPAC, or special purpose acquisition company, but on a smaller scale and without the intent of taking the acquired company directly to the public markets. Unlike traditional funds, its size is not limited or defined at the start. However, Dekos’ backers, which includes firms like Miramar Equity Partners and Next Coast Ventures, as well as individuals like Scott Bagley and Andrew Saltoun, are flexible and have committed to fund the acquisition of a company with an enterprise value between $20 million and $50 million.
“We go back to our investors and say, ‘Here’s what the opportunity looks like and here’s how much capital is required,” Thomas said. “We’re not worried about tapping out on size, it’s more about the right opportunity.”
Berani said the search for the company Dekos will ultimately acquire could take up to two year – a typical timeframe for a search fund – but is hoping to wrap up the search sooner. Part of the reason for the timeline is that Dekos is looking to potentially target a number of industries, including areas ranging from health care and telecom to consumer good and aerospace.
“We got trained in looking at different industries, so we’re just making sure we’re looking at the right things when it comes to the business-perspective of it, but right now were kind of open minded across different industries,” Berani said. “We will look at health care and business services and light manufacturing starting off, but there’s different niches and verticals that we will explore as we go down that route.”
Dekos is based in Dallas due its founder’s network in the region, as well as the city’s density of capital, Thomas said. He added that while, ideally, the Dekos will find a business to acquire locally, the firm is also concentrating its efforts heavily in the Sun Belt region of the country, where he sees a positive business environment and strong population growth trends.
Both founders see Dekos launching at a time when the market is ripe with opportunity. Both parents of immigrants, Berani and Thomas have seen the hard work it takes to build a business from the ground up and the pride that comes with that. Because of that, older generations of entrepreneurs are hesitant to sell off their business to a competitor or private equity firm. At the same time, some of the younger generations aren’t interested in continuing to operate the family business. Thomas added that the pandemic has pushed to the forefront of many business owners’ minds the need to a strategize a successful exit strategy for when they retire.
“You have this perfect storm almost of a lot of businesses looking to change hands over the next couple of decades, those are the types of opportunities that were excited about,” Thomas said. “It creates this opportunity to match up families and founders who want to see a transition plan for their business, but they don’t want to necessarily sell it to competition because their name is on the business.”
That’s where Dekos would come in, bringing together the founders’ professional knowledge of finances with the passion to be hands-on in growing the business. Following Dekos’ planned acquisition, Berani and Thomas said the long-term plans are open, from running it for generations to seeking an exit. However, both expressed an interest in building something that provides stable jobs and an impact on the community around it.
“Seeing how my dad built his business and the impact he had on the community and his employees, that was really meaningful to me as I was growing up,” Berani said. “I’m really looking forward to having that same impact, making sure that employees enjoy coming to work every day and that you’re doing something meaningful and bettering society.”
