Welcome back to The Private Equity Podcast by Raw Selection, In this episode, host Alex Rawlings sits down with Matt Bodnar, founder and managing partner of Eidolon Capital. They discuss Eidolon’s unique deal origination strategies, including innovative approaches like direct mail, and how their flexibility in deal-making helps them close deals where more rigid firms miss out. Matt also shares valuable insights on long-term investing, inspired by Berkshire Hathaway, and offers top recommendations on business, psychology, and deal-making books.

Breakdown: 

[00:00] Matt explains how their market position was inspired by Berkshire Hathaway, leading them to find unique opportunities by being flexible where others are rigid.

[00:12] PE firms often miss out on deals due to their rigid criteria; Eidolon benefits from a more flexible approach.

[00:26] Matt mentions Extreme Ownership as one of his favorite books and shares it with his management teams.

[00:53] Introduction to Matt Bodnar, founder of Eidolon Capital. The conversation covers deal origination, using direct mail, and valuable book recommendations.

[01:21] Goldman Sachs, starting Eidolon Capital, and focusing on lower middle market companies with a long-term approach.

[02:17] Matt identifies rigid deal structures as a common mistake PE firms make, missing opportunities to tailor deals based on sellers' needs.

[03:09] Flexibility in deal-making, like structuring equity rolls and earn-outs, gives Eidolon an advantage over more rigid buyers.

[04:34] Matt shares Eidolon’s broad deal origination strategies, including cold email, LinkedIn, direct mail, and networking.

[07:46] The importance of market positioning and personal outreach from principals to increase deal engagement.

[09:39] Why principals contacting sellers directly makes a significant difference in building rapport and closing deals.

[10:35] Direct mail as an effective, less crowded method for sourcing deals, especially in old-economy sectors like manufacturing and distribution.

[13:23] Eidolon’s brand focuses on long-term investing and taking care of all stakeholders, inspired by Berkshire Hathaway.

[15:16] Eidolon’s flexibility with capital and bespoke deal structures allows them to close deals even in suboptimal conditions where other firms might walk away.

[17:09] How taking a long-term view, as opposed to the typical 3-5 year private equity time horizon, results in better decisions and stronger outcomes for companies.

[19:25] Matt discusses the importance of staying informed on macroeconomic trends, the Fed, and market cycles to understand the broader impact on investment decisions.

[20:48] Book recommendation: How to Make a Few Billion Dollars by Brad Jacobs, a prolific entrepreneur who founded or acquired several billion-dollar companies.

[22:41] Matt shares how deep reading into human psychology and decision-making (Charlie Munger’s Poor Charlie’s Almanac and Robert Cialdini’s Influence) shapes his approach to deals and negotiation.

You can connect with Matt on LinkedIn by visiting his profile here. 

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