The holiday shopping season may have gotten off to a strong start, but Kristen Weber sees ongoing distress in the retail sector.
“Most of the retailers make their money in this month, from Black Friday on,” said Weber, the founder and director of the Web site DailyDAC, a deal database service based in Chicago. “They’re in the red all year up until that point. Whether they meet their goals, we find out at the end of the year. That’s when they get thrown into Chapter 11.”
Weber, who launched the “Deal Acquisition Central” site in May, bases her assessment on her company’s ongoing surveys of the investment bankers, lawyers and accountants who are among the site’s primary users.
“It’s not just the consumer retail industry that is struggling,” Weber added. “The food industry and some of the service industries are going to take a tremendous hit, from what we’ve seen. Distressed commercial real estate is going to continue to take a hit.”
The youthful entrepreneur decided to become a deal aggregator after stints in the financial advisory services group at the audit firm Deloitte & Touche and before that the restructuring practice of the law firm Kirkland & Ellis. Her work in those firms persuaded her that many companies fail to attract the prices they deserve simply because they are below the radar of dealmakers whom they might appeal to.
“These are deals you cannot find with technology. They’re not on a Bloomberg terminal. Reuters is not writing about them,” she said. “We’re trying to make this lower middle market more efficient.”
DailyDAC launches into a marketplace that is becoming increasingly competitive, as deal aggregation sites proliferate. Weber distinguishes her effort from other deal databases such as AxialMarket and PE-Nexus through its focus on smaller companies. DailyDAC deals are typically small-cap, typically $2 million to $25 million in deal size.
“We’re the only ones out there that try to aggregate these deals together,” Weber said. The site develops its list of deals, typically 50 new ones a week, by working with the network of contacts she developed in her previous jobs, by scouring bankruptcy court documents and through proprietary search techniques that she would not discuss.
She estimated that 65 percent of DailyDAC’s deals involve distressed companies, although it also includes start-up companies looking for venture capital and businesses whose owners have personal reasons to sell.
Most listings remain online only a few weeks, she said. “The common denominator in all our deals is they are deals that need to happen fast. They need to sell.”
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