Samantha Ory and Richard Tannenbaum believe their family office-derived private equity strategy can take founder-owned companies into the digital age.
Utilizing proprietary Artificial Intelligence algorithms—produced using machine learning called “AI sourcing”—to find consumer and healthcare companies poised for significant growth, Ouroboros Group is a digitization-focused private equity firm based in Hudson Yards, New York City’s hub of innovation. An investment firm for family founders run by family founders, Ouroboros takes middle-market $5 million EBITDA and above companies “to the next level by implementing the best-in-class digital technologies to drive returns for investors,” said Richard Tannenbaum, the firm’s Managing Partner.
“We are using AI to disrupt the typical private equity business model by sourcing direct deals with founder-owner companies,” said Founder & Chief Investment Officer, Ms. Ory, “Our ability to find investable family founder businesses is the proof in the pudding of our proprietary AI’s usefulness to the Ouroboros Group’s selection process.”
Most financial sponsors and investors do not use AI to find investment opportunities.
“The traditional approach reduces the flexibility to structure an investment that is best for the CEOs and their companies, thus, minimizing their ability to grow and flourish,” Mr. Tannenbaum continued. “We built our own AI tool—we call her ‘Carmen’—to solve this problem and find companies with CEOs who we think are looking to sell, are nearing retirement, or have no natural successor to run the business. This allows us to tailor our investments to specific companies and maximize returns for both Ouroboros Group and family founders.”
AI is transforming the world at a rapid clip, making tasks like investment sourcing, which used to require thousands of human hours, be less time consuming in order to allow Ouroboros to focus more on investing and portfolio company operations.
“Carmen saves us hundreds of hours a month looking for new investment opportunities as she takes care of much of the filtering that would otherwise require a manual process,” Mr. Tannenbaum said.
Whether it be in finance, health care, transportation, retail, manufacturing, or now even private equity, AI—like Carmen—is reducing costs. AI is optimizing analysts’ time by generating new opportunities in a fraction of a second and streamlining the age-old tasks of investment opportunity sourcing.
The Ouroboros AI-sourcing strategy also allows the firm to mostly avoid
auction processes with investment bankers, which results in better valuations and structure for CEOs.
“While we do use our network of investment bankers, brokers, finders, lawyers, accountants, CEOs, or intermediaries to source potential investments as well, we feel that Carmen is a unique and useful tool in finding an investment opportunities—especially for our platforms,” Ms. Ory said. “She allows us to really build a deeper relationship with the CEOs we are planning to invest in.”
From ChatGPT to self-driving cars, AI is propelling our day-to-day lives into a new machine-driven digital age. But AI is perhaps poised to have its biggest impact when applied to investing, as Ouroboros is showcasing with its groundbreaking investment thesis and strategy.
With Carmen, Ouroboros maintains the upper hand in locating CEOs thinking about selling and landing them as clients. Once a new company is on board, Ouroboros structures investments preferential to all parties involved. The firm is thus able to generate superior returns for their investors and operators.
“We invest in family-founder owned, sleepy, boring businesses with infrastructure-like risks that can produce private equity-like returns.” Mr. Tannenbaum said.
Ouroboros is able to provide a cutting-edge, digitally focused, alternative investment AI sourcing strategy for the future of buy-out private equity. Mr. Tannenbaum believes “[Ouroboros] stands to change the way investments in the middle market are made.”
“We invest in owners and operators,” Ms. Ory said. “We identify the companies that would most benefit from our expertise and make them better by adding capital, driving digitization, and allowing them to make data-driven decisions while implementing an achievable growth strategy. Moreover, our woman-led and diversity-driven team provides a variety of insightful perspectives, ultimately leading to better returns.”
Visit www.obgfund.com to learn more about Ouroboros Group and its innovative approach to deal sourcing in private equity.
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