Steve Balaban demystifies complex world of direct private equity

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With 85 per cent of family offices in North America participating in private equity investment, according to the 2021 Family Offices Report from Campden Wealth and RBC Wealth Management, this an important component of high-net-worth portfolios.

Private equity, however, is a complex ecosystem with many nuances that can be difficult to navigate. This is where Steve Balaban found an opportunity to educate and demystify these complexities for interested parties – from his students at the University of Waterloo to investment advisors – through his YouTube videos.

As the chief investment officer of Mink Capital and founder of Mink Learning Inc., Balaban helps family offices navigate private equity opportunities. He is also a lecturer on private equity and venture capital at the University of Waterloo’s School of Accounting and Finance. Here he shares his investment knowledge, what he sees in store for family offices and why he continues to consider the world of private equity so fascinating.

How did you get into finance?

Growing up, I loved math and was always fairly entrepreneurial, so for university, I ended up studying in a double degree program that resulted in a Bachelor in Mathematics degree from the University of Waterloo and a Bachelor of Business Administration degree from Wilfrid Laurier University.

Luckily for me, the double degree program was a co-op program that allowed me to work during the semesters when I wasn’t studying. After taking a third-year finance course that I loved, I wanted to try a semester working in finance.

For my co-op role in 2005, there was an incredible opportunity available to work with and learn from some of the top finance professionals in the industry at Gluskin Sheff. The small investment team had seven people – five of them graduated from either the University of Waterloo or Wilfrid Laurier University.

I got the job and learned an incredible amount from the entire team. I learned so much that I went back to Gluskin for my final co-op term in 2006. I was in the right place at the right time. Gluskin went public in 2006, and after that, one of the Gluskin partners hired me to work for his family office to buy private companies – that’s how I started in private equity at such a young age.

Why did you choose to focus on finances within family offices?

While working for the [Gluskin partner’s] family office for many years sourcing private deals, conducting due diligence and creating value in multiple businesses, other family offices took notice of what I was doing. At the time, quite a few family offices didn’t have the in-house expertise for direct private equity, so they approached me to see if I was willing to help. So, in 2011, I started Mink Capital to consult, advise and educate family offices on how to invest in private equity. At the beginning, my work was mostly consulting on direct private equity and now, in 2022, it is mostly educating on all areas of private equity through our private equity learning company, Mink Learning.

By the way, Mink is my mother’s maiden name. I was very close with my grandparents growing up, so I wanted to honour them with the naming of the company.

What is it about private equity that you find so interesting?

I remember, when I was in my mid-twenties, I got to lead my first set of deals in private equity. They were deals to buy billboard companies as part of a roll-up strategy. I got to negotiate the deals with the founders of the companies, figure out how to put these companies together, and along the way, I acted as president of the company, Stellar Outdoor Advertising.

Fifteen years in and I’m spending most of my time educating people on private equity, from investors to my students at the University of Waterloo.

Private equity is an industry that lacks transparency and is difficult to understand. Unfortunately, there is a lack of unbiased, educational resources necessary for investors to fully understand the asset class. I really enjoy demystifying the complexities in private equity so that people around the world can better understand the industry.

You have a lot of educational videos available online. Why did you want to start making these?

Three years after starting Mink Capital, the University of Waterloo asked me to create and teach a private equity course. When I started teaching, I realized that students would ask me to repeat some of the foundational private equity concepts such as: limited partnership agreements, or ways to invest in private equity such as co-investing and secondary investing.

So, I filmed videos on these foundational concepts. Next thing I knew, people around the world started to contact me to request that I shoot additional videos.

When the pandemic hit, I continually received requests to film more videos. Since June, 2021, I have filmed and shared a new private equity video every week on topics such as: a real private equity due-diligence example; everything you need to know about management buyouts; why do private equity firms go public?

What are you seeing as the biggest stress for high-net-worth individuals and families when it comes to finances these days?

I think that many family offices have two main goals in common: preserve wealth over many generations and leave a lasting legacy. Both of these goals involve having a clear plan that includes succession and, usually, children (who are now adults). The patriarchs and matriarchs of many of these families are getting older, and it is important to them that the next generation of their family has the plans, advisors and resources needed to succeed in the future.

As for short-term stresses about finances, I believe, like most investors, family offices are wondering how to invest in this inflationary environment, how rising interest rates will affect their portfolios and if the supply chain issues around the world will change the investment landscape going forward.

With that said, I believe many families are not too stressed about the short-term and are more concerned with the long-term outlook of their wealth.

One other point to mention, another stress would be the long-term outlook of our planet. Families want to make a positive impact on the world through their investments. With the current war affecting energy supplies around the world, there has been concern about the effect on the environment and clean energy.

What is something about you that people would be surprised to learn?

I really enjoy learning different perspectives from people around the world. I have worked, studied and travelled in over 85 countries in all continents of the world. Some highlights of my travels include playing soccer with locals in Namibia, sleeping in a yurt in rural Mongolia, bungee jumping in New Zealand, meeting friendly penguins in Antarctica and swimming in the Amazon River in Brazil.

Responses have been lightly edited for clarity and length.