Episodes
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Consolidation in asset management is one of the industry's most important trends. When any industry enters a mature phase, consolidation brings the benefits of economies of scale, product depth, and broader services to meet client demands. We’ve seen a rising tide of merger activity in recent years, effecting both asset managers and allocators alike.
My guests on today’s show are leaders of two organizations that announced mergers in October – Simon Krinsky, a Managing Partner at Hall Capital and Tim McCusker, CIO at NEPC. Hall announced a merger with Pathstone, adding its $45 billion in assets to Pathstone’s $100 billion. NEPC announced a sale of a majority stake in its firm to Hightower Holdings, adding NEPC’s $1.8 trillion of assets under advisement to Hightower’s $130 billion of assets under management. Both Hall and NEPC have been longstanding independent organizations that are selling to a partner backed by private equity owners.
Simon and Tim walk through their rationale for the transactions, deal process from idea to signing, and opportunities and challenges going forward. The organizations share similarities in their long independent history, broad equity ownership, and investment capability, while also having significant differences in their new partners, incentive structure, and plan to service clients. Together, Simon and Tim offer an inside look at dealmaking in asset management.
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3G Capital’s buyout of Burger King may be the most successful private equity deal you’ve never heard about. Over the last fourteen years, or the length of a typical private equity fund, 3G turned a $1 billion investment into $28 billion in value. The annual dividends from the investment accruing to 3G today are around 70% of its invested capital. The deal is one of the highest earning buyouts ever.
3G is an organization with a storied history. Founded by Jorge Paolo Lemann, Carlos Alberto Sicupira, and Marcel Herrmann Telles, the group created an owner-operator model of investing. They rose to prominence through building the largest beer company in the world, initially buying local brewer Brahma in 1989, expanding it and merging with a competitor to become AmBev in 1999, merging with Interbrew to become ImBev in 2004, and taking over Anheuser Busch in 2008 to become AB InBev.
Twenty years ago, Alex Behring, a young star on their team, moved to the US to form 3G Capital and take the approach abroad.
Burger King was the second largest hamburger fast food chain after McDonalds in 2010 when 3G took it private. What it accomplished since then has been extraordinary.
My guests to discuss 3G and the deal are Alex Behring and Daniel Schwartz. Co-Managing Partners of 3G Capital.
Our conversation covers the history of 3G, Alex's journey to form 3G Capital, and the 3G playbook. We then dive into the deal, covering the sourcing and deal dynamics, improving operations, growing the business, taking the company public unexpectedly, and reloading to buy Tim Horton’s, Popeye’s, and Firehouse Subs. Today’s Burger King is part of Restaurant Brands International (QSR), a public company with a $32 billion market cap and $50 billion enterprise value.
This classic deal will widen your aperture on what’s possible with a long-term, compounding holding period and operational excellence.
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This Sponsored Insight features Ben Harrison, Founder and Co-President of DealCloud, our sponsor for Season 3 of Private Equity Deals.
Ben discusses how DealCloud’s vertical software supports alternative investment professionals through deal sourcing, relationship and pipeline management, and workflow efficiencies.
We are incredibly grateful of DealCloud for sponsoring Private Equity Deals, and we are eager to highlight their value to the alternative investment community.
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On episode eight of season three of Private Equity Deals, Chris and Rob Michalik discuss Kinderhook Industries’ investment in Ironclad Environmental Services.
Chris and Rob are twin brothers and co-founders of Kinderhook, a twenty-year-old private equity firm that manages $5 billion specializing in middle-market businesses across healthcare services, environmental services, and automotive/light manufacturing.
Ironclad Environmental Services is a leading provider of logistics-based solutions focused on the containment of industrial waste. It has 50 branches and a fleet of 29,000 specialized rental assets that store, separate, and transport liquid and solid industrial waste.
Our conversation covers Kinderhook’s identification, due diligence, and negotiation of the deal. We discuss a significant early add-on acquisition, progress-to-date, and the future of Ironclad.
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Henk Hartong III is the Chairman and CEO of Brynwood Partners, a middle-market private equity firm that invests in U.S. consumer-oriented businesses, primarily in the food, beverage, and personal care sectors. Henk’s father established Brynwood in 1984, and the firm boasts an impressive forty-year track record of driving results through its hands-on operating expertise.
Hometown Food Company is a manufacturer and marketer of an iconic portfolio of American baking brands that includes Pillsbury, Funfetti, Hungry Jack, Martha White, White Lily, Jim Dandy, Arrowhead Mills, Sunspire, De Wafelbakkers, and Birch Benders.
Our conversation covers the creation of Hometown in 2018 through a carve-out from Smuckers, buildout of a new management team, systems, and supply chain, management of the business through the COVID pandemic, tuck-in acquisitions, and the resulting performance of the company.
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Rich Caputo is the Chairman and Chief Executive Partner and Erik Fagan the Co-Head of Diversified Industrials at The Jordan Company, a private equity firm founded in 1982 by Jay Jordan that manages $23 billion.
Silvus develops and manufactures mobile communications datalinks primarily used in law enforcement, unmanned systems, tactical, and other applications to facilitate data communication in harsh environments without needing fixed infrastructure.
Our conversation covers the sourcing, diligence, purchase of Silvus, work with the management team, special characteristics of culture, and lessons learned.
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Ignacio Jayanti is the CEO of Corsair, a $10 billion specialist in financial services and infrastructure investing that started as a private equity practice within JP Morgan three decades ago.
TreviPay is a global payments and invoicing network that enables businesses to transact in a reliable way with other businesses.
Our conversation covers Corsair’s target companies, sourcing of TreviPay inside World Fuel Services, diligence process, exclusivity period, valuation, and risk assessment. We then turn to post-close operations, including building and onboarding a team alongside the existing superstar CEO, managing the balance sheet, transitioning from the former parent, and the early performance and challenges of the deal.
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David Perez is the Co-Founder and Managing Partner at Avance Investment Management, a middle-market private equity firm focusing on U.S. services and consumer businesses that he launched with a billion-dollar first time fund after spinning out of Palladium Equity Partners in 2020.
Univista Insurance is a South Florida-based insurance agency offering auto, home, life, health, and commercial policies primarily to the Hispanic community that was founded and run by Cuban immigrants in 2006.
Our conversation covers Univista’s history and business, sourcing of the deal, opportunities and risks, and deal process. We discuss valuation and financing, drivers of the business post-acquisition, and exit strategy down the road.
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Michael Fisch is the founder and CEO of American Securities, a private equity firm founded in 1994 that manages $27 billion focusing on U.S. middle market companies.
Milk Specialties is a producer of dairy products for the health and wellness, sports, and functional food industries. With roots dating back to 1944, the company focuses on Whey products and ingredients that end up in recognizable brands.
Our conversation covers American Securities approach to investing, Milk Specialties market niche, and the diligence and deal process. We turn to the gameplan for the business alongside existing management, growth drivers, and risk mitigation. We then go full circle discussing the sale process to exit the investment, covering the timing, auction, and case against continuation funds.
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Greg Fleming is the CEO of Rockefeller Capital Management, a business he created alongside the Rockefeller family and Viking Global Investors with the purchase of Rockefeller & Co. in 2018. He was a guest describing his background and the early years of RCM on Capital Allocators, and that conversation is replayed in the feed.
Rockefeller Capital Management is a platform that encompasses private wealth management, strategic advisory, and asset management formed out of the former family office of the Rockefeller family that today advises on over $100 billion in assets.
Our conversation covers Greg’s vision for Rockefeller Capital, the deal to purchase Rockefeller & Co, tuck-in acquisitions of private wealth managers, development of strategic advisory, and refining of the asset management business. We discuss the tuck-in acquisition process, including sourcing, diligence, deal structure, and integration, and the technology and operations required to make it work. We close discussing the recent recapitalization of RCM by the Desmarais family and Greg’s aspirations for the next five years.
For full show notes, visit the episode webpage here.
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Greg Fleming is the founding CEO of Rockefeller Capital Management, where he took the helm of a storied family office in 2018 to build and serve other families and institutions as well. Prior to taking on this challenge, Greg was the President of Morgan Stanley Wealth Management and Morgan Stanley Investment Management and before that spent seventeen years at Merrill Lynch, culminating in serving as President and Chief Operating Officer from 2007-2009.
Our conversation walks through some of Greg’s career path, including highlights from the financial crisis, and the Rockefeller Capital Management business and strategy. We hit on ESG investing, serving clients, and leadership. And I couldn’t help asking Greg about his relationship with Yankee great Derek Jeter.
For full show notes, visit the episode webpage here.
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Chris Ackerman is a Managing Director at Flexpoint Ford, a Chicago-based private equity firm founded in 2005 that manages $7.5 billion targeting investments in the healthcare and financial services sectors.
TigerRisk is an independent reinsurance broker and capital advisory firm founded in 2008. The company was founder and employee-owned at the time of Flexpoint Ford’s investment and had grown to become the fourth-largest reinsurance broker in the world, sitting below the big three of Aon, Marsh McClennan’s Guy Carpenter, and Willis Re.
Our conversation covers the history of TigerRisk and its differentiation as a preferred alternative to the big three. We discuss Flexpoint’s sourcing of the deal, perceived investment opportunity and risk, and Covid disruption to the deal process. We turn to the business performance, culture as a competitive advantage, alignment of incentives, unexpected sale, and lessons learned.
For full show notes, visit the episode webpage here.
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Next week, we’ll release the first episode of Season 3 of Private Equity Deals, this time focusing on deals in the middle market.
As an interlude between Season 2 and 3, this week’s show is a classic – it’s Bain Capital and KKR’s take private of Hospital Corporation of America (HCA) in 2006. The $33 billion club deal was the largest private equity transaction in history at the time and was significantly larger than any deal since KKR’s famous run at RJR Nabisco in the late 1980s. The HCA deal showed the private equity industry the scale of what was possible and set the stage for both mega buyouts and public to private deals ever since.
My guest is Chris Gordon, a Partner and Co-Head of Private Equity in North America for Bain Capital. Bain Capital today is one of the world’s largest private, multi-asset investing firms that oversees over $165 billion in assets. Seventeen years ago, Chris was a younger member of Bain Capital’s HCA deal team.
HCA is one of the nation’s leading healthcare services providers, with over 182 hospitals and 2,300 sites of care in 20 states and the United Kingdom. Its origins date back to 1968 when it was one of the first hospital companies in the United States.
Our conversation covers HCA’s history, the private equity environment in the mid-2000s, and the impetus for the HCA buyout. We discuss the complexity of navigating a large-scale transaction, conducting due diligence discretely, navigating the financial crisis, and what happened to the company. We turn to HCA’s return to the public markets through an IPO in 2011, Bain Capital’s eventual exit of the investment, and the implications of the deal on the firm and industry.
For full show notes, visit the episode webpage here.
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Andreas Holzmueller and Luke Chapman represent Partners Group, an investment firm that canvasses buyouts, real estate, infrastructure, and private credit with $135 billion under management, $71 billion of which is in private equity.
Breitling is one of the leading Swiss watchmakers, founded in 1884 as a pioneer in aviation-focused technology, and which today, is positioned as a casual, inclusive, and sustainable luxury brand.
Our conversation covers Partners Group’s thematic approach, Breitling’s long history, and its characteristics as a luxury brand business. We discuss Partners’ initial purchase of a minority stake in the business, its path to buying a controlling stake, and plans to grow the business from here.
For full show notes, visit the episode webpage here.
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David Roux and Tom O’Rourke lead BayPine, a private equity firm founded in 2019 that manages $3 billion across healthcare, consumer, industrials, and business services with a focus on growth through digital transformation.
Mavis is an independent tire dealer and aftermarket auto service provider with over 1,100 locations in the U.S. The chain dates back to 1949 and has experienced a growth explosion the last decade adding 1,000 service centers since 2015.
Our conversation covers BayPine’s strategy of digitally transforming core economy businesses, Mavis’ 74-year history, sourcing the investment, due diligence, differentiating BayPine’s bid, executing the digital strategy, and navigating macroeconomic headwinds.
For full show notes, visit the episode webpage here.
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Brent Beshore is the founder and CEO of Permanent Equity, an investor in small, family-owned private businesses it buys with no intention to sell through investment vehicles with 30-year lives. He is well-followed on Twitter and a past guest on Capital Allocators, and that conversation is replayed in the feed.
Selective Search is the highest end matchmaking firm in the world. It helps its busy, successful clients find long-term committed relationships. As Brent describes, it conducts executive search for love.
Our conversation covers the matchmaking business, deal assessment and dynamics, enhancements during the four years of Permanent Equity’s ownership, and future plans.
For full show notes, visit the episode webpage here.
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Brent Beshore is the founder and CEO of Adventur.es, an investment firm that buys small family-owned businesses with the intention of holding them indefinitely. After launching a few businesses out of college, Brent developed a distinct investment strategy and style. Earlier this year, he raised outside capital for the first time in a permanent capital vehicle, and I am a happy investor in the fund.
Brent regularly shares his insights on business and investing through his widely distributed letters on his website and commentary on Twitter. And just last week, he released his first book, The Messy Marketplace: Selling Your Business in a World of Imperfect Buyers. It’s a fantastic instructional guide that covers everything from emotional expectations to the fine print in documentation.
Our conversation covers Brent’s childhood interest in business, early mistakes, structural differences in his strategy from traditional private equity, search funds and fundless sponsors, sourcing deals, conducting due diligence, understanding valuation, negotiating, raising a first-time permanent capital vehicle, entering the ranks of professionals, and his new book.
Brent is unusually insightful about investing in general and deeply knowledgeable about the niche he occupies.
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David is a Partner and Co-Head of private equity at Apollo Global Management, a public alternative asset manager that invests across yield, hybrid, and equity strategies with 680 investment professionals overseeing $550 billion in assets.
Yahoo is a global media and tech company that connects people to their passions. Its origins date back to 1995 as one of the pioneers of the early internet era. It is well known for its web portal, mail, finance, and sports verticals, and houses a series of other businesses including the legacy of AOL.
Our conversation covers the modern Yahoo, its recent corporate history, and Apollo’s carveout of the business from Verizon. We discuss the deal dynamic, ownership plan across growth opportunities of core assets and divestment of non-core assets, new management team, tuck-in acquisitions on the come, and growth drivers going forward.
For full show notes, visit the episode webpage here.
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Sam Byrne is the Managing Partner and founder of CrossHarbor Capital Partners, a leading real estate firm with a multi-strategy platform across property type, geography, and capital structure that manages $7 billion and has put to work $28 billion across 350 transactions.
The Yellowstone Club is a private, exclusive ski club located in Big Sky, Montana, whose members reportedly include Bill Gates, Eric Schmidt, Justin Timberlake, and Tom Brady. CrossHabor bought the Club out of a messy bankruptcy in 2009.
Our conversation covers the history of the Yellowstone Club, process of purchasing the assets out of bankruptcy, and CrossHabor’s implementation of real estate, membership, and community development over the fourteen years since. We close with CrossHarbor’s pending exit of the investment, adjacent opportunities, and lessons learned.
For full show notes, visit the episode webpage here.
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David Shapiro is a co-founder of KPS Capital, a three-decade old private equity firm that manages in excess of $14 billion with a focus on acquiring and improving manufacturing-based businesses. TaylorMade is one of the leading manufacturers of golf equipment, and a familiar brand to golfers and fans of the game. Our conversation covers the history of TaylorMade, desired spin-off of the business from Adidas, prolonged and broken deal process, and KPS’ winning the deal. We then turn to the steps KPS took to improve the business across its supply chain, product cycle, and marketing, and its decision to sell the business in 2021 after a complete turnaround.
Thanks to our Season 2 Sponsor - Canoe Intelligence. Learn more about Canoe and how it's technology is powering the future of alternative investments.
For full show notes, visit the episode webpage here.
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