Private Equity Deals with Capital Allocators

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. Learn More Follow Ted on Twitter at @tseides or LinkedIn Subscribe to the mailing list Access Transcript with Premium Membership

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. Learn More Follow Ted on Twitter at @tseides or LinkedIn Subscribe to the mailing list Access Transcript with Premium Membership

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. Learn More Follow Ted on Twitter at @tseides or LinkedIn Subscribe to the mailing list Access Transcript with Premium Membership

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. Learn More Follow Ted on Twitter at @tseides or LinkedIn Subscribe to the mailing list Access Transcript with Premium Membership

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. Learn More Follow Ted on Twitter at @tseides or LinkedIn Subscribe to the mailing list Access Transcript with Premium Membership

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. Learn More Follow Ted on Twitter at @tseides or LinkedIn Subscribe to the mailing list Access Transcript with Premium Membership

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. Learn More Follow Ted on Twitter at @tseides or LinkedIn Subscribe to the mailing list Access Transcript with Premium Membership

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. Learn More Follow Ted on Twitter at @tseides or LinkedIn Subscribe to the mailing list Access Transcript with Premium Membership

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.   Learn More Follow Ted on Twitter at @tseides or LinkedIn Subscribe to the mailing list Access Transcript with Premium Membership

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. Learn More Follow Ted on Twitter at @tseides or LinkedIn Subscribe to the mailing list Access Transcript with Premium Membership

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.  Learn More Follow Ted on Twitter at @tseides or LinkedIn Subscribe to the mailing list Access Transcript with Premium Membership

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.  Learn More Follow Ted on Twitter at @tseides or LinkedIn Subscribe to the mailing list Access Transcript with Premium Membership

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.  Learn More​ Follow Ted on Twitter at @tseides or LinkedIn​ Subscribe to the mailing list​ Access Transcript with Premium Membership​

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.  Learn More  Follow Ted on Twitter at @tseides or LinkedIn  Subscribe to the mailing list  Access Transcript with Premium Membership

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.  Learn More  Follow Ted on Twitter at @tseides or LinkedIn  Subscribe to the mailing list  Access Transcript with Premium Membership

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.  Learn More  Follow Ted on Twitter at @tseides or LinkedIn  Subscribe to the mailing list  Access Transcript with Premium Membership

Scott Spielvogel is a co-founder and Managing Partner of One Rock Capital, a private equity firm managing $5 billion that specializes in ugly, hairy, messy situations. Blue Triton Brands is the business that formerly comprised Nestle Water North America, which collectively have the top market share in North American bottled water. Its brands include Poland Spring, Deer Park, Arrowhead, Pure Life, Origin, and a host of other specialty brands. One Rock carved out the business from Nestle in 2021. Our conversation covers a history of bottled water, attractiveness and risks of the opportunity, and a deal process that started with the banker telling One Rock they were too small to participate. We turn to deal pricing, operational efficiencies upon ownership, reinvigorating brands, new initiatives, and early performance. Thanks to our Season 2 Sponsor - Canoe Intelligence. Learn more about Canoe and how its technology is powering the future of alternative investments. For full show notes, visit the episode webpage here.  Learn More  Follow Ted on Twitter at @tseides or LinkedIn  Subscribe to the mailing list  Access Transcript with Premium Membership

Ian Charles and Sam Kennedy discuss Fenway Sports Group. Ian Charles is the founder and Managing Partner of Arctos Sports Partners, a private equity platform dedicated to the professional sports industry and sports franchise owners. He was a previous guest on Capital Allocators alongside his co-founder Doc O’Connor, and that conversation is replayed in the feed. Sam Kennedy is the longtime President and CEO of Arctos portfolio company, Fenway Sports Group. FSG is a twenty-year old global sports, marketing, media, entertainment and real estate portfolio that has taken cherished and iconic sports clubs to new heights. The business includes ownership of the Boston Red Sox, Liverpool Football Club, and Pittsburgh Penguins, and a series of related real estate and media assets. Our conversation covers the Fenway Sports Group holdings, business drivers, and attractiveness as an investment. We discuss Arctos’ sourcing, underwriting, and perceived risks of the deal, and then turn to Sam’s operating strategy, tuck-in acquisition of the Pittsburgh Penguins, importance of fielding winning teams, impact of private institutional capital, capital structure, on-field product, and future plans. Long-time listeners likely know about my affinity for sports, so it is a great privilege to share this discussion of Arctos’ investment in FSG with you, and a special bonus to have Sam walking through how it works. 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.  Learn More  Follow Ted on Twitter at @tseides or LinkedIn  Subscribe to the mailing list  Access Transcript with Premium Membership

Ravi Sachdev is a Partner and Ron Williams is an Operating Advisor at Clayton Dubilier & Rice, a global private equity firm with $57 billion in assets under management that was founded in 1978. agilon health is a company CD&R created from the purchase of two businesses in 2016 and grew using aspects of buyout, venture capital, and growth equity investment strategies. The business assists primary care physicians transition from a traditional “fee for service” model to an outcomes “value-based” model, where incentives are aligned across patients, payers, and providers. Our conversation covers the founding of agilon, its economics, and CD&R’s entry in the business. We turn to agilon’s start as a novel business concept alongside established traditional capabilities, driving operational change, expanding the model, and preparing the company to go public. We close by discussing the potential to leverage this model across other opportunities in the space. Learn More  Follow Ted on Twitter at @tseides or LinkedIn  Subscribe to the mailing list  Access Transcript with Premium Membership

Tricia Glynn is a Managing Director at Advent International, the global private equity firm that oversees nearly $100 billion in assets. Orveon Global is a collective of beauty brands specializing in the future of the face. Advent carved out three brands from Shiseido Americas to form Orveon in 2021. Our conversation covers the beauty business and the complex dynamics of a carveout transaction, including sourcing, due diligence, and preparing to hit the ground running with a new executive team and a transition plan for the newly independent business. We then turn to Advent's plan to reinvigorate the brands, improve operations, and add value through M&A. We close with challenges in the current environment, lessons learned from the deal, and a roadmap for the years ahead. Learn More  Follow Ted on Twitter at @tseides or LinkedIn  Subscribe to the mailing list  Access Transcript with Premium Membership