Every month, we will feature an active member of the ACG New York community in a brief interview. Reflecting industry insight and personal perspective, this feature will introduce industry leaders and offer advice on the tools you need to succeed in the ever-changing middle market.
ROLE/FIRM: Co-Founder & Managing Partner of Consumer Growth Partners
1. Quick Basics – Role/Firm/Focus/How long have you been an ACG member?
I am a co-founder and the managing partner of Consumer Growth Partners. We are a private equity investment and advisory firm with an exclusive focus on companies in the retail and non-perishable branded consumer products sectors. On the investment side, we target growth companies in the lower middle market with at least $3mm of EBITDA. On the advisory side, we work with companies that are contemplating an equity transaction over the next 1-3 years but understand and appreciate that during that period, they have many opportunities to improve their profitability, scalability, and competitive positioning that will result in them achieving a higher valuation for their business.
I have been an ACG member for over ten years and served on the board for two terms from 2011-2017.
2. What do you think are the biggest obstacles in the middle market today?
Today, one of the biggest obstacle in the middle market is the high valuations demanded by companies seeking equity capital. We know that valuations fluctuate over time depending on lots of factors, but valuations at current levels make it difficult for PE investors to earn reasonable returns on their portfolios. Since there is so much dry powder to be put to work and the usual paucity of really good deals, this situation is likely to persist for some time. As an independent sponsor, we don’t feel the pressure of a committed PE fund to put money to work, as each of our investments can have its own time horizon unrelated to the remaining time of a private equity fund.
3. How has ACG helped you in your career?
ACG has given me the opportunity to expand my professional network in countless ways. With our business model, we are constantly seeking good investment opportunities from investment bankers and M&A advisors, good service providers and good C-Level talent. There is an abundance of all these professionals within the ACG family.
In addition, I have expanded my knowledge base for many subjects that directly affect my business as well as those subjects which just make me smarter about the world around me. I’ve also had the opportunity to chair or co-chair ACG’s Annual Retail & Consumer Conference on several occasions through which I have gotten to know and work with many industry luminaries and experts.
4. Can you tell us about your greatest success story/proudest achievement?
I would say my proudest achievement is surviving (indeed prospering) as an independent sponsor for over a decade, which included the Great Recession as well as the Great Recovery. The market is now overrun with independent sponsors, with numbers now well over a thousand. When we started in 2005, there were maybe 100 independent sponsors. We have been fortunate to be known and recognized as one of the independent sponsors with a targeted sector focus and a reputation for solid collaboration with both our funded sponsors and portfolio companies.
5. What changes do you foresee happening in the middle market in the next 3-5 years?
While I don’t profess to be a very good crystal-ball gazer, I do believe the middle market will continue to see an influx of more investors as well as investment opportunities. With most of the innovation and innovators coming out of start-ups and younger companies that need capital to grow, there will be an increasing amount of attention paid to funding these young founders and entrepreneurs. We are already seeing larger PE firms moving down into the middle market and VC firms moving up into later stage start-ups.