ROLE/FIRM: Principal – Transaction Advisory Services at CohnReznick LLP
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.
1. Quick basics– role/firm/focus/how long have you been an ACG member?
I started with the ACG CT Chapter around 10 years ago and I am now in my 5th year of being a member of the New York Chapter.
2. What do you think are the biggest obstacles in the middle market today?
I don’t see obstacles but rather the proliferation of investors, including PE, Family Office, Independent Sponsors and the like, focusing their efforts towards the lower middle market, driving higher valuations, and causing investors to rethink their strategies for value creation upon exits. In general, investors have moved downstream. For example, larger cap funds are investing in the middle market and middle market funds are focusing their attention in the lower middle market. There is significant capital chasing investment, and finding quality businesses seems to be more challenging.
It’s not necessarily because there aren’t good businesses to invest in within the lower middle market, but rather many are not prepared for a sale or to bring onboard an investor. Assessing these businesses requires time and patience as well and due to their size, many funds can’t justify spending significant time with them. This is where both Family Offices and Independent Sponsors are well positioned to facilitate this market dynamic given they have far more flexibility to spend time and work with owners and management teams to professionalize, assess the businesses, and package them for PE, or be an intermediate step in the overall investment lifecycle.
3. How has ACG helped you in your career?
ACG has been fantastic in so many ways: (i) Access to the middle market players and a forum to network and meet great people (ii) Educating me and keeping me abreast of developments in the middle market (iii) Platform for CohnReznick to gain brand recognition and meet clients (iv) Opportunity to take on leadership roles through the Women of Leadership and more recently, the ACG New York Board of Directors, which has helped me personally in my career development and gain exposure in the market.
4. Can you tell us about your greatest success story/ proudest achievement?
Tough one. I’ll keep it on a professional level—it’s still ongoing, as I think back to many milestones in my career since I finished university and there are so many areas so I don’t want to highlight one specific area. I feel I am still striving for that and continually looking to develop myself, which is part of what keeps me motivated and challenged.
5. What changes do you foresee happening in the middle market in the next 3-5 years?
No one that I speak to about current market conditions seems to have the answer. How long does this frantic pace of transactions continue? There is so much capital out there and barring another significant market event, I do not see another 2007/2008. Things potentially slow down as it does with any business cycle. A lot of my efforts and time are spent with Independent Sponsors and Family Offices, who I feel will continue to become increasingly important in the middle market. Almost on a weekly basis, I find myself meeting new Independent Sponsors and getting access to Family Offices pursuing a direct investing model. PE will obviously continue as a significant driver of investment in the middle market but they will also need to reinvent themselves to stay relevant and drive great returns. We are seeing a lot of the younger PE professionals working in larger funds spinning out on their own either as Independent Sponsors or backed by one or a small group of families. Industry specialization, for the operating partner, will continue to be an important area to differentiate. Business Development and the sourcing of deals will also be what drives success and the BD role will be more and more important, as we are seeing now.