What’s THE firm’s origin story?
I formed Crescendo to house my ownership positions in a PE portfolio developed by a UHNW. After three years with him, I planned to join a recognizable LBO firm. While negotiating comp, a deal found me. That deal didn’t happen, but the next one did. For 3-4 years, I worked with a handful of friendly indies, co-sponsoring ~5 deals, choosing partners based on geography, domain expertise, bandwidth, etc. In ~2017, my most prominent co-conspirator died unexpectedly when I had three deals under LOI, so I had to form infrastructure around Crescendo. I started with Mike MacRitchie, whom I had known for 5+ years, who is now a Partner. We’ve added 4 additional investment professionals, both in Austin and Chicago, plus an Operations Partner and a CFO Partner.
As for the name, I am a closet musician. (Years ago, I was in a reggae band, playing to dozens in the Caribbean.) The name “Crescendo” is a musical nod … soft to loud, similar to our portfolio companies.
What is your investment thesis or value proposition?
We are old economy buy-out investors. We spend 80% of our time, broadly speaking, in construction, renovation, and repair; and we have developed an ecosystem around this vertical. We take best geographies, best companies and develop scale, geographic diversity and amplified service results. We’ve had three nine-figure exits and four deals with an MOIC in excess of 6x.
Any notable differentiators for the firm?
We tell owners that we have 3 main differentiators:
- We substantially use our own money.
- We live in the construction/renovation/service world.
- We maniacally focus on cultural and personality fit. The FOOs (founder owner operators) who sell to us almost always fit a certain profile. We gear our entire approach, formal and informal, to bond with the FOO. Our Texas and Midwest roots play well to this owner base. We are in the “people business” — we preach it, and we try to live it.
What are you looking for, and where are you seeing opportunities?
We source equally from brokers (as opposed to IBs) and outbound searches in areas where we have a developed thesis. We remain in the same verticals, only larger, with median entry EBITDA pushing $10 million. Our pipeline is more robust, reflecting a total CCP team of 8.
Finally, can you regale us with an interesting or funny m&a story?
I’ll give you two for the same price.
We once had a business owner blame poor performance on PTSD from a prior incident. Not wartime, but a basketball scrum. Apparently, a pick-up game turned into a free-for-all among the mainly 50+ year old participants. Broken noses, separated shoulders, and some black eyes resulted. Performance fell in the 3-6 months afterward, as a result of this owner’s inattention and mis-focus, which he alleges resulted from the aforementioned hoops scrum, despite the fact that he was uninjured.
And secondly, one incumbent CFO insisted that we continue to pay his monthly tab at the, ahem, “gentlemen’s establishment” across the street, where he took an extended lunch every day. We learned after close that these lunches were all expensed to our firm, typically at $100+ outlays. He demanded a salary adjustment; we declined. Ultimately, he was replaced, albeit after his options had vested. Unsurprisingly, the options became embroiled in a divorce dispute after his wife learned about the lunch dalliances.
