What’s THE firm’s origin story?
I’ve always been interested in working with my father, John, who’s operated on his own as an independent sponsor for the past 30 years under what was called Desrosier & Company. As we’ve seen over the last 12–18 months, COVID has had a way of accelerating entrepreneurial spirits, and over the summer of 2021 we started talking about eventually partnering up. After those talks advanced over the course of the summer, we made the decision to formally work together, and I gave my notice to leave my current private equity firm at the time in September of 2021. We’ve since rebranded the firm and founded Desrosier Capital Partners (name creativity has never been finance’s strong suit…), and are both excited about what the future holds for us!
What is your investment thesis or value proposition?
We’re focused on niche industrial manufacturing and business services opportunities in the lower middle market, with target company sizes typically ranging from approximately $2–5M of EBITDA. We have both spent the majority of our careers focused on partnering with founder or family-owned businesses at critical inflection points to help generate significant growth and operational improvements. As a result, we’re intimately familiar with the difficulties associated with scaling a business and have guided numerous owners through the process of successfully scaling and exiting their businesses.
Any notable differentiators for the firm?
Relationships are a critical aspect of investing, and we’ve found that we can quickly develop a strong rapport with founders or family owners, primarily due to our own father-son dynamic. Another aspect of our differentiation is that we bring more experience to the table than traditional independent sponsors, with over 40 years of combined investing experience supported by our strong track record of 17 platform investments (excluding add-on acquisitions). Lastly, we have an extensive network of operating executives and advisors who can help assist with growing the businesses we are involved with.
What are you looking for, and where are you seeing opportunities?
We are actively pursuing new platform opportunities where the founder or family ownership group feels that they’ve grown the business about as far as it can go and needs help taking the business to that next phase of growth. We look to back strong management teams and do not tend to get as involved running the day-to-day operations of our companies, instead operating in a truly board-level or advisory-type role to the company.
In terms finding new deals, we have developed a broad outreach strategy that has allowed us to find new opportunities through our own personal relationships, third party providers (primarily lawyers and accountants), and a wide range of business brokers and bankers. It involves having countless conversations that don’t always lead to a new deal immediately, but when that right opportunity comes up, it’s critical that you’ve already developed a relationship with that source.
Finally, can you regale us with an interesting or funny m&a story?
Ok, so one funny story was when we had gone out to visit a new company. Ordinarily, when visiting a company we would expect the CEO or someone from the management team to greet us at the entrance of the facility, but when we arrived we were told by reception that the CEO was waiting for us in his office — except that the office was up five flights of stairs up with no elevator, so needless to say we were pretty winded by the time we made it up to his office. When we walked in, the CEO peered his head around the dual-screen monitors on his standing desk and expressed surprise that we were there as he was apparently “not expecting us,” even though we knew he had just been notified by reception. He then proceeds to spend 15 minutes walking us around his office, showing us all of the work that he was apparently so buried in when we arrived, and all of the various industry awards he’s received over the years.
Having visited countless companies over the years, I’ve experienced many CEOs trying to impress potential buyers with his or her level of work ethic, but this was by far the most brash performance I’d ever seen — and unfortunately acting was not this CEO’s strong suit. Needless to say we ended up passing on the opportunity.
