What’s the firm’s origin story?
Over my career I have been fortunate to build a diverse network of investors and operators who see opportunities outside of the typical universe and enjoy using their expertise to grow great businesses. After closing several passive deals together, it made sense to formalize the group and process, so I founded Pareto & Company in 2016 to tap this unmatched source of hard-to-find opportunities and leverage the ability to transform and expand companies with a high potential for success.
What is your investment thesis or value proposition?
Pareto & Company provides institutional funds and individual investors with hard-to-source, niche opportunities that can lead to significant value creation over time. By tapping into a unique network, Pareto can find compelling investment opportunities in lower-middle-market companies that larger funds may overlook. In acquiring and accelerating the growth of portfolio companies, Pareto brings financial and M&A expertise while building the right teams to leverage the acumen of industry experts and portfolio company executives. As a result, Pareto offers compelling outcomes for institutional fund partners, portfolio companies, and individual investors seeking long-term, high-multiple, uncorrelated returns.
Any notable differentiators for the firm?
We are a nimble team that turns niche opportunities into proven results, with multiple closed platforms, add-on acquisitions, and successful exits to date. We screen between 50 and 500+ real opportunities each year and conduct deeper due diligence on the best five to ten opportunities. Of these best ideas, we annually present the top two or three possibilities to our institutional partners and individual investors. In a typical year, we ultimately close one to two new investments. And, once closed, we then leverage our knowledge network to help each business scale by identifying the best industry leaders and other experts who can roll up their sleeves alongside us and the company to spur quality growth.
What are you looking for, and where are you seeing opportunities?
We seek to invest in companies within fragmented industries where we can apply our expertise to accelerate growth. This generally means we target companies in the Services, B2B Products, and Niche Manufacturing industries that evidence EBITDA ranging from $3-7 million. We also enjoy working with some internal leadership who wants to remain involved and together building a clear strategy for recurring revenue. Currently we are exploring possibilities in the stormwater management and financial back office industries.
Finally, can you regale us with an interesting or funny M&A story?
Most dental labs are typically still run by an individual owner used to running things their way and without a lot of good reporting. In pursuing add-on acquisitions for our dental lab platform, we often came across owners who handed over a ratty notebook stuffed with receipts when asked for financials or who pointed to an aging employee when asked about their customer tracking system. The most unique situation, however, was when we went to diligence a lab with only 4 employees and a single delivery driver. Despite its small size, upon arrival we noticed 7 freshly-washed Black Escalades parked outside that the owner subsequently assured us were all used for deliveries…
