What’s THE firm’s origin story?
Mark Sparrow and I attended high school together in San Antonio, TX. The beginnings of Rox Capital were in 2017 when Mark and I both lived in Dallas working for large public corporations. Mark had deep experience in operations, manufacturing, and lean process management in the building materials space. I had experience in sales, business development, marketing, and strategy in the medical device industry. In 2017, we both decided to leave our corporate careers and acquire a 35-year-old fastener and hardware distribution company in Austin, TX. Amifast became Rox Capital’s first portfolio company.
What is your investment thesis or value proposition?
Rox Capital looks for legacy businesses in the $1-4mm EBITDA range. We target majority buyout, first transaction deals. We then unlock value in these family businesses through professionalizing the systems and processes, and targeting organic growth via sales and business development strategies.
Any notable differentiators for the firm?
As independent sponsors, Mark and I come from an operational background vs private equity or financial. Our operational backgrounds are a differentiator for sellers who place high value on their company legacy and employee transition. We’ve “sat in the chair” much like the sellers we work with. Understanding the priorities and concerns of sellers help differentiate Rox Capital from other sponsors, allowing us to source proprietary deals as a preferred buyer.
What are you looking for, and where are you seeing opportunities?
We are currently looking at recession-resistant businesses with long legacies. We are particularly interested in companies that have endured multiple business cycles and have stable performance. Industries of focus include building materials, infrastructure-related businesses, manufacturing, and healthcare businesses.
Finally, can you regale us with an interesting or funny m&a story?
As mentioned, Mark and I bought a fastener and hardware manufacturing business in late 2017. The company did a lot of manufacturing overseas, including in China. We planned several trips overseas to build relationships with our suppliers. One key supplier was a younger factory owner and a really nice guy. At lunch he asked Mark and I, “My friends have been asking if I can get you to come play basketball with us. They all want to play against Americans, and you’re both pretty tall. Will you come play with us tonight?” He drove us to the gym where they played, far off the beaten path. We played hoops for a couple hours with all of his friends, who loved playing basketball against a couple American guys. In between games, everyone would stop for a smoke break! He remains a good supplier and would always ask about us coming back to play some ball. That’s one part of M&A and business operations we love — you never know what experiences are coming! Never a dull moment.
