PE firms tend to have a long-term investment perspective. Unlike other types of investors, they don’t expect a quick and aggressive revenue generation from the businesses. Success embraces only those who focused on increasing market share rather than making profits and also those who were in pace with the fast-changing consumer tastes.
How PE Firms Drive Businesses to the Next Chapter of Growth
Consumers have always expected retailers to be innovative. Recent technological advancements have accelerated the pace of change, making it even more difficult to capture consumer attention in an increasingly crowded industry. More than ever, success requires financial and managerial flexibility and adaptiveness, and this is where private equity can help.
Through PE firms, the retailers get access to key data that is specific to the sector and demographics. Successful brands make smart use of consumer data to inform product decisions and better address changes in taste. Private equity provides capital and guidance to retailers to enable them to harness these data-driven strategies.
As sophisticated e-commerce capabilities and competition for more efficient delivery logistics are driving a revolution in how retailers operate, PE firms would give companies more motivation to embrace the power of AI. As expected, retail will soon overtake banking as the biggest investor in AI.
PE firms have a tremendous amount of capital to deploy, putting private equity in a strong position to partner with retailers to adapt and continue to drive positive changes. Within the consumer & retail industry, PE firms’ sustainable and thriving strategies would help businesses regulate the value chain, grow the workforce and augment the market share as well as brand awareness.
Top 9 Friendly PE Firms Worth Considering
#1: Blue Point – A Value-Added Partner in Lower Middle-market
Founded in 2000, Blue Point Capital Partners is a PE firm based in Cleveland, Ohio. The firm maintains a strong conviction that investments forged from relationships developed through regional proximity can be a key to success. It applies this orientation across areas of expertise in industrial, business services, and especially the consumer sector which we are caring for.
The Blue Point team partners with entrepreneurs of lower middle-market companies, seeking to bring unique and effective operating resources to its partnerships with management teams. The firm has built an extensive network of business owners and advisors, as well as trusted, local intermediaries to assist in identifying new investment opportunities.
Its portfolio companies include Country Pure Foods, a pioneering provider of branded and private label beverage products; Next Level, a designer and supplier of quality, casual apparel; Premier Needle Arts, which provides quilting products; Weaver, a niche market leader of enthusiast brands in the equine, pet, leather crafting, arborist, etc.; and many others.
#2: Carousel Capital – Customized Solutions for Successful Business Owners
Founded in 1996, Carousel Capital is a PE firm headquartered in Charlotte, North Carolina. The firm seeks to invest in Southeastern-based companies with strong management, a strategic market position, recession resistance, operating in the business services, and healthcare services, and consumer services sectors.
At Carousel Capital, the people-first approach builds alliances that are not simply transactions. Its investments are relationship-based, results-focused, experience-driven with a deep understanding of the hard work, sacrifices, and risks involved in building a business. The firm works hard to be respectful of your corporate culture and the unique aspects of your business that created success.
Its portfolio companies include Joe Hudson’s Collision Center, which provides automotive collision repair services; Express Oil Change & Service Center, an independent automotive service provider; Expedited Travel, a leading provider of expedited travel document processing services; Copac, a prominent provider of specialty packaging services to domestic and global customers; and many others.
#3: Clayton, Dubilier & Rice – Win-Win Orientation from a Constructive Partner
Founded in 1978, Clayton, Dubilier & Rice (CD&R) is a PE firm based in New York, New York. The firm looks for companies operating in the consumer & retail, healthcare, industrial, and services-based sectors with an investment strategy predicated on building stronger, more profitable businesses.
CD&R is no stranger to the retail sector, having a long-standing track record of consumer and retail investments with good retail experience. The firm practices investing as a craft, relying on a cohesive team with a shared sense of purpose and values. Its investment approach blends skilled investment judgment with extensive experience driving growth and operating excellence.
Its portfolio companies include American Greeting, the creator of innovative social expression products such as paper cards, digital greetings, party goods; David’s Bridal, a retailer of bridal gown and wedding-related apparel and accessories; High Ridge Brands, which provides consumers with personal care products; MOD, a purpose-led brand offering artisan-style pizzas and hand-tossed salads; and many others.
#4: Eagle Merchant Partners – The Investment Partner of Choice for Founders
Founded in 2013, Eagle Merchant Partners has become the investment partner of choice for founders, owners, and entrepreneurs who want to build great companies. It’s an Atlanta-based PE firm investing in lower middle-market consumer and industrial businesses in the Southeast.
Within the consumer area, Eagle focuses on established multi-unit brands including retail, restaurant, and fitness with significant experience in improving four-wall returns, store growth, and add-on acquisitions. Significant expertise in this core sector allows the firm professionals to better evaluate the challenges and opportunities a business faces.
Its portfolio companies include Code Ninjas, the world’s largest and fastest-growing coding franchise system for kids; Church’s Chicken, a global chicken quick-service restaurant; Loehmann’s, an off-price retailer of upscale women’s fashion apparel and shoes; Caliber Car Wash, a multi-unit operator and developer of premium, express car washes in the United States; and many others.
#5: Gauge Capital – The Partner in Potential with a Timeless Philosophy
Founded in 2013, Gauge Capital is a PE firm based in Southlake, Texas. The firm prefers to invest in growth-oriented companies playing around commercial services, industrial, food products, healthcare services, technology sectors, and most importantly consumer services. Its primary aim is long-term, sustainable value creation through transformational change, organic growth, and strategic acquisitions.
Gauge Capital is led by an experienced investment team with more than 100 years of combined expertise investing in privately-held companies. The firm is principle-based and invests in high potential businesses that desire to create an extraordinary outcome. Its due diligence process thoroughly reviews the sector trends, competitive landscape and company to assess risk and opportunity.
Its portfolio companies include Beauty Industry Group, the leading supplier of professionally installed hair extensions and other beauty and lifestyle products; Wireless Vision, the largest T-Mobile Premium Retailer in the United States; CTI Foods, which provides the industry’s leading restaurant companies a competitive edge through customized menu creations; Quiznos, a sandwich restaurant franchisor; and many others.
#6: Morgan Stanley Capital Partners – A Leading Middle-market PE Platform
Founded in 1985, Morgan Stanley Capital Partners is the private equity division of Morgan Stanley and is based in New York. The firm makes control investments in middle-market companies based in North America. Within the consumer sector, the firm focuses on pet products and animal health services, outdoor and enthusiast products, food/beverage and personal care/beauty products, multi-site experiential retail.
Throughout the investment period, the firm provides guidance on critical strategic and operational matters, including formulating and directing strategy, and raising and allocating capital. We also help portfolio companies achieve best practices by seeking to recruit talented executives, designing appropriate incentive structures, and implementing financial controls and governance systems.
Its portfolio companies include Nivel, the pioneering manufacturer and supplier of branded aftermarket parts for personal transportation vehicles; Manna Pro, a leading distributor of specialty pet nutrition and care products; Cadence Education, one of the United States’ biggest providers of early childhood education; Tops Markets, a leading full-service grocery retailer in upstate New York.
#7: Sentinel Capital Partners – Help Entrepreneurial Executives Build Great Businesses
Founded in 1995, Sentinel Capital Partners is a PE firm based in New York focused on the lower midmarket. The firm invests in management buyouts, corporate divestitures, going-private transactions, and operational turnarounds. It seeks to invest in businesses with attractive prospects and high-quality management. Consumer & retail is among the most important sectors that it prioritizes.
Sentinel’s mission is to generate attractive investment returns by providing private equity to talented executives and helping them to build great businesses and realize their boldest dreams. This mission guides everything the firm does, from the way it interacts with management partners, investors, investment bankers, and other professionals, to the way it manages every investment.
Its portfolio companies include Floral Plant Growers, which produces, markets, and sells specialty floriculture products; Hollander, a leader in the North American basic bedding segment selling sleep accessories; Holley, a leading provider of specialty automotive aftermarket performance products for car and truck enthusiasts; Pet Supplies Plus, a franchisor and operator of pet-specialty stores; and many others.
#8: TPG Growth – A Dedicated Investment Platforms of TPG
TPG has developed five investment platforms: Capital, Growth, Impact, Real Estate, and Market Solutions. Each of our five investment platforms is comprised of a range of complementary products that invest across our target sectors. Its diverse pools of capital allow the firm to be flexible investors, which increases both its relevance in the private capital ecosystem and the value it can bring to potential portfolio companies.
Its portfolio companies include Angie’s, one of the fastest-growing healthy snack players in the United States; Beringer Wine Estate Holdings, a producer of premium California varietal table wines; Burger King, whose franchisees operate more than 11,200 restaurants in all 50 states and around the world; Beautycounter, a disruptive beauty brand that develops and sells highly effective cosmetics; and many others.
#9: TZP Group – The Ideal Partner to Accelerate and Scale Growth
Founded in 2007, TZP Group are a PE firm focused on investments in lower-middle market technology & business services and consumer products & services companies. The firm aims to partner with owners and management teams seeking an investor with the skills and relationships to enable businesses to reach their full potential. It will be the ideal partner who helps accelerate and scale growth and bring your products to mass retail.
Operating as one firm, TZP shares its learnings and experiences to apply best practices and processes internally and with its portfolio companies. TZP has three pillars of differentiation: acting as a partner of choice for entrepreneurial owners and management teams; managing the firm like a company, not a deal shop, which makes it better owners and more effective operational advisors; and establishing the TZP platform with proprietary, scaled capabilities, and diverse strategies.
Its portfolio companies include Itzy Ritzy, a community-driven consumer brand focused on functional on-trend baby products for parents; Vegas.com, a leading direct-to-consumer e-tailer of show tickets to over 200 shows in Las Vegas; The Black Tux, a vertically integrated e-commerce provider of men’s formalwear; Christy Sports, a winter sports specialty retailer; and many others.
The Bottom Lines
At the onset of the Covid-19 pandemic, the consumer & retail sector was among the worst-hit globally. But today, when the world is moving towards vaccinations, lockdowns have been lifted, and stores have opened there are more opportunities for investors to step into this industry. By making the right choice, a partnership between PE firms and businesses can offer the bright prospect for both sides.