Some private equity firms like to invest in market cycles while others take a longer-term approach. In the consumer sector, focusing on lifestyle improvement, whether it’s diets or exercise routines, is a good long-term strategy for some PE firms. Read our analysis below to find out why.

“I love change,” says HighPost Capital founder and CEO David Moross. “I love dynamic change. I love shifting in patents in terms of what the consumer wants. Not fads, but things we see that have very sustainable long-term growth.”

David Moross, HighPost Capital

In August, HighPost raised its first fund at $420 million along with a $115 million co-investment vehicle. The firm, which has offices in New York and West Palm Beach, Fla., mostly targets businesses with more than $15 million in Ebitda and $75 million in revenue, focusing on the consumer, sports and media, and wellness, leisure and lifestyle sectors.

One of the investments that HighPost’s fund made was in Centr, a digital health and fitness platform that was founded by Australian actor Chris Hemsworth, who is best known for playing comic book character Thor. HighPost also acquired Inspire Fitness, a maker of free weights, rowing machines and other exercise equipment, and combined it with Centr.

“Chris’ entire philosophy is to center your life,” says Moross. “You wake up every morning with a centered approach to life. Not just weightlifting and power training, but it’s also how are you at peace with yourself? What kind of music are you listening to? Can we provide that for you? What kind of food are you eating? Can we provide that for you? What kind of lifestyle are you living? Can we make that better for you?”

“Everybody I know is just clearly looking. ‘Can I improve the way I eat? Can I improve the way I live my life? Can I destress?’ There are just so many things that are happening and we find companies that can affect that change.”

Watch What You Eat

Healthy food and beverage companies are always attractive to investors in any economic climate, says Collier McRae, a managing director at Atlanta-based investment bank VRA Partners. “Investors have been planning for some kind of correction in the economy for a while,” he notes. “Therefore, they have been looking at the longer-term sustainable trends that are going to perform well in any environment. The active lifestyle category would fit in that. The better-for-you would fit in that in food and beverage. I think those investments will continue and that hasn’t changed.”

Ryan Budlong, Harris Williams

In June, HighPost invested in cereal brand Magic Spoon, which also counts celebrities such as Shakira, Amy Schumer and Nick Jonas, among others, as investors. Magic Spoon uses something called allulose, which is a natural sweetener, that isn’t used by many, if any, of the big food companies, according to Moross. “If you think people are going to move and shift away from having an oversupply of sugar in their diet-and that’s a pure judgement call, and you think you’re going to have growth in [these other areas]—which are going to be healthier for you, which is a major thesis of our fund, then you look at companies in that space,” Moross says. “So, we did the Magic Spoon deal.”

More Information Available Than Ever

Today, consumers have more research tools at their disposal, whether it is reading ingredients on a food label or reviews on Amazon, and this just gives them more choices in what to buy.

“Global consumers have more choice than ever before, both in terms of the products available to them and the channels through which they buy those products,” says Harris Williams managing director Ryan Budlong. “That has led to higher expectations from consumers in terms of product quality and greater scrutiny of the contents of products. Consumers around the world want to know and understand what’s in the things they buy, how they were made, how the inputs were sourced, and how well they will perform before they choose.

“Those companies that can prove their products deliver real health benefits will see the most reward: Consumers can quickly and easily do the research to figure out what’s real and what’s snake oil,” Budlong adds.