Covid accelerated a trend years in the making: the most valuable capital for dealmaking firms arguably is human capital. For private equity, many are doubling down on operating partners. How are firms making the most out of this critical asset to drive value in their portfolios?
Alan Goldfarb, the founder and managing partner of New York-based private investment firm Orangewood Partners, says, “We love investing where we can be a real value-added partner and a big part of that value-add is coming up with ways that our operating partner network can really help drive innovation or investments in technologies or other creative ways to help really elevate good companies into great territory.”
The firm recently hired Jake Brewer as a managing director of operations and Chuck Sonsteby as an operating partner to focus on the firm’s restaurant technology investment strategy.
Orangewood’s strategy in this sector is to focus on how to make and provide food in a more convenient and sophisticated way that makes the consumer experience better. Driving customer traffic and creating a memorable experience to get them to return is the firm’s fundamental goal.
“So if you look at both Jake’s and Chuck’s background, they have some really interesting experiences over the last decade-plus in working within those industries of helping companies drive customer satisfaction and helping us drive continued customer traffic,” says Goldfarb.
Sonsteby is a former CFO of Brinker International, a major player in the casual dining restaurant sector with chains like Chili’s. He also currently sits on the board of Darden Restaurants, owner’s of The Capital Grille among others.
Brewer comes with almost 20 years of operational experience in the food and engery sectors, including several years with The J.M. Smucker Co.
Mergers & Acquisitions has spoken to the M&A and fundraising community on ways that professionals can strategically work to source new deals and capital. However, Goldfarb highlights the importance of the operating partner in growing its existing portfolio companies. Orangewood uses its team of 11 operating partners to work closely with these companies.
“So in in our minds the way we invest is not just as a passive investor and hope things work,” says Goldfarb. “We come in with a strategic game plan that involves people, it involves investment in people, investment in technology, and investment in processes where we could really help drive value and create value for all stakeholders and not just a certain subset of the stakeholders.”
The firm also focuses on providing a flexible investment structure. Like most private equity firms, Orangewood makes controlled investments. But a shifting landscape is putting more emphasis on becoming a solutions provider to founders, owners and management teams within its portfolio.
How have you seen the role of operating partners increase in importance? Let me know your experiences at [email protected].