Comvest Partners is a West Palm Beach, Fla.-based private equity and credit investment firm with more than $6.5B in AUM. Founded in 2000, it seeks investments between $75mm to $400mm in enterprise value and targets companies in business services, consumer & retail, healthcare services, industrials and transportation & logistics. Senior partner Tom Clark and partner Kevin LaHatte recently spoke to Managing Editor Demitri Diakantonis about their views on retail/consumer investments.
Talk about the recent exits in Rugs USA and Robbins Brothers?
The exits were driven by the realization of our investment theses coinciding with strong investor demand. For RugsUSA, we partnered with the company’s founder to invest in a unique business with a strong strategic position as a direct-to-consumer e-commerce seller of area rugs sourced directly from producers. Our thesis was predicated on strong tailwinds from growing e-commerce penetration given increasing consumer comfort buying home products online; RugsUSA’s strategic advantages as a large, integrated business, and an opportunity to accelerate growth by building the team, infrastructure, systems, and business processes. We still believe in the company’s opportunities and remain a material investor in the business. For Robbins Brothers, we similarly identified a mature and healthy end market, strong concept, and opportunity to improve the company. We invested in additions to management, and improvements to systems and core business operations and processes as the company scaled. Robbins Brothers is incredibly healthy, which is particularly impressive for a west coast-based retailer operating through Covid.
Why does Comvest like the retail/consumer sector?
It combines favorable, continuing growth trends with an advantage for investors with specialized experience and capabilities. The two of us together have amassed nearly 40 years of experience studying, investing in, and working with consumer businesses. With many middle-market companies still early in their transition to digital capabilities, success in this channel today requires multi-faceted expertise that extends beyond financial acumen to disciplines like performance-based marketing, analytically-based merchandising, and dynamic supply chain management. Our digital skill set has become an area of significant added value to companies. We know the key success factors of transitioning to or expanding online retail presence, whether through dynamic consumer experience interfaces, digital sales reporting solutions, or e-commerce ordering and fulfillment capabilities. Many consumer businesses are still founder- and family-owned, and Comvest has a 20-year history of partnering with these entrepreneur segments to drive value in their businesses through infrastructure and process improvements.
Why is the firm interested in both brick and mortar and e-commerce?
We believe there’s a big place for both types of middle-market businesses in this next consumer era. With the right digital capabilities, today’s successful brick-and-mortar companies won’t merely survive, they will grow and thrive. Currently, for example, many consumer product businesses with leading market positions in traditional retail channels still lack strong abilities in online retail, in which they may be underpenetrated.
Is the firm eyeing any specific subsectors?
Within the consumer sector, we continue to focus heavily on the e-commerce channel. This includes both direct-to-consumer e-commerce businesses and consumer products businesses that can benefit from our experience with similar companies.
