Chicago-based GTCR recently sold Callcredit, a U.K. provider of real-time credit reports, to TransUnion (NYSE:TRU) for about $1.4 billion. GTCR acquired Callcredit in 2014, recruited CEO Mike Gordon to lead the company and built the business through organic expansion and three acquisitions. GTCR focuses on financial services and technology, healthcare, technology, media and telecommunications, and growth business services, and the firm touts its approach to finding and partnering with seasoned executives, dubbed The Leaders Strategy, as the core of its investment approach. We asked managing director Aaron Cohen the development of Callcredit and The Leaders Strategy.

Walk us through Callcredit’s growth strategy under GTCR’s ownership.
We developed a multi-pronged growth strategy focused on enhancing product offerings and technological capabilities, deepening relationships with existing clients and expanding into new industries and markets. Callcredit made material investments in product development, technology infrastructure and systems to deliver innovative solutions and differentiated service delivery to customers. In our core financial services credit market, we became more entrenched with our customers and more integrated with their systems by becoming primary providers of credit reports, and not just providers of secondary credit reports. We expanded beyond our credit data market via organic efforts and acquisitions, capitalizing on strong market tailwinds in the fraud-and-identity-verification and software-and-analytics markets. We also took advantage of growing demand for credit data in new industries including alternative lending, telecom and government.

How did GTCR choose the buyer for Callcredit?
As one of the three largest credit bureaus without a presence in the United Kingdom, TransUnion was the natural buyer for Callcredit. Callcredit offers TransUnion an entry point into the second-largest credit market in the world. Callcredit’s best-in-class product portfolio can be exported globally into TransUnion’s other markets, while TransUnion can also introduce its innovative solutions into the UK market. We believe the combination offers tremendous revenue and cost synergies given the complementary nature of the two business models. Further, GTCR and TransUnion have a strong and long-standing relationship, particularly since we’re both based in Chicago. TransUnion was a great counterparty and a pleasure to deal with. We believe TransUnion will be a great home for Callcredit and its employees.

How is Callcredit’s path emblematic of GTCR’s investment strategy?
Callcredit is another successful example of GTCR’s Leaders Strategy. We recruited a world-class CEO, Mike Gordon, and partnered with him to build out the management team and professionalize key functions of the organization. As long-term growth investors, we made significant investments to transform the business. We invested in people, systems, infrastructure, product development and go-to-market capabilities to build a sustainable platform for continued term growth.

What differentiates GTCR from other PE firms? Tell us about The Leaders Strategy and some current examples.
GTCR’s main differentiator is The Leaders Strategy. Our strategy involves developing deep domain expertise to build relationships in an industry and then identifying proven CEOs with strong track records of value creation and with whom we share similar theses on an industry. We often partner with CEOs to identify great businesses that can benefit from new leadership. Examples include corporate orphans that are starved for capital and/or leadership, founder-owned businesses that have reached a point where they need professional leadership to get to the next level, and businesses that can benefit from additional capital and expertise to expand into new products, industries and geographies.

What is your outlook for M&A in 2018?
The market remains expensive, with both strategic buyers and sponsors continuing to bid high prices for quality assets. In order to succeed in this market, buyers need to bring a differentiated approach (e.g., The Leaders Strategy) to identify unique companies and underwrite transformational opportunities.