Q: Why did you decide to become an independent sponsor?
Rob Bauer: It all started with the concept of partnership. I wanted to partner with companies, entrepreneurs, business owners, management teams, leaders and industry experts to take businesses to the next level. Bassett Creek’s partnership approach centers on a culture of teaching and learning from each other to create an environment where a rising tide lifts all boats.
I think of private equity as: (1) investing and (2) business ownership. We spend a lot of time developing industry-focused investment theses, crafting business plans, and building corporate infrastructure so our partners can scale. This approach allows Bassett Creek to be the most valuable partner of the companies in our portfolio.
I chose the path of independent sponsors because the reality is that the above takes a lot of time and effort. Bassett Creek’s approach is not possible in a traditional private equity fund setting, and I wanted to be different.
Q: How long have you worked as an independent sponsor and how long did it take you to complete your first contract?
RB: I first became an independent sponsor in 2016 and entered into my first contract approximately 18 months later in April 2018.
Since the first closure, Bassett Creek Services has made four acquisitions and has grown into a leading platform in the restaurant industry with 16 offices across the country. We immediately started building the infrastructure for the company and appointed Daniel O’Brien, a restaurant industry legend, as CEO in 2019. Dan and I partnered up to build the capabilities, the team, mission, role and overall purpose of the company’s business platform. , which has been essential to our growth.
Q: What do you think are the most important reasons why the independent sponsorship model has grown so strongly?
RB: Independent sponsors are really entrepreneurs. We take the risk of investing our own capital, not earning a salary and spending our time pursuing acquisitions as well as developing and executing operational business plans. I think it’s natural in the evolution of the private equity asset class for industry professionals to use their expertise and apply their ideas to a new investment strategy, to forge their own path. .
Private equity professionals have realized that you can spend more time helping portfolio companies because independent sponsors typically have fewer portfolio companies than traditional private equity firms.
Q: What changes to the independent sponsor model do you see in the future?
RB: You’ll see independent sponsors teaming up with other independent sponsors to work together on deals. You could call these “independent club sponsorship agreements”. There are a lot of high quality independent sponsors in our community, and I see a lot of synergies between the different independent sponsors who are making deals. It makes sense for independent sponsors, with their own unique areas of expertise, to partner with other independent sponsors who have complementary, but different, expertise.
I also believe that the number of independent sponsors will increase over time as the model becomes more accepted. For example, I think you’ll see more staff leaving traditional private equity to become independent sponsors because of the benefits of the business model.
Q: What are the most common misconceptions about the independent sponsorship model?
RB: The biggest misconception is that independent sponsors have no money and are glorified brokers. Bassett Creek Capital is constantly discussing investment ideas with our financial partners, and the independent sponsor model allows us to select the ideal partner for an investment. We are not married to one source of capital. We can be flexible. This mindset and approach gives independent sponsors an edge over traditional private equity firms.
Another misconception is that the independent sponsor model is new. It’s been around as long as private equity has been around. It’s just now that there’s a name for the model, and it’s an asset class within private equity.
I started my career with a traditional private equity firm that started out as a company doing transactions on a “pre-finance, transaction-to-transaction” basis 30 years ago. Today it would be called the independent sponsor model.
Q: Recognizing that every deal is different, what are some of the most important considerations for you when choosing a capital partner for a deal?
RB: Partnership. Is there an alignment between the vision of the independent sponsor for the company and the vision of the funder? Providers of capital are more than money. They are partners. The question I always ask is, “What can the capital provider bring to the table besides money?” This could be resources, a talent assessment or a strategic rationale, for example.
You must understand the track record of a capital partner with independent sponsors. If they haven’t entered into an independent sponsorship agreement, ask them why. The question is whether the capital provider will be a good partner for the vision and support of Bassett Creek Capital. Only make a deal with someone you see as a partner, and don’t agree to anything less. You can negotiate on the economy, but don’t negotiate your values and what is really important in a partnership. You should have a binary “yes” or “no” mentality. Don’t do business in the gray area.
Q: What achievement are you particularly proud of?
RB: I am especially proud of the culture we have built at Bassett Creek Services. We did it the right way: honestly, transparently, authentically and ethically. We went from one location three years ago to 16 locations in May 2021 with the support of 12 top executives and managers. All of our field sites have retained their own entrepreneurial spirit, while benefiting from the advantages of a large national company. We support each other collaboratively and push each other to constantly improve performance.
It was a lot of hard work and we had to readjust our plans several times, but I knew we would be successful because of our culture and our strong partnership. That’s why my favorite saying is “culture eats strategy for lunch every day of the week”.
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