Shor, known for his turnaround efforts for jewelry retailer Zales, has been involved with past deals by Riata executives. The firm recently announced a partnership with Alan Shor, co-founder and president of The Retail Connection, a real estate advisory firm that represents more than 275 retail and restaurant chains, to pursue investments in high-growth, specialty retail and multi-channel consumer companies with EBITDA I want to be an investor, first and foremost.”Īlthough Riata Capital Group was formally launched only about a year ago, its roster of managers is time-tested, the Dallas based firm said. “I cringe when people refer to me as an asset manager. “I had an entrepreneurial itch I needed to scratch,” Cardinale said during an interview in his office high over Madison Avenue. Albert Huddleston, founder of Aethon Energy, now works with RedBird on two ventures to develop oil and gas assets in the United States.įor Cardinale, these efforts embody the reason he launched RedBird in 2014 after retiring from Goldman Sachs. Other platforms at RedBird also reflect the strategy: Jerry Kent, most recently chairman and CEO of SuddenLink Communications, joined with Redbird and Ontario Teachers’ Pension Plan to invest in TierPoint, a data center roll-up. This was the case with On Location, where Bon Jovi invested capital as part of the investor group and is also helping run operations as a manager of the business. “Our focus is on proven business models where the founder of the business is heavily engaged and has written a check alongside us, so they have skin in the game,” he said. If you’re starting something up, it’s a different skill set.”Ĭardinale said one of the keys to this type of investing is that the rock star manager invests alongside the firm. “Even if nabs a Fortune 500 executive, typically have huge teams and much more of an institution behind them. “Those people do have broad networks and they understand the industry and the strategy they’re executing,” he said. High-profile executives may not always be the best choice to lead a new or growing business, Vogelhut said. “There are no statistics on using rock-star managers, but it’s something we do see,” said Ethan Vogelhut, executive director at Adveq, a firm that invests in middle-market buyout funds. Another risk: Backing rock-star managers means working with hyper-successful people who may have big egos and are used to having control, sources said. While an executive may have been the best at what he or she does for the past 20 years, there’s no guarantee of future success. The challenge with this type of investing is that it is based on people. It is perhaps more prevalent among newer shops, where GPs can tap into long-standing relationships with executives they have worked with before and have the ability to operate more nimbly than bigger, older outfits. This type of strategy is a way to return to the entreprenurial roots of private equity in merchant banking, when firms invested alongside founders and focused on growth, rather than leverage, to generate returns, sources said. Besides RedBird, GPs that seek to back big-name executives include GTCR, Riata Capital, Pine Brook and Warburg Pincus. Venture capitalists have been making big bets on rock-star managers for some time, but the phenomenon still isn’t as common in private equity. We have a passion for building companies, and we look to add value across a range of areas, which is easier said than done.” “It’s a hands-on approach to investing that creates an inherent alignment with best-in-class operators and entrepreneurs. “This is what we love to do,” said Gerry Cardinale, CEO of RedBird and a former Goldman Sachs partner. The firm also brought in John Collins, former chief operating officer of the National Hockey League, to be CEO of On Location, a platform spun out of the NFL. It then brought the “Livin’ on a Prayer” singer into the deal as both an investor and a manager.īon Jovi folded his own company, Runaway Tours, into On Location, building a music focus onto the sports-related company. RedBird last year teamed with Bruin Sports Capital and the National Football League to launch On Location Experiences, which sells VIP packages to the Super Bowl and other marquee events. RedBird Capital took it to the extreme with one recent deal, teaming with real-life rocker Jon Bon Jovi. Private equity investors are increasingly looking for seasoned, successful executives - so-called “rock stars” - to drive performance at their portfolio companies. GPs Back ‘Rock Star’ Managers to Amp Returns
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