Bob Pinkas tells Michelle Rivera how this company takes a proactive approach to partnering with companies that have the potential for greater success.

Brantley Partners, a private equity organization with offices in Ohio and California, has developed a unique approach by partnering with the management of the companies they acquire rather than buying them out. As a result, the firm has increased its profits and employee morale on both ends, a win-win situation for all involved.

“What we do for a living is find successful companies that are typically within the $50 million to $200 million revenue range and have the potential to be much larger and more profitable. We work hard to find companies in industries where the opportunity for more growth is available, and we partner with those people who will take our money and will buy stock in those companies,” explained Bob Pinkas, managing general partner.

Brantley ends up as an active board member, helping management and growing the business out. “We become a strategic sounding board and look at acquisitions together, and as a result, we end up growing those businesses out drastically. Our business relies on extremely close, personal relationships where we get to know people, and they are comfortable taking us on as partners.”

Bob Pinkas

Enhancing profitability
Cleveland-headquartered Brantley Partners has approximately $400 million of committed capital under management. Brantley’s limited partners are primarily institutional investors, including pension funds, insurance companies, and banks. Since the firm’s inception in 1987, it has been the lead investor in more than 40 privately held companies in a variety of manufacturing, technology, and service industries throughout the US.

The firm identifies large, highly fragmented industries with sustainable internal growth rates. Once these industries have been identified, Brantley will back the management team and establish a platform company. These platform companies capitalize on industry trends to increase sales growth (both internally and through acquisition) and enhance profitability.

Brantley’s equity in a company represents the initial round of institutional capital, typically committing between $5 million and $15 million in majority, as well as non-controlling ownership positions, and can invest up to $20 million in any one company.

Perfect partners
According to Pinkas, the firm operates in a part of the market that is highly inefficient. The investment business is huge, where there are trillions of dollars at stake. As one can expect, most of that money is targeted at public companies, where there’s plenty of information available because there’s trading on a daily basis. “If there’s something someone doesn’t like about his or her investment, they can leave on that day,” he explained.

Brantley’s part of the market focuses on growth capital because it deals with private companies. Oftentimes, those companies aren’t looking for capital, explained Pinkas. “We have to seek them out. It’s not as though their stock is traded or exchanged—it’s not easy to find them.”

Although Brantley has invested in companies in all stages of development, it now focuses exclusively on growth buyout investments. By proactively finding private companies, Brantley creates a relationship with their management and convinces them it would make a great partner. “Once you buy stock in a private company, you can’t sell it readily. You’re an owner and a partner in that business until you take it public or until you decide to sell it. You don’t have as much liquidity in a private company, so our part of the market just tends to have the least overall amount of investment dollars targeted at it.”

Industry expertise
Brantley Partners differs from most of its competitors by focusing on industry expertise rather than operational expertise. “Most companies have people working with them on how to be better managers in their businesses and tell CEOs what they should be doing different in their company’s operations or supply chain,” Pinkas said.

The firm focuses on the strategy aspect of business, taking a more consultative approach and focusing on asset positioning. With backgrounds primarily in consulting, Brantley Partners’ expertise helps companies pick the strategy that will most likely grow the equity value of their company. “We focus our expertise and ability to analyze the industry based on our experience to come up with the best strategy for enhancing equity value,” Pinkas concluded.