Turning a quick profit is always music to an investor’s ear. But sometimes, patiently sitting through the entire symphony, so to speak, can result in a particularly satisfying ending. An investor’s proverbial “Ode to Joy” that requires waiting until the final movement of Beethoven’s 9th.
Steve Vivian is an investor with a platform that puts a twist on the traditional PE stance, including relaxing the traditional timeframe for realizing profit. With 15 years behind him in the world of private equity, Vivian recently launched Kestrel Capital Group with partner Bill Harlan.
While cashing in on an investment drives decision-making in a traditional PE fund—envision the limited partnership, for example, ticking down toward a definitive stopping point—Vivian is interested in trying an approach where investments can continue for a longer term. This approach can be more appetizing to a company founder or entrepreneur who isn’t ready to put a time frame on the ability of his or her company to meet its target, or lose control of the decision-making process, Vivian said.
Kestrel looks to raise funds on a company-by-company basis, with the fund’s investors making decisions as opportunities arise. Yes, Vivian acknowledges, this approach is a bit more labor-intensive than the blind-pool funding approach, but he’s convinced it is a model that will serve both his investors and the companies Kestrel invests in as well.
The investment funds aren’t as widely diversified as in a traditional portfolio, but Vivian expects an attractive investment climate to make up for risk factors. The model isn’t new, but Vivian said it’s timely. Although Vivian and Harlan have deep experience as control investors, controlling interest is not a requirement in their investment model.
Vivian noted that about 10,000 baby boomers are retiring every day. Small businesses that those boomers run are changing hands, and that creates opportunity for interim executives and companies looking to invest, he said. Intersecting those potential deal flows with both interims who can step in as managers for the short-term and with investors that want to stay on as longer-term financial partners creates a scenario for good business opportunities, Vivian said.
Those investors could well be the interims themselves. “Kestrel’s model is incredibly important for interims because a good number of them are capable of creating the same kind of model for themselves,” Bob Jordan, founder of The Association of Interim Executives, said. “So much of the time, interims still have an employee mentality. They need to break out of that and start thinking like owners and investors themselves. That’s why Steve’s example is inspiring,” he said.