Anyone here have insight on middleground capital? Seems like the founders came from Monomoy, always thought of Monomoy as a pretty decent shop, but any insight to middleground in terms of pay, culture and exit?
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Fast growing MM industrial firm, as you mentioned ex-Monomoy so kind of a quirkier culture from what I understand (look at website bios). The seem to take on larger deals and syndicate a ton down to co-investors. Ton of people on their website and an army of junior staff, so I have no idea on comp, but can’t imagine it’s above market. They use the Monomoy operations model, where they parachute their ops team to port cos. But overall, it’s a growing firm that just raised Fund II so probably a good time to join the platform.
I have heard great things about culture and the work they do.
A solid group that hit the ground running after spinning out of Monomoy (which spun out of KPS) in 2018. Have heard from LPs and GPs alike that they've grown significantly over the last couple years. Believe their last Fund II closed on a little over $800m and they're in market now with their 3rd fund. That said, the murmurs seem to suggest that MiddleGround has grown too quickly, opening a London office this year (...they're a Kentucky-headquartered firm that's essentially 5 years old, for reference) and launched an ESG strategy, among other strategies. Leadership’s messaging about switching to a 4-day work week is essentially misleading. People in non-ops roles essentially still have to work the 5th day as needed obviously. They seem to be a good trajectory nevertheless but I do wonder how they'll fare in this tough fundraising environment along with the rapid expansion into other strategies. Would definitely raise some red flags for some LPs.
Know them decently well and think highly of them. Echo the above that they have grown very quickly and no idea how sustainable it is, building out a pretty big EU team and launching an ESG strategy. Returns are supposed to be stellar, though. I imagine you could live like a king working out of their Lexington HQ but I'd never do that, especially as like an early 20s kid.
Just opened office in europe
Is this place just a house of cards? Saw they are raising > $1B for Fund III. I don't think they have sold anything from Fund I and II, European office, ESG fund, 4 day work week, all the LinkedIn stuff....feels like a weird place. Any updated insight?
More on LP side but spoke with them once around 2 years ago and it just seemed way too fast moving growth wise to ever be sustainable. I asked a well-respected FoF I know that loves the emerging manager space (back when MGC was raising fund II) and they echoed the same thing that growth is way too fast for their liking. Just seem like a marketing machine that marked up assets to raise more $ and we'll know in 3-4 years what they really are.
Yes I have worked across the table from these folks and were extremely unimpressed with them. They have some excellent operators but they are a wannabe KPS without any of the bravado or investing chops. Backgrounds of the investment team are below average at best but operators are a step above. Makes for an interesting dynamic and as you said we won’t know until they actually exit some of their positions.
To add to my comment above, the rumors and gossip I've heard ever since make me think leadership team is a bit of an egomaniac who lies through his teeth to bamboozle LPs into investing into his funds. There's tons of GPs that do this but I've never seen anyone overtly try to build his own image/aura than this guy. Pretty incredible.
Also have heard that their North American investment team co-heads were previously exclusively focused on IR/fundraising and operations. That. Is. Wild. Just to re-title your senior execs and more impressively for LPs to believe it and then invest in your fund. If that's not working magic, Idk what is.
I don't know about the rest of this, but I can categorically say that it is not true that the co-heads were previously focused on IR / Fundraising and shadily re-titled. When the firm was originally formed, it consisted of the founding partner and two others from their prior firm — one operations-focused partner and one investment team partner. They later brought on a business development/IR executive and eventually promoted that individual to partner and co-head of the North American investment team alongside the existing investment partner. Even reviewing the bios and press releases around these hires and promotions shows that the progression was transparent. Truly amazing how low quality the information on this forum can be sometimes...
Relax, guy. I'd caveated that these are just rumors in my comment. I do see now that -name- was originally on the investment team but -name- did used to be ops exclusively. And they did lean on -name- heavily for IR in the beginning of their launch.
Middleground Capital is a problem. Just follow the lawsuits, of the individual companies acquired by MGC. -name- brags on his LinkedIn page that he is most proud, that when people look up Middleground Capital, they don’t see any lawsuits, unlike other private equity firms……
His statement is not accurate….
On that note, probably one of the ugliest things I've heard in this industry was -name bragging on LinkedIn about how the now deceased cofounder at Monomoy (where -name- spun out from) was such a supportive mentor during the spinout when in reality, they're all still caught up in a lawsuit. Just...incredibly messed up and if true, really one of the lowest things you can do.
The fact that Middleground has been successful is emblematic of how much LP investing is reliant on herd momentum and perceived scarcity. A senior leader had 0 investment track record and was just an ops guy. He's now set up his own ivory castle and AUM was growing in leaps and bounds until he started all these strategies and opened a London office. Now all these LPs are finally waking up to their idiocy. Even the established players are struggling in this market though. Monomoy, where -name spun out of, hasn't been able to keep an ops team together since -name- left. There's just tons of turnover every 1-2 years.
I’m 100% in agreement that this is not a firm I’d be backing for the long term but think it’s also a bit unfair to say he was “just an ops guy”. He was their head of ops but pretty integral to some of their early success in the industrial mfg space. With that being said, a good friend of mine is an LP that was an early investor in that team and to say they’re disappointed in the choices of that firm, is an understatement. The massive team, multiple offices/euro expansion, etc during the favorable macro environment of the last 5+ years, has been a head scratcher for many in the industry. Like other GPs that took advantage of the LP herd mentality that you highlighted, I don’t see this ending well down the road.
In my humble opinion the only thing Middle Ground has been successful doing, is raising money for their funds. I know of at least two of their companies that were run into the ground after Middle Ground purchased them. One was subsequently sold for a very substantial loss last year and the other has laid off all their employees for lack of work. I imagine there are likely others in the same boat, but we haven’t seen an analysis yet on their remaining companies…
Anyone know anything about portco performance? From what I’ve read as an industrials coverage guy, SixAxis and Megatech seem like strong platforms. I could see Middleground actually doing well when it comes time to sell and at least buying themselves time with LPs that way. However, curious if anyone has heard otherwise. Thanks.
He gives me conman vibes.
I spoke with him and his team years ago and got the same vibe that he was just full of it. Raising funds so quickly in succession is always a giant red flag in the LP world, especially for a brand new firm. Add in hiring what seems like a hundred people in short succession it became fairly obvious he wanted to be an asset gatherer ASAP and just get rich off management fees. Passed it along to a respected FoF in this space who invested in Monomoy and they said run from MG.
Ditto
Also, impressive for a guy who went to U of Phoenix
Middleground Capital ruins companies, Avoid at all costs.. I just saw they are acquiring LS Starrett. They will destroy Starrett.. Just look at what they did to Attala Steel Industries….or EDSCO Fasteners etc…
Say more….
Look at MGC’s own website. Under their “portfolio” section, they show the revenue of the companies they’ve acquired and further down under “Add On Strategies” they list the current EBITDA and sometimes whether they have positive FCF (free cash flow). In the case of Castle Metals and Banner Industries they list revenue at acquisition as (1) Billion. Yet now their EBITDA is only $5million????
I wasn't sure I was reading this right, so I asked an expert, who concluded that I was correct in my understanding.
or take ASI (Attala Steel) revenue at the time of acquisition $140 million and now it’s EBITDA is also only $ 5 million???
WTF?? This is not just bad, it’s much much worse, and down right horrific!
Saw their Head of IR just ragequit. Kind of wild.
Usually means fundraising is going to be brutal which doesn't shock me in the slightest with MGC.
How do you know he ragequit
Not OP but it was a woman. She was on their website this morning and no longer there. Probably tired of -name- eye rolling act.
How do we feel about the latest lawsuit?
What is this latest lawsuit?
Emerging manager FoF who has a $75mm commitment to fund I with rights to a portion of management fees is owed a portion of management fees they deemed MG did not pay because -name- was too busy messing with his thoroughbred hobby.
-name- is a complete fraud of a person and just trying to enrich himself with his goofy story. These funds have no distributions to my knowledge and are just a story that smart LPs laughed at and ran from since day 1. Won't shock me in the slightest if they only raise 1 more fund and never raise again.
bumping as saw the article that one of their co-founders is leaving...
As an insider from one of their port cos, middleground capital is BROKE. One of their brilliant strategies to saving money is not paying vendors. This has caused domino effects of missing revenue targets, losing relations with key vendors and widespread production disruption, further compounding the inability to pay vendors. There are 10+ port cos with ~50% margin where all of their profit is going toward paying high interest on loans so there is 0 being passed down to companies to grow and even do the bare minimum of keeping the lights on. Won't be long until it all comes unraveled.
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