Never seen them on any of our buyer lists, which makes me wonder... how does a fund that large fly under the radar and acquire so many businesses for such low multiples? (obviously HIG has been doing this and doing it well for years, along with a few others - e.g. Encore, Valor). I just don't get how they source so many deals that are trading for such low multiples, given the market.

 

Looks like they only closed their $964 million Fund II in April 2017....so it's relatively young. Fund I was only $431.5 million which doesn't seem that large to me.

In terms of acquiring businesses for low multiples, even in this market of wild valuations, shitty businesses are being sold as owners attempt to capitalize on the environment. In my opinion, periods of high valuations, like the one we are in now, do not impact divestiture valuation multiples equally. A great business that might sell for 10-11x in an average period could sell for 15-16x in a hot M&A market. However, a shitty business that may sell for 4-5x in an average period would likely hit a ceiling of 7x in a hot M&A environment. This rings true to me because shitty businesses don't often go to deep-pocketed strategic acquirors who can rely on synergies to juice their offers, they go to private equity firms just looking to lever it up to generate IRR then get out.

In One Rock Capital's case, I think this phenomenon helped them acquire FXI, Inc., a foam products company (shitty business...all that shit can be made in China at lower cost). The previous owners acquired it through bankruptcy in 2009. By 2017, they were probably just trying to get out before the M&A market turned, hence One Rock Capital (probably the only real bidder) won with a likely very conservative valuation.

 
Bullet-Tooth Tony:
Never seen them on any of our buyer lists, which makes me wonder... how does a fund that large fly under the radar and acquire so many businesses for such low multiples? (obviously HIG has been doing this and doing it well for years, along with a few others - e.g. Encore, Valor). I just don't get how they source so many deals that are trading for such low multiples, given the market.

we don't look at "shit" businesses, but would love to be on your buyer's list :) PM me?

 

Comp: very high 

hours: complete shit 

culture: among the worst 

deals: very complex and growing in size over the years 

summary: smart value investor specializing in chemicals and industrials with horrible WLB and culture; extremely high comp to offset. It’s a baby Apollo without the name or reputation / “prestige”   

 

I saw their comp was good but had not heard about the hours/WLB. Good to know. Appreciate it.

 
Most Helpful

It’s a firm on the rise, as evidenced by doubling target fund size each raise and hitting the hard caps. Very operationally focused in value creation. Punches above their weight (see: Nestle Waters NA carve out). Yes, “sweaty” due to the complex nature of the target deal profile, but from what I understand the culture is good, e.g. people are respectful of each other and not toxic, which is rare in this type of strategy.

Source: close with someone there.

 

Can only speak to the IR / fundraising side but know someone who worked on the capital formation team and she said it was her worst job by far. Left after just a few months. All she could share was that they've got terrible culture and toxic environment generally. 

 

The recent comment above, with 6+ upvotes, is probably your best bet. It resonates with what I have heard from someone there.

 

Interviewed with them for on-cycle but didn’t get the offer despite making it to the superday. Definitely are a value oriented firm like others have mentioned and a lot of the deals they do won’t be valued using traditional valuation methodologies as they’d rather pay below for assets. Their superday focused more on how you think through things and they asked some strange brain teasers apart from doing case study like questions. 

I liked the team but definitely got the vibe that some people are tough to work for. They definitely do some cool deals like the Nestle carve-out which they did an add-on and recap for. They’ll play lead investor on larger deals like Nestle so they have a greater say in carrying out their operating plan and will definitely use a sharp elbow if needed.

If you want a firm that is value oriented I think you should consider them but just be cautious about some of the sharp elbows and tougher personalities that are present. 

 

Had a similar experience. Interviews felt they focused more on IQ and processing ability than pure technical capacity. 

I enjoyed all the people I met in the process, but not a particularly 'laid back' group. 

 

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