Bruckmann, Rosser, Sherrill Looks For New LPs

Bruckmann, Rosser, Sherrill & Co. appears poised to close on $250 million for its third fund, which carries a $600 million target. The first $250 million will come from prior investors, and from there the firm looks ready to broaden the fundraise.

The general partners of the New York shop themselves plan to commit $90 million to the fund, or a relatively high 15 percent of the target. The firm intends to charge the standard carried interest of 20 percent, along with a 2 percent management fee to start.

Bruckmann, Rosser, Sherrill’s expertise lies in consumer products and services, and with the new fund the firm aims to make 15 to 25 investments of an average size of $20 million to $40 million. It is the smaller end of the market where the firm has had the most success. The firm has generated a 36.6 percent gross IRR and a 3.0x multiple of capital on its 30 transactions in smaller consumer products and services companies, according to statistics the firm has shown to LPs. It defines those companies as having enterprise values less than $250 million. Notable portfolio companies in the firm’s history include Au Bon Pain, California Pizza Kitchen, New York Sports Clubs and totes-Isotoner.

Bruckmann, Rosser, Sherrill & Co. will be going to LPs with a team that’s been fairly stable. Eleven of its 17 investment professionals have been in place since 2000. The firm’s three founders came from CVC: Bruce Bruckmann, Harold Rosser and Stephen Sherrill. The other three managing directors are Thomas Baldwin, previously of The INVUS Group; Paul Kaminski, previously of Coopers & Lybrand; and Rice Edmonds, previously of Bankers Trust. Overall the firm has done 66 deals.

The founders compiled a stellar track record at CVC in the late 1980s and early 1990s. CVC I, active between 1986 and 1991 and taking advantage of high levels of leverage, put $336 million to work in 16 companies and posted a gross IRR of 91.1 percent and a 5.1x gross multiple of capital, according to Bruckmann, Rosser, Sherrill numbers. CVC II made eight investments worth $76 million, and posted a gross IRR of 49.3 percent and a gross multiple of capital of 8.3x, also according to the firm.

The most recent fund, Bruckmann, Rosser, Sherrill II, has been deployed in 27 investments worth $637 million and so far has generated a gross IRR of 18.2 percent. That fund’s investment period ended in 2006, and since then the firm has been busy making add-on acquisitions.

One of the firm’s biggest home runs was California Pizza Kitchen. The firm sunk $17 million into the firm in 1997, and ultimately got back $126 million following an IPO in August 2000. After adding a new CEO, EBITDA more than tripled, according to a Bruckmann, Rosser, Sherrill document. The firm also invested $19 million in MWI Veterinary Supply through its second fund in 2002. The exit ultimately returned $156 million to the firm, after an August 2005 IPO at $17.00 per share and secondary offerings in 2006 at $32.25 per share and $35.00 per share. In that case, the company brought on John McNamara, the former CEO of AmeriSource Health, to the board of directors.—M.C.