Excellere includes premium carry in fund closed after co-founder death

Excellere’s fund close, which came in recent weeks, was a profound moment for the Denver firm.

Excellere Partners recently beat the target on its latest flagship fund, and in the strong fundraising market this news could have quietly passed by without much impact. After all, lots of firms are beating targets and raising huge amounts of capital.

But Excellere’s fund close, which came in recent weeks, was a profound moment for the Denver firm. Excellere endured the loss of its two co-founders, David Kessenich and Robert Martin, who both died after battles with cancer only a few years apart.

The loss of leadership could have been catastrophic for Excellere and caused the firm to wind down business and fade out. Other firms, where the partners get into some sort of conflict, have gone quickly as talent departs and limited partners lose confidence.

Excellere, instead, tapped next-generation leadership in part to resolve any potential key-person issues that could have emerged from Kessenich’s death in January of 2020. Fund III entered an interim suspension period after Kessenich’s death, which would have resolved into a continuation of the investment period automatically, absent an LP vote, Buyouts previously reported.

At the time, the firm named a leadership group with managing partners Brad Cornell, Ryan Glaws, Matthew Hicks and Patrick O’Keefe, all former partners.

The firm had to get an LP waiver of a key-person provision in its second fund when Martin died in 2017, Buyouts previously reported.

Kessenich’s daily involvement in investment activity had been limited because of his illness, sources told Buyouts at the time and for this article. LPs got to know the next-gen partners during this time, and as evidenced by the successful close of Fund IV, they remain committed to the leadership group.

Excellere closed Fund IV on $875 million, beating its $750 million target. It raised the fund with the ability to earn above-market performance fees. The GP can earn 25 percent carried interest if it hits a 2x net multiple of invested capital and an 8 percent preferred return, according to the source and an investment document from New Jersey Division of Investment.

Excellere invests in founder-led, lower-mid market North American companies in sectors like business services, healthcare and industrials.

Performance has been strong. The third fund, which closed on $625 million in 2015, was generating a 19.1 percent net internal rate of return and a 1.38x net total value to paid-in multiple as of Dec. 21, 2020, according to performance information from the New Jersey Division of Investment. Fund II, which closed on $465 million in 2010, was producing a 32.3 percent net IRR and a 2.06x TVPI multiple as of the same date, New Jersey said.

Kessenich and Martin formed Excellere in 2006 after working at KRG Capital Partners.