1. Congratulations on your new post as chairman of MidOcean Partners. Most recently, you were CEO of RR Donnelly, the international printing company. What prompted you to take on the new role in private equity?
MidOcean has three things that are important to me. One, I know the partners very well; two, they are of very high reputation and integrity; and three, they are open for business at a time when many others are not. I completed what I set out to do at RR Donnelley, which is an amalgamation of several printing companies. We took Moore Corporation Ltd., in which MidOcean’s predecessor, Deutsche Bank Capital Partners, was an investor, and merged it into its competitor, Wallace Computer Services. We then merged Moore Wallace into RR Donnelley and built those three companies, and several subsequent acquisitions, into the largest printing company in the world: 65,000 employees, almost $12 billion in revenues, 600 locations around the world and 40,000 customers. Effective corporate leaders leave their firms in good shape and in good hands. I believe that I did both, and I was looking for a new range of mountains.
2. MidOcean Partners specializes in mid-market companies in the media, leisure, business services and consumer goods sectors. With banks now reluctant to provide cheap debt for deals, are you seeing an increase in competition for targets from strategic buyers?
We try to avoid buying companies at auction. All five investments in our current fund were sourced on a proprietary basis, and we continue to pursue proprietary transactions. We seek to be strategic partners with first-rate management teams. So the answer to your question is “no.”
3. Many limited partners have been saying that they’re looking to invest more with middle-market LBO shops than mega firms. Is there a river of capital flowing to MidOcean?
MidOcean not so long ago closed Fund III with greater than $1.3 billion of capital and well above our hard cap. We are not at this moment in a fundraising mode, but the last time MidOcean went to the capital markets it was very, very successful.
4. Earlier in your career, you spent a lot of time working in Europe. Does your new role at MidOcean signal the firm’s desire to expand its LP base and its deal flow in Europe?
We take very seriously our dual headquarters of London and New York. Many of our portfolio companies have global operations but happen to be based either in North America or Europe. We have completed a number of significant transactions involving European companies, and we are reviewing a robust pipeline of attractive investments in Europe. We are interested in expanding our bases on both sides of the pond.
5. As an executive with considerable international experience, which countries (aside from China and India) do you think offer fertile ground for private equity investments?
In my earlier professional engagements, I invested successfully in China, India, Sri Lanka, the Philippines, Poland, the United Kingdom and elsewhere. But MidOcean is going to continue to be focused on companies based in North America and Europe, for now.