Five Questions With … Thomas Carrier, Partner, Offit Capital Advisors LLC

1. You recently joined Offit Capital Advisors from Morgan Stanley’s financial sponsors group. What attracted you to the firm?

Two things. One is the growing number of wealthy families and individuals investing in alternative asset classes. Second is the explosion in the alternative asset classes that they have an interest in, and I think that investment advisors to those families have a lot of value to provide. The Offits have a long history of building successful businesses in the sector, such as Offit Bank and Offit Hall, and it was an opportunity to join a very high-quality team that I know.

2. What types of private equity investments will you advise your clients to make given the economic landscape?

If you assume that we are moving into a recessionary, or at least a lower-growth, environment, it would appear there’s going to be a fair amount of opportunity for firms skilled at turnarounds and restructuring, especially given the large number of heavily-levered consumers and businesses, many of which were the subject of buyouts. You also need to seek out buyout firms that are going to be good owners, because I think we’re headed into a market of longer hold periods and a market that lacks the robust economic and stock market growth that we’ve had in recent years, and that lacks the opportunity for frequent recapitalizations.

3. Will Offit Capital Advisors focus on investing in the mega-funds that are still been raised?

We are certainly taking a look at all of them. These funds are going to have a longer life than recent funds given their size and what is likely to be a slower pace of investing. Debt markets will eventually come back to life, but it’s unlikely that we are going to see $30 billion buyouts again anytime soon, given what will be a lower market capacity for any one deal. As a result, there is still plenty of opportunity for attractive multiples of money, but we think at lower IRRs. That said, large name-brand funds got that way for a reason; they are generally full of excellent investors with deep vertically-focused teams, and they have excellent networks and deal flow.

4. How has the recent tightening of the debt market affected the advice you offer to clients?

Ironically, if you look back, some of the best buyout vintages have been those years or periods in which financing has been more difficult to obtain and issues in the economy or a weaker market allowed for more attractive pricing and risk, less competition, and also greater opportunities for deals. However, it’s not totally clear that that paradigm exists in this instance given the massive amount of capital that has been raised. The debt market is likely to come back sometime in 2008, but it’s not going to come back like it has been in recent years.

5. Now that Offit Capital Advisors has built out the investment team with a number of significant hires, what distinguishes your research and due diligence process?

Our approach to building opportunity has been to put together a small team of very seasoned professionals. We think our value-add comes from judgment, experience and expertise.

Edited for clarity