Lincoln Road, led by former Sun Capital exec, lays groundwork for Fund I

Lincoln Road recently backed Landmark Paving, the type of investment that will demonstrate “proof of concept prior to raising a first institutional fund,” Magny told Buyouts.

Lincoln Road Global Management, founded by Sun Capital Partners veteran Jeff Magny, is quietly building a portfolio with an eye to launching its inaugural fund.

In December, Lincoln Road invested alongside Trivest Partners in Landmark Paving, a pavement maintenance services provider in the Southeast. This capped a busy period of dealmaking by the Miami private equity firm, which has been investing without a fund for roughly three years.

Landmark, Magny told Buyouts, is the type of investment that will demonstrate Lincoln Road’s “proof of concept prior to raising a first institutional fund.” He declined to comment on the offering’s timing and other details.

Magny established Lincoln Road in 2016 after working for nearly nine years with Sun Capital, where he was a senior vice president. During that time, he participated in a range of distressed, special situations and turnaround deals.

“I always planned to start my own firm,” Magny said. “Sun Capital provided the appropriate tools. It was a great training ground.”

Lincoln Road’s strategy

Magny set up Lincoln Road to source proprietary deal flow in North America’s lower mid-market, an opportunity set he said is overlooked by other investors. The focus is on family- and entrepreneur-owned companies and carveouts in “industries we know extremely well,” such as business services, specialty manufacturing and value-added distribution.

Lincoln Road targets businesses with recurring revenue and strong franchise value in growth sectors that “can benefit from our support,” Magny said. This includes operational improvements that build out infrastructure to enable scaling. It also involves deployment of a buy-and-build strategy that leverages opportunities in fragmented spaces.

The goal, Magny said, is to help companies with EBITDA of $3 million to $10 million to grow organically and through acquisitions to EBITDA of $20 million to $30 million.

Lincoln Road’s pre-fund investments have been capitalized by a “concentrated group of folks,” Magny said, among them institutions and high-net-worth individuals. The group typically supplies the capital necessary to underwrite an entire platform deal, including add-ons.

Lincoln Road’s inaugural investment, made in 2018, was Pro-Tec Fire & Safety, a fire extinguisher and safety services provider. Pro-Tec is today one of six businesses forming Republic Fire Protection, a platform backed by Lincoln Road and Peninsula Capital Partners. The most recent addition, Fire Equipment Company of Florida, was bought last year.

The deal pipeline for Lincoln Road is “robust,” Magny said, owing to “no shortage of good post-pandemic opportunities.” Many of these, he noted, are the result of successions and other major transitions prompted by the health crisis.

The value of diversity

Lincoln Road is among a small handful of PE firms led by a Black investor. While being part of a minority community has never impeded his opportunities, Magny said, it has instilled a conviction about diversity, which he is applying to Lincoln Road’s operations and strategy.

“Diversity of thought, background and experience are paramount to success and achieving superior returns,” Magny said. “Through it, you draw from a larger and better pool of answers.”

Lincoln Road was named after a popular Miami Beach street and hub that Magny said has “a diverse feel.”

Boston-born Magny, a graduate of Pennsylvania State University, started his career as an analyst in JP Morgan’s mergers and acquisitions group. After working with multiple PE firms, he saw becoming an investor as a natural next step. “I liked the idea of turning one dollar into fifteen dollars.”

Lincoln Road’s team includes two managing directors, operations, who share a history with Magny. One is John Brignon, ex-CEO of Certified Power, a former Sun Capital company sold in 2014 to Brinkmere Capital Partners. The other is Rick Walters, previously a Sun Capital vice president and group CFO.

Brignon joined in 2016, while Walters came onboard last year.