After 20 years working in private equity, Jared Paquette recently struck out on his own, launching Conanicut Capital, a PE firm focused on the lower middle-market.
"The first half of my private equity career, I was with much larger middle-market funds," Paquette says. "And what I found in those markets is that they're generally more competitive but more importantly, the companies are just more mature. I went to a great lower-middle-market firm for about 10 years. And what I found in going to the lower middle market is you get much closer to the founders and the owners of businesses. Some of the best deals that I've been a part of are ones in which you're really working as the first institutional pool of capital."
While he's looking forward to working more closely with business owners, he says being a new firm working to land its first deal is both a blessing and a curse.
"There are founders and owners that want a larger private equity institutional firm that's going to bring a lot of that institutional mindset to the table," he says. "We are different."
Though Paquette has a track record in the industry and works with operating people who know their markets, it comes down to being able to have a meeting of the minds.
"We pick our spots," he says. "And the spots that we picked, the founder unequivocally have gravitated towards what we are bringing because they know they want to work with someone that they're meeting and interacting with. So, not to say all firms like this, but sometimes through the early part of an investment, you've got certain folks involved and then maybe more mid-level folks are more of the day-to-day, whereas that's not our approach. It's a senior-level involvement."
Paquette brought on capital to launch his firm. For someone who's accustomed to making those investment decisions, being on the other side of the table gave him a unique perspective of his own business.
"It is good for any business," Paquette says. "It's kind of like when we analyze a business and break it down to its studs. It's kind of what I did when I started the firm in terms of what do we really need? How do we use software tools for business development?"
Breaking down organizational decision-making gave him a chance to explore what the firm really needed and how it might use outside resources to be more effective from a back-office perspective.
"It's interesting when you really analyze the cost you put into expensive business development people and the ROI on that, and every different aspect — portfolio management and CRM systems, and everything else," he says.
He says they've tried to put the same lens on themselves that they would put on companies as they scrutinize them in a deal.
"And we don't always do that," he says. "So, it was a good process to go through."
Paquette spoke on the Smart Business Dealmakers Podcast about his experience launching his new firm.
