5-Minute Interview with Jeff Magny and Inqu Neuenschwander, Lincoln Road

In this series of 5-minute interviews, I shine the spotlight on up-and-coming fund managers in private markets across the globe. All geographies. All strategies. All sectors.

Here's my conversation with Jeff Magny, Founder, and Inqu Neuenschwander, Director – Investor Relations, at Lincoln Road Global Management (“Lincoln Road”).

Quick facts about Lincoln Road:

• Sector/thematic focus: Business Services, Industrial
• Geo focus: Sun Belt region of U.S.
• Year established: 2015
• Location: Miami, Florida
• Number of funds closed: None. Currently raising first fund
• Current fund size: $200m
• Current fund life: 10-year fund life, with three one-year options to extend
• Equity size invested in companies: $30m - $50m

Q: What’s Lincoln Road’s investment strategy?

A: We make control investments in lower middle market companies in the U.S. Sun Belt region, focusing on businesses that provide essential business services.

Q: What is the size of the market in the Sun Belt region?

A: The Sun Belt is a large and populous area. It encompasses 18 states in the Southeast and Southwest of the U.S. It currently represents 50% of the national population, which is around 332 million, and its share of the population is expected to rise to about 55% by 2030. Over the past decade, the region has accounted for 75% of the total U.S. population growth, which is about 15 million out of a total 21 million growth.

Q: Why the specific focus on essential business services in the Sun Belt?

A: The reason for our specificity, put simply, is that the Sun Belt offers the necessary market fundamentals to support our investment focus of buying and building businesses that support important things people need on a regular basis.

Furthermore, we focus on businesses that are underpinned by recurring commercial contracts, such as paving and commercial landscaping, and/or a need for customers to satisfy regulations, such as fire & safety.

Q: What is Lincoln Road’s track record of investing in this area?

A: We have made three investments, two of which are exited.

Brothers Paving is a great example of our approach of buying a regional business in the Southeast, expanding it across the Sun Belt and Eastern seaboard, and establishing a national footprint.

Republic Fire Protection is another example of a platform that started through the purchase of a regional business based in Georgia. Through our buy-and-build approach, Republic established itself as the premier consolidator of fire safety businesses in the Southeast.

Both these companies serve as important case studies of what we look to achieve with every investment.

?

Q: How do you source deals in this area?

A: Through our network and operating partners who have 40+ years of operating experience in the services space. This leaves us one degree separated from entrepreneurs and family-owned businesses in our industries of choice. We have made 22 investments across our three portfolio companies, two of which have already made strong exits as mentioned. All of our investments have been sourced outside of a process. Our track record and current pipeline of opportunities are clear indications that our method of finding such opportunities will continue.

Q: What hands-on expertise does the team have?

A: We have two full time operating partners that have sat on both sides of the table. They have been CEOs and executives of business services focused companies prior to their roles at Lincoln Road.

Collectively, the investment team, including operators, serve as coaches and sounding boards for founders and family-owned services businesses that are looking to achieve the next stage of growth. We do not deviate outside of our investment thesis because we know where we can offer the kind of value creation and partnership opportunities that the management teams we interact with are looking for.

?

Q: How are you building your team?

A: We are currently a team of six. We have our founder, two operating partners, two investment professionals, and our head of investor relations.

Jeff Magny, our founder, and Rick Walters were colleagues back at Sun Capital. They have known each other for over 15 years. Jim Long served as a board member of Brothers Paving, our second portfolio company, before joining the Lincoln Road team full-time as an operating partner. Alex Breinin and Inqu Neuenschwander worked together at Partners Group before teaming up again at Lincoln Road. Jagrit Rai joined the team in 2019.

Q: How do you see Lincoln Road scaling?

A: We are targeting $200m for our fund 1. The fund will be comprised of approximately 6 portfolio companies. We envision scaling our fund size and team accordingly over time.

Q: What is your secret sauce?

A: Simplicity. We know where we need to focus, and we stay there. We pursue straightforward buy-and-build opportunities with strong management teams already in place. We then continue to grow the businesses organically and inorganically while further refining their operations. Our tried and tested approach has led to industry-leading essential service businesses.

?

Q: What valuable lessons have you learnt that helps drive your approach?

A: First, think differently. Second, benchmark, measure and improve. This approach has led to successful outcome across our portfolio.

Q: What advice would you like to share with our readers?

A: Figure out what people’s problems are and make them your problems. You’ll always get more out of the relationship when you can be useful.

Jeff Magny Inqu Neuenschwander Lincoln Road Global Management, LLC

#privatequity #venturecapital #innovation #entrepreneurship #startups #investing #businessservices #industrial #sunbelt #usa