Robert Fioretti, Managing Director, Palladin Consumer Retail Partners

Robert Fioretti, Managing Director, Palladin Consumer Retail Partners


This is Pete Moore on HALO Talks NYC, I have the pleasure of having an old friend of mine, Rob Fioretti, coming in from Paladin retail equity partners. We’re going to talk about growth equity. We’re going to talk about post pandemic, and we’re going to talk about what it’s like to partner up with a institutional investor. So Rob, welcome to the show. So you’ve had a an interesting career from you know, moving around to a couple of different consumer focus groups. So maybe talk through kind of your personal trajectory and, and some of the the deals that you felt you know, wow. We kind of helped this company get from a to B.

Rob Fioretti: Yup. So happy to do that and I’ll make it quick, not to bore anybody, but I’ve been in and around the private equity space in general for more than 25 years. Now that make me, makes me sound old. But for the last decade, plus I’ve been focused on the consumer sector specifically. I did start out my career more in a more operationally focused world, working with private equity firms, portfolio companies, establishing post-acquisition strategies. So I do have a lot of experience on the operating side. But for the last really 20 years, I’ve been focused on the investing side, most of that in the consumer sector specifically.

Pete Moore: Cool. So when you take a look at these consumer companies and you know, they used to be, I’d say more competitive barriers around businesses. So how do you think about, you know, the, the technology changes and, you know, maybe new competitors popping up on the consumer side, as you think about investment thesis going forward?

Rob Fioretti: Yeah, look, it it makes it very interesting from our perspective because you know, the barriers to starting you know, somebody putting up a website and all of a sudden having a company are very low these days. And so when we’re evaluating opportunities, we’re certainly aware of that. We make sure that the companies were partnering with are, you know, more established. They’re not gonna go away tomorrow that they’ve established a brand with a moat around it or something proprietary, whether it’s IP based or otherwise that provides them with you know, a defensible position. And it’s not gonna be overtaken by the next guy to come along.

Pete Moore: So when someone partners up with your firm now what are some of the key areas that you guys dig into, or maybe like right before the acquisition closes, you say, look, here’s a a hundred day plan and here’s, you know, what we can throw either our brains behind our relationships behind maybe some muscle, you know, whatever, whatever it is. How do you guys think about like, Hey, look, how do we make a first hit impression here?

Rob Fioretti: So we send most, if not all of our time partnering with founders or founder groups who have established very impressive companies they built them into, you know, sizeable entities, but are looking for partners to bring in not only for capital. But frankly for much more than that, somebody who can help them professionalize the organization, institutionalize it, help them take it to the next level. Every company in our portfolio today was actually a founder owned business where we went in, partnered with that group or that individual brought capital to the table, but also brought relationships, resources, our own expertise to help them continue to grow the companies we tend to do. We tend to like to partner with founders for a couple of, they tend to like to partner with us because of a lot of the operational expertise that we have and operational experience we have, we’ve been on their side of the table. And as a result, when things happen and things always happen we are constructive, we don’t panic. We can help them deal with the situation whether it’s an opportunity or something that we need to you know, a problem that needs to be addressed.

Pete Moore: So when you take, you know, some private equity firms will say, look, you know, we’re a consumer fund. We wait for companies that want to sell, and it’s an auction process. And maybe we have some kind of unique angle or, Hey, we’re just wanting to put money to work and we’re willing to pay the highest price. So, you know, we’ll play that game. You know, what do you think is a differentiator and how much more work is it to find the right deals when you’re trying to go direct to an entrepreneur and also to follow on to that, you know, an entrepreneur typically hasn’t done a transaction. The size that you’re talking about is probably the largest transaction he or she have done financially. So do you view that as an opportunity to educate, do you view that as maybe there’s more sellers remorse before you get involved? So maybe give us the, the how things kind of evolve.

Rob Fioretti: Yep. No great, great question. And a lot of the time, you’re exactly right. I know you deal with a lot of founders and entrepreneurs yourself, so you’re facing these same types of challenges. But we see it as an education process. You know, in general, we know the companies we invest in oftentimes for a long time before we actually make that investment, we’ve, you know, followed, you know, we follow the sectors. We invest in for years before we actually make an investment and we spend lots of time and it’s one of the things that’s been, that’s made investing during this pandemic challenging for us, we spend lots of time with the entrepreneurs or founders, making sure they’re comfortable, making sure they understand the process. We actually prefer when advisors like you guys are, are involved or involved because it ensures that they’re well, that they’re well-advised and that they’re well-educated and they feel like they they have the proper context in order to make a proper decision.

Rob Fioretti: So but we spend an awful lot of time making sure they understand, you know, all aspects of the transaction. The last thing we want, because in general, we’re always going into these deals with the intent of partnering with these founders that they’re going to continue to be involved with. The last thing we want or need is for them to be surprised or disappointed by something. Along the way, the, our transactions generally involve a fairly significant rollover by that founder, by that entrepreneurial rollover of their of their equity into our deal. And so interests tend to be very well aligned going forward. But one of, and you mentioned this, one of the keys to that is ensuring that our vision for where the company is headed are aligned as well. So we spend a lot of time talking about, you know, where have you brought this company so far? Where do you see it headed? What are the opportunities, whether it’s organic, whether they’re M and a, how can we help in reaching those that were achieving those opportunities? You know, how are we going to get there?