Thesis. Exploration.Breakthrough.

Our investment opportunities are born from a time-tested approach that combines data, exhaustive research and expertise. By partnering with world-class advisors, we identify durable growth markets and build differentiated, sustainable companies.

Durable Growth Trend

Financial Institutions have historically relied on varying combinations of manual processes, core processor poorly integrated solutions, or costly custom solutions to manage their heavily regulated, data-intensive businesses. A universe of third-party software and services firms have emerged to help these institutions employ the data in their systems and more efficiently address the exigent FI requirements. Accordingly, we expect demand will continue to grow, particularly for providers with a broad range of solutions that deliver modern capability, address regulated processes, or achieve greater efficiency.

Technology-Enabled Services for Financial Institutions

Our Thesis

Technology-Enabled Services for Financial Institutions

Durable Growth Trend:

Technology, Data, and Services to Better Enable Financial Institution Management

Completed Acquisition: Marquis Software, Documatix, and Tax Guard

  • Working alongside Susan Faulkner, Falfurrias recognized the growing need for technology tools that could identify and enable additional revenue opportunities for financial institutions (FIs), and in particular, incremental revenue opportunities for small and medium size banks and credit unions that lacked the resources to build such tools in-house.
  • Falfurrias Capital and Ms. Faulkner identified Marquis as a platform investment opportunity that provided software and services to FIs enabling actionable intelligence that can drive revenue growth.
  • In September, 2016, Falfurrias announced a majority investment stake in Marquis and Ms. Faulkner joined the company as CEO of the business.

Our Expert

Susan Faulkner

bio

Susan Faulkner has over 30 years experience in the financial services industry and expertise across bank strategy and operations as a former executive with Bank of America. Ms. Faulkner led FCP's tech-enabled services for financial institutions industry first campaign and was immediately appointed CEO of Marquis Software Solutions upon the firm's investment in the business in September, 2016.

Our Expert

Susan Faulkner

Durable Growth Trend

Driven by increased digital engagement, the marketing, media and information services landscape is rapidly evolving and creating significant pain points and additional competition for legacy providers. This pace of change has driven increased outsourcing, an appetite for data-driven tools and services, and a focus on vertical specialization. Therefore, we are attracted to companies that serve vertical niches with industry-specific expertise. We also look for sectors that exhibit complex sales cycles, need for unique data and insights from hard to reach end markets, reoccurring needs and vendor relationships, high ticket sales leading to robust marketing budgets, fragmented vendor communities with consolidation potential, and complex compliance requirements.

Marketing, Media, and Information Services

Our Thesis

Marketing, Media, and Information Services

Durable Growth Trend:

Digital Engagement, Domain Specific Tools & Insights, Content / Thought Leadership, and Related Services

Completed Acquisition: Industry Dive, Ballast Research, and GlynnDevins

  • After a successful investment in GlynnDevins, a leading provider of senior living marketing services, Falfurrias continued to evaluate opportunities to invest in vertically focused marketing service providers.
  • Falfurrias Capital identified Alexander Jutkowitz, a leading evangelist for the shift in Business to Business (B2B) marketing and communications toward integrated professional content, digital engagement and strategy. Mr. Jutkowitz partnered with FCP as an Industry First executive to identify companies taking advantage of this shift.
  • In September 2019, Falfurrias announced an investment in Industry Dive based on a thesis in the B2B media space and Jutkowitz joined the company as Executive Chairman.
  • In December 2020, Falfurrias announced an investment in Ballast Research based on a thesis in the corporate stakeholder reputation space and Jutkowitz joined the company as Executive Chairman.

Our Expert

Alexander Jutkowitz

bio

Alexander Jutkowitz is one of today's leading evangelists for the shift in marketing and communications toward integrated content and strategy. His work for clients in a wide array of fields proves that brands who tell their own stories innovate faster and inspire enduring customer loyalty. Mr. Jutkowitz has more than 20 years of experience in strategic communications and enterprise sales —as a political pollster, digital architect, brand strategist, and content creator in over 30 countries. He is an adjunct professor at USC Annenberg and member of the Curriculum Committee. Mr. Jutkowitz's book, The Strategic Storyteller, was published by Wiley in 2017. Alexander was raised in Chile and Philadelphia and is fluent in Spanish. Mr. Jutkowitz partnered with Falfurrias Capital to identify vertically focused marketing, media and information services firms positioned with digital engagement, high quality content, peer to peer platforms, and tech enabled services.

Our Expert

Alexander Jutkowitz

Durable Growth Trend

US electrical utilities are in the early stages of long-term initiatives to expand, modernize, and improve the reliability of critical transmission and distribution infrastructure. The sector continues to see sustained growth driven by antiquated infrastructure, regulatory requirements, smart grid initiatives, rate-case funding mechanisms, and the need to curtail outage costs. Providers of differentiated services and products to utilities making these infrastructure investments can create substantial barriers to entry through brand equity, reliability, and institutional knowledge that creates “sticky” customer relationships.

Electric Utility Supply Chain

Our Thesis

Electric Utility Supply Chain

Durable Growth Trend:

Aging Utility Infrastructure, Declining Utility Workforce, Outsourcing Labor Trends, Smart Grid Initiatives, Increased Regulatory Scrutiny

Completed Acquisition: UC Synergetic, North American T&D Group

  • Falfurrias built and grew UC Synergetic, a provider of engineering, technical services, and consulting services to the electric utility and telecommunications industries as an investment in FCP I.
  • In FCP II, formed North American T&D Group as the holding company for Instrument Transformer Equipment Corp (“ITEC”), a manufacturer of instrument transformers, and Advanced Control Systems (“ACS”), a provider of utility and automation systems software.
  • After successful investments in UC Synergetic and North American T&D Group, Falfurrias relaunched the electric utility supply chain campaign in 2020.
  • Falfurrias Capital identified Lloyd Yates, former EVP of Duke Energy and President of Duke Energy Carolinas region. Mr. Yates is partnered with FCP as an Industry First executive to identify companies in the power & utility sector

Our Expert

Lloyd Yates

bio

Lloyd Yates has more than 35 years of experience leading businesses in the electric and gas utility industry. Most recently, Mr. Yates served as Executive Vice President of Market Solutions and President of the Carolinas Region at Duke Energy where he led the P&L, strategic direction and performance of two electric utilities. He previously held leadership roles at Progress Energy and Carolina Power and Light and has a broad range of experience covering nuclear & fossil generation, energy delivery, operations, and customer service. In January 2020, Mr. Yates began serving as an advisor to FCP through our Electric Utility Supply Chain industry first campaign. He serves on the boards of Marsh & McLennan Companies, Sonoco, and American Water Works Co.

Our Expert

Lloyd Yates

Active Campaigns

Status
Campaigns
Active
Packaged Foods
Durable Growth Trend:

Shifting consumer preferences

Completed Acquisition: Sauer Brands, Inc., Chicago Custom Foods, and Carolina Foods, LLC
Executive: Mary-Ann Somers

An increased focus on health and wellness, shifts in food purchasing patterns by millennials, and the proliferation of specialty diets are creating opportunities for niche packaged food brands to take market share from industry leaders. At the same time, many national brands suffer from underinvestment in marketing and supply chain management. Falfurrias believes we can leverage proprietary data analytics to identify high-potential regional niche brands as well as "orphaned" national brands embedded in larger consumer product companies, and help grow these brands through strategic investment. Falfurrias is partnering on the Packaged Foods campaign with Mary-Ann Somers, a consumer packaged goods executive that has a strong track recording of growing branded food products in her leadership roles at Hershey and Coca-Cola.

Active
Private Equity Software & Services
Durable Growth Trend:

Private Equity's Growing Focus on Value Creation

Completed Acquisition: Crosslake Technologies

Driven by competition for investments, regulatory oversight, and a growing appreciation for the value of data, private equity investors have increasingly embraced third-party services and software that help identify opportunity and manage risk. During the due diligence phase and in the subsequent investment period, private equity investors are assembling federations of service providers and vendors to drive progress across technology, finance, and operations, as well as broader strategic initiatives. However, these federations are often poorly integrated, and rarely work in stride of one another, costing investors lost opportunity and time. We believe that private equity firms will increasingly turn to vendors with a broader, but better integrated service and product offering, with continuity of data as the foremost consideration.

Active
Fraud & Credit Risk Analytics
Durable Growth Trend:

Growth in third-party services and software that promote better processes and employment of data to manage risk associated with fraud and credit losses

Executive: Chris Lundquist

We expect spend related to fraud and credit risk analytics to increase over the next decade as a result of secular shifts towards e-commerce, growing sophistication of fraudulent schemes, and an increasing number of data protection-related regulations. Collectively, these forces will require more vigilant and dynamic awareness of the risks and costs associated with fraud and credit. The answer to these challenges can be found in better employment of data and the engagement of third-party solutions and services that establish more proactive processes and countermeasures. We are especially focused on sectors that are data intensive and where the incidence and cost of fraud is pronounced, yet where there remains a reliance on manual process or comparatively less innovation has occurred. Falfurrias is partnering with Chris Lundquist, a Verisk executive with significant experience in fraud and credit risk data/analytics, on this campaign.

Active
Technology-Enabled Services for Financial Institutions
Durable Growth Trend:

Technology, Data, and Services to Better Enable Financial Institution Management

Completed Acquisition: Marquis Software, Documatix, Tax Guard

Financial Institutions have historically relied on varying combinations of manual processes, core processor poorly integrated solutions, or costly custom solutions to manage their heavily regulated, data-intensive businesses. A universe of third-party software and services firms have emerged to help these institutions employ the data in their systems and more efficiently address the exigent FI requirements. Accordingly, we expect demand will continue to grow, particularly for providers with a broad range of solutions that deliver modern capability, address regulated processes, or achieve greater efficiency.

Active
Marketing, Media, and Information Services
Durable Growth Trend:

Digital Engagement, Domain Specific Tools & Insights, Content / Thought Leadership, and Related Services

Completed Acquisition: Industry Dive, Ballast Research, and GlynnDevins
Executive: Alexander Jutkowitz

Driven by increased digital engagement, the marketing, media and information services landscape is rapidly evolving and creating significant pain points and additional competition for legacy providers. This pace of change has driven increased outsourcing, an appetite for data-driven tools and services, and a focus on vertical specialization. Therefore, we are attracted to companies that serve vertical niches with industry-specific expertise. We also look for sectors that exhibit complex sales cycles, need for unique data and insights from hard to reach end markets, reoccurring needs and vendor relationships, high ticket sales leading to robust marketing budgets, fragmented vendor communities with consolidation potential, and complex compliance requirements.

Active
Electric Utility Supply Chain
Durable Growth Trend:

Aging Utility Infrastructure, Declining Utility Workforce, Outsourcing Labor Trends, Smart Grid Initiatives, Increased Regulatory Scrutiny

Completed Acquisition: UC Synergetic, North American T&D Group
Executive: Lloyd Yates

US electrical utilities are in the early stages of long-term initiatives to expand, modernize, and improve the reliability of critical transmission and distribution infrastructure. The sector continues to see sustained growth driven by antiquated infrastructure, regulatory requirements, smart grid initiatives, rate-case funding mechanisms, and the need to curtail outage costs. Providers of differentiated services and products to utilities making these infrastructure investments can create substantial barriers to entry through brand equity, reliability, and institutional knowledge that creates “sticky” customer relationships.

Under Development
Food Safety
Durable Growth Trend:

Increasing Focus on Food Safety and Food Quality by Both Consumers and Regulators

In recent years, regulatory scrutiny associated with food safety has become more stringent and the penalties for non-compliance more severe. As a result, brands have shifted from meeting the bare minimum regulatory requirements to staying proactive to avoid outbreaks, expensive recalls, or potential brand disasters. At the same time, consumers have become increasingly focused on food safety, transparency, and nutrition. Increasing globalization and supply chain complexity create additional demands for food safety and traceability solutions. Companies that process, package, and sell food are becoming increasingly reliant on third-party providers of services, software, equipment, and supplies to help mitigate food-related risks and to provide specialized expertise. While demand for food remains stable and positive, we believe differentiated businesses within the food safety ecosystem will achieve growth rates well in excess of that of the underlying food market.

Under Development
Future of Work
Durable Growth Trend:

Contingent labor delivery model, disintermediation of traditional agencies, and trend towards verticalization

The “Future of Work” space has benefited from accelerated adoption trends stemming from the COVID environment. We originally began researching the space prior to COVID in light of contingent labor delivery model tailwinds (i.e., freelancers and independent contractors), ongoing disintermediation of traditional agencies (gig economy preference, access to talent, variable cost and speed), and an overall trend toward increased verticalization and consolidation. COVID has accelerated many of these trends, namely “supply” side increases and corresponding “demand” side accelerate in light of greater remote talent acceptance and need for increasingly variable / agile labor models. We believe the B2B marketplace model has evolved and future winners will be those focused on “owning” specific, skilled verticals and communities. With an understanding that the strength of the community is its core value proposition (not solely the technology platform or the “demand” side offering), we believe there are ways for potential acquisition targets in this space to further disrupt traditional models (agencies, traditional consulting, in house offerings, labor marketplaces) while targeting growth that A) provides greater value to the community (deeper), B) leverages the strength of the community and its services to offer additional, complementary services to the client (wider) in a more enterprise-grade offering, and C) replicates its successes in additional verticals both organically or acquisitively to grow overall market size.

Under Development
Cybersecurity Services
Durable Growth Trend:

Commercial spend on cybersecurity-related services

Despite growing awareness and investment in defensive capabilities to address cybersecurity risk, the number of breaches and the costs associated with them continue to increase. Many businesses – particularly in heavily-regulated industries that maintain or utilize sensitive information – are relying on various combinations of third-party services and tools to confront this dynamic threat, but those solutions may not address industry-specific requirements or infrastructure. We believe cybersecurity service companies with a holistic service offering that is tailored to specific sectors, and where the opportunity to become an industry standard solutions exists, will be the beneficiaries of growing demand for their capabilities.

Under Development
5G Infrastructure
Durable Growth Trend:

Growth in investments related to 5G infrastructure & maintenance

Consumers and businesses eagerly await the arrival of new innovations, such as autonomous vehicles and internet-of-things (IoT), which have the potential to change the shape of work and life, but these innovations are dependent upon the buildout of infrastructure that makes them possible: 5G technology. Week after week, business news reports on the progress of telecommunications firms who are racing to establish an edge over competitors in the race to deliver faster broadband speed to consumers, who consume more data than ever before. A less publicized story is in the installation of enterprise 5G infrastructure, including the networks and antennas that will be found on factory floors and enable the capture of data that will inform decisions about asset maintenance, energy consumption, and efficiency. We believe that the unprecedented investment in 5G technology and the magnitude of the challenge to maintain it will create increasing opportunities for often-regional services firms performing ongoing maintenance of these systems.

Hard Skills Training & Education
Durable Growth Trend:

Increasing regulation and online adoption

Completed Acquisition: American Safety Council and 6 additional add-ons before exiting in 2020

Corporations and consumers are increasingly turning to online providers to meet their education and training objectives, especially in markets that are driven by regulations or government oversight. Falfurrias has identified the potential to build a diversified provider of e-learning solutions for regulatory-driven end markets that could accelerate growth through acquisition, investments in technology, and leveraging sales & marketing infrastructure. In 2014, we acquired American Safety Council, an e-learning provider for driver safety and workplace safety.

Asset-Liability Management Software & Services
Durable Growth Trend:

Technology, data, and services to better enable financial institution management

As a result of historically low interest rates in the last decade, many banks no longer possess or resource robust asset-liability management (ALM) capabilities. ALM refers to the practice of managing interest rate risk, which insures that the expected interest margin is greater than the forecasted liabilities, including the cost of deposits. ALM capabilities are fundamental to how banks and credit unions preserve capital and generate earnings, but effective interest rate risk management is enormously complex. Due to this complexity and in anticipation of rising interest rates in the next decade, most institutions are expected to increasingly rely on third-party consultants or software to support an active ALM program that also fulfills the expectations of regulators.

Visitor & Vendor Management Platform
Durable Growth Trend:

Safety and contingent workforce

Companies and institutions across virtually all end markets increasingly need to pre-qualify, screen and monitor incoming populations driven by regulatory pressure, safety concerns or cost efficiencies. Furthermore, as the U.S. economy increases its reliance on contingent workforces, companies will need to address a growing population that is currently under-monitored but requires the same screening processes as employees. We believe there is an attractive opportunity amid a fragmented universe of vertically-focused vendors today to build a multi-vertical visitor and vendor management platform. We believe the benefits of such a platform would include increased scale, diversification, greater "network effect" among visitors & vendors, and a wealth of data that could lead to value beyond existing service offerings.

Pet Services
Durable Growth Trend:

Humanization of pets and national pet ownership

The U.S. pet industry is the seventh largest retail industry in the U.S. that has grown 5% since 2006. The industry continues to exhibit macro tailwinds as pet ownership continues to grow and owners increasingly "humanize" their pets and treat pet product and service spending as nondiscretionary. Falfurrias believes there are significant opportunities for veterinarian outsourced services with an emphasis on financial services & insurance and other value-added services (marketing services, data & information services, practice management).

Healthcare Revenue Cycle Management
Durable Growth Trend:

Shifting payer mix and increasing provider sophistication

The healthcare industry in the US has undergone significant transformation as a result of changing regulations with the Affordable Care Act. This includes a transitioning coding system and increasing pressures to improve patient services while simultaneously lowering costs. In general, healthcare providers are not well-equipped to manage their revenue cycles internally, and they have experienced lower rates of collection and further expense pressures accordingly. Such market dynamics are leading to increased utilization of outsourced RCM providers to improve cash flow, increase productivity / efficiency, and ensure accurate reimbursement through a higher degree of specialization and expertise.

Healthy, Fast Casual Restaurants
Durable Growth Trend:

Shifting consumer preferences

FCP believes that there is a growing demand for fast casual restaurants serving consumers wanting healthier (both real or perceived) products. Consumer preferences are changing in favor of healthy food, eating out, and dining quickly. Such market dynamics make opportunities in the space attractive on their own, and combined with the firm's Bojangles' experience, Falfurrias believes it can to add value to healthy, convenient restaurants.

Senior Services
Durable Growth Trend:

Senior population and care trends

Completed Acquisition: GlynnDevins

The aging population is driving significant industry tailwinds for the foreseeable future as the first boomers turn 75 in 2021 and half of boomers will be 75+ by 2030. In addition to positive population trends, baby boomers possess nearly 75% of all U.S. wealth and account for 40% of total consumer demand. Our investment in GlynnDevins has also provided us an active lens into the industry to identify niches of interest. Technology is growing in importance to senior living operators due to the increasing acuity levels of residents, staffing pressures and demand for data (both preventative and outcomes based). Similar trends are exhibited to those seniors who prefer aging in their homes. Senior community and home technology environments have historically been underinvested, understaffed and not integrated, creating a fragmented market of vendors and point solutions. We believe technology spend will increase in the coming years across a number of basic needs (emergency call, wander and fall prevention, smart home technologies, sensors and security) as well as more advanced (data and analytics, telehealth, internet of things). The end consumers (community operators as well as senior aging in their homes’) are slowly realizing the need for greater technology to operate their communities, however direction is needed – we believe the market opportunity is pairing services with technology (i.e. managed services) as opposed to just the technology point solution. Ultimately we think there is a credible thesis for consolidating the various senior technology & service providers that currently partner within the existing senior IT setting today.