For this issue of Manager of the Month we profile Houston-based GP The Sterling Group, a focused middle-market buyout firm with a four-decade track record of building businesses in the industrial sector.
GP Overview –
Status: Established | Geography: North America | Market Cap: Mid & Lower Mid Cap | Sectors: Industrials
The Sterling Group (“Sterling”) is a Houston, Texas-based private equity firm founded in 1982 by Gordon Cain and Frank Hevrdejs. Cain, a chemicals industry operator turned dealmaker, drew on decades of hands-on plant experience while Hevrdejs brought financial discipline. Together they established a firm focused on owning industrial businesses with close operational involvement, not financial engineering from a desk.
More than four decades later, the firm has raised approximately $9 billion in assets under management, sponsored the buyout of 77 platform companies representing over $27 billion in aggregate transaction value, and remained singularly focused on basic manufacturing, distribution and industrial services.
Alongside its PE strategy (which is the focus here today), the firm also maintains a Private Credit strategy (the Sterling Credit Fund), which provides mezzanine and second lien financing both to Sterling’s own deals and to third-party sponsors.
Sterling is perhaps best known for two things: its early founding (placing it among the oldest independent US middle-market PE firms still operating), and its proprietary Seven Levers℠ methodology: a codified value creation framework. The firm has consistently ranked among the top performing middle-market buyout shops globally, placing at #13 in the 2025 HEC Paris–Dow Jones Middle Market Buyout Performance Ranking (the top 2% of 695 firms surveyed).
Strategy
Sterling operates two private equity strategies that together cover the full spread of the industrial middle market. The flagship Middle Market Fund (currently investing out of Fund VI, a $3.6bn vehicle closed in April 2024) targets transaction sizes between $100 million and $1 billion, with equity cheques ranging from $150 million to $350 million per deal. Typical target EBITDA values at entry sit in the $25 million to $100 million range.
The Foundation Fund, launched in 2023 with a reported $640m, addresses the lower middle market opportunity set underneath the flagship fund. The Foundation Fund is led by Partner Lucas Cutler, who joined in 2021 from CenterOak Partners specifically to build out the strategy, and is based out of Sterling’s Dallas office unlike the flagship Houston office.
What unifies both vehicles is sector focus and operational approach. Sterling invests exclusively in the industrial sector, manufacturing, distribution, industrial services and business services, across a wide range of end markets including aviation, packaging, building products, outdoor power equipment, fencing, landscaping and residential/commercial services. Target firms exhibit typical PE profiles including high barriers to entry, strong demand in fragmented industries and high free cash flow.
The firm’s value creation approach is codified under the Seven Levers℠ methodology, which Sterling describes as the areas in which it consistently and materially impacts businesses. The seven levers are: Human Capital, Strategy, Execution, Commercial, Operations, Technology, and M&A. Each lever maps to a dedicated operating leader or committee within the firm, and portfolio companies work through each lever systematically from the first 100 days onward.
A distinctive feature of the firm, dating back to founder Gordon Cain, is Sterling’s practice of broad equity sharing with portfolio company employees. Cain wrote a book titled “Everybody Wins!” detailing the philosophy, and Sterling has continued the practice as a core tenet. Most portfolio company employees have meaningful equity or options participation; a design Sterling views as central to forming true partnerships to driving the pace of operational change.
Buy-and-build is also a recurring feature, with the firm actively combining platforms at formation (e.g., DexKo was created by merging Dexter Axle and AL-KO; Highline Aftermarket was formed through the simultaneous acquisition of two legacy businesses; Construction Supply Group was built from Brock White, Border and Stetson).
Team and Operational Infrastructure
Sterling today has approximately 85 professionals across two offices (Houston and Dallas). The senior leadership group is notable for continuity with the firm’s core partner group, including Greg Elliott, Brian Henry, Scott MacLaren, Brad Staller, Kent Wallace, Jim Apple, Franny Jones and Jud Morrison, having a collective 100-plus years working together at Sterling and an average of 17 years per partner.
The investment team for the flagship Middle Market Fund is led by partners Greg Elliott (first joined 1994, rejoined 2008 after building Trajen and Encore Aviation as a CEO), Brian Henry (joined 2008, member of the Investment Committee, co-leader of the Improvement Committee), Scott MacLaren (joined 2014 from BCG, West Point graduate and former Army Ranger officer), Brad Staller (Partner since 2008, oversees the Human Capital committee), Kent Wallace (joined 2001), and more recently John Griffin (joined 2018 from McKinsey, with prior PE experience at Madison Dearborn). The Foundation Fund is led by Lucas Cutler, supported by Managing Directors Luke Bateman (ex-Insight Equity) and Jonathan Jackson (ex-Sun Capital Partners).
Beyond the investment team, the defining structural feature of Sterling is its Portfolio Resource Group, a sizeable in-house team of operators and specialists aligned to each of the Seven Levers and dedicated to working directly alongside portfolio company management.
Rounding out the senior ranks, Franny Jones (joined 2010 from Morgan Stanley) leads investor relations and has led the firm through seven successful fund raises, and Jim Apple (joined 2013) leads business development and sourcing, with Jared North covering Northeast sourcing out of New York.
A somewhat unusual Sterling feature is the VP embedment program, under which Vice Presidents spend a full year embedded inside a portfolio company in a senior management position reporting directly to the CEO. This is a distinctive talent development approach in the industry and reinforces the “investor-operator” identity Sterling has cultivated.
Portfolio and Performance
Sterling’s active portfolio consists of approximately 20 current platform investments across the Middle Market and Foundation Fund strategies, with a portfolio spread that reflects the breadth of the industrial economy: from outdoor power equipment to PET recycling, aviation services to commercial landscaping.
Select investments include:
- Precision Concepts International — A Huntersville, NC-based manufacturer of specialty rigid packaging for the personal care, household and food & beverage sectors. Acquired in July 2025.
- Healthcare Linen Services Group — A regional provider of outsourced linen laundry and management services to US healthcare institutions, acquired in early 2026 and held in Fund VI.
- PrimeFlight Aviation Services — A global aviation services provider (commercial aviation, general/business aviation, cargo), held in Fund V. PrimeFlight recently acquired GAT (Peachtree City, Georgia), adding ~6,000 employees across nearly 70 airports in North America and significantly expanding the platform’s ground and cargo handling footprint.
- White Cap (Construction Supply Group) — A national distributor of construction materials for professional concrete and masonry contractors, built through the combination of Brock White, Border and Stetson. Operates over 130 branches with 2,000 employees across the US and Canada. Held in Fund V.
- Fencing Supply Group — Formed in 2021 through the acquisition of Merchants Metals (distributor with 35 branches and 4 manufacturing facilities across 28 states) and since built out through further add-on acquisitions.
- Bad Boy Mowers — A Batesville, Arkansas-based manufacturer of high-performance branded zero-turn radius lawn mowers and outdoor power equipment, dual-held in Funds IV and V.
- Ergotron — A St. Paul, Minnesota-based designer and manufacturer of ergonomic products for healthcare, workspace, industrial, and education end markets. Held in Fund V.
- Foundation Fund platforms — The lower middle market vehicle has built out a set of platforms in founder- and family-owned service businesses, including Premier Tire & Service, Overhead Garage Door, Russell Landscape Group, Compost360, and most recently American Glass Services.
On the exits side, Sterling has had a notable run of monetisation activity. Headline realisations in recent years include the $1.3 billion sale of Artisan Design Group to Lowe’s Companies, announced April 2025.
Fundraising
Sterling operated as a fundless sponsor for much of its early history, completing deal-by-deal investments before transitioning to a conventional fund model. Each successive flagship fund has been larger than the last: Fund IV closed at approximately $1.3bn; Fund V closed in 2020 with $2.1bn of commitments; and Fund VI closed in 2024 (vintage 2025) at its $3.6 billion hard cap, significantly oversubscribed and well above the $2.75 billion target. The majority of Fund VI’s capital came from returning investors, an unusually high LP re-up signal, supplemented by a group of new investors that expanded the firm’s LP base across the US, Europe, the Middle East and Asia.
Sterling’s Foundation Fund launched 2023. Though not actively in the market today, Sterling may be back with its Foundation Fund in the near-term future.
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