For this issue of Manager of the Month we’re back in the US, exploring the emerging lower middle market firm, Percheron Capital. Percheron Capital is also being actively discussed on the LP Gateway forums so head there for further peer discussion.
Percheron Capital (“Percheron”) is a North American lower middle‑market private equity firm founded in 2020 by former long-term Golden Gate employees Chris Collins and Chris Lawler. The firm is primarily based out of San Francisco, but with a further office in New York. The firm boasts a sizeable team considering its more emerging nature and has raised and deployed two funds to date. The most recent Fund II (2023) saw a hotly anticipated and oversubscribed process, closing on $1.55 billion at its hard cap.
The name “Percheron” comes from a breed of draft horse originating from western France, part of the former Perche province, from which the breed derives its name.
Strategy
Percheron operates a highly focused strategy of identifying, acquiring and rapidly growing essential services businesses in North America. To date, this has covered non-discretionary tire and automotive services, veterinary services, car washes, HVAC and plumbing, roof repair and fire and safety services. All areas with non-deferrable, recurring offerings that are typically highly resilient across economic cycles.
Target companies are typically high quality, with superior operating models in resilient and fragmented markets and generating long-term growth. This often translates into businesses with $5-10 million in EBITDA, but with revenue growth and margins of 20-30% and strong unit economics. Though, at the same time, still with an emphasis on attractive single digit entry multiples and, most notably, no debt at close. Its strategy typically results in highly concentrated portfolios of around 6-7 assets.
Post acquisition, Percheron implements a rapid buy-and-build program aimed to quickly scale the company within its first few years. The firm leverages its sizeable (25+ member) portfolio support group to drive high velocity M&A (sometimes upwards of 50-60 acquisitions per company) and actively improve post-merger integration at portfolio companies. While rapid growth via M&A remains Percheron’s bread and butter, the firm also supports portfolio company tech-enablement, team build out, office of the CFO and go-to-market acceleration with several dedicated specialists within its operational support group.
Percheron aims for wholly proprietary sourcing, which it has succeeded on to date. The firm operates a proprietary sourcing tech platform, PercheronIQ, that processes and tracks a wide range of data points to facilitate sourcing. Percheron also utilises its in-house sourcing “Access” team of more than 10 members to further scale its sourcing pipeline.
Performance
Percheron remains young, though has seen good traction to date. The firm has seen success with one exit to date in Big Brand Tires, through a $1.6 billion recapitalization alongside Blue Owl Capital, ICONIQ and Warburg Pincus. Percheron has also completed several other investments:
- Alloy Roofing — A national roofing repair and replacement services platform focused on partnering with roofing businesses across the country.
- Blue Cardinal Home Services Group — a multi-regional network of leading home services brands specializing in residential HVAC, plumbing, and electrical services.
- Caliber — An operator of subscription express conveyor car washes.
- Vanterra — A national platform of leading foundation repair and basement waterproofing services businesses across the United States.
- Veritas — A national network of specialty and emergency veterinary hospitals offering progressive care across a broad range of fields such as surgery, oncology, cardiology, neurology, critical care and internal medicine.
Fundraising
The firm’s debut fund I closed in September 2021 at its $770 million hard cap. Percheron then also raised a further oversubscribed $1.55 billion fund II, formerly closing in 2024, having begun its investment period in 2023.
Percheron has begun pre-marketing for Percheron Fund III. The fund size has yet to be announced, but LP Gateway will provide any further updates if necessary. For more information, head to the LP Gateway forum for discussion.
Percheron is represented by Evercore.
https://percheron.com/
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