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Darby Creek Capital’s New Focus

Empowering Employees & Viewing Ownership as Stewardship

Darby Creek Capital’s New Focus: Empowering Employees & Viewing Ownership as Stewardship

Darby Creek Capital’s focus is empowering employees, growing wealth for employees and investors, and being good stewards for great businesses.  We will accomplish that goal through a combination of equity investment and Employee Stock Ownership Plan financing to enable employee ownership. Our focus on ownership as stewardship will focus on maintaining a great and profitable business instead of on growth.

Investment Vehicle: Evergreen Fund

Our goal is to partner with employees and to be stewards of the company for the life of the company.  So we will not have a time horizon attached to any of our investments.  We will be raising an Evergreen Fund that focuses on accomplishing our goals in a simple manner. And its fee structure will be fair and simple for our investors.

How Our New Focus Came to Be

Over the past year I have been working as an independent sponsor, looking for the right small company to purchase.  Over that time I’ve spent time talking with a lot of business owners and reflecting on what I bring to the table for a company.  Through that process, and through reading books like Small Giants which are focused on small companies, I found some key points that directed my change in focus:

  1. Companies don’t need to grow to be successful.
  2. Employees are the heart of every successful company.
  3. The best companies have a deeper mission than just making money, but they still do make a profit.
  4. My value to a company is the respect I have for what the owners have built.

After thinking about these points I changed my focus from finding single deals as an independent sponsor to raising an evergreen investment fund. An evergreen investment fund is a fund that has no time horizon. So the goal is to invest in good companies at the right price and hold the companies forever.  If you do that then you don’t need to grow the business to generate your return, you just need to maintain what is special about the business and its profits.

I also saw that what is special about a business usually revolves around a unique employee culture and set of employees. So why shouldn’t they get to benefit from the deal alongside our investors and the sellers? That is what led to including Employee Stock Ownership Plans (ESOPs) as a core part of every deal.  By loaning funds to the ESOPs, and investing in the equity with them, we can generate a return for our investors and provide an opportunity for employees to generate wealth.

 

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