By Teddy Grant October 29, 2019
RedCloud invests in business services, consumer products, environmentalservices, food & agriculture and value-addeddistribution industries
Invests in companies with Ebitda between$3 million to $10 million
Based in Denver, Colorado
Kevin Mitchell, who formed LariatPartners in 2013 alongside Jay Coughlon, ismoving back to his roots in the independentsponsor world.
Mitchell, who mutually decided with Coughlon to parts ways earlier this year, isreactivating independent sponsor shop RedCloud Capital, which he started in 2004.
RedCloud focuses on entrepreneur-led businesses in the lower middle market, targetingcompanies with Ebitda between $3 million and $10 million. The firm focuses oninvestments in business andenvironmental services, consumer products, value-addeddistribution and food & agriculture sectors.
“I made a decision to go back to focusing on the lower middle market, where RedCloud
[was] always successful,” Mitchell told Buyouts.
Mitchell and Coughlon raised $118 million for Fund I in 2014. Mitchell said Lariat has onemore investment to exit, Ecoserv, an environmental cleaning and waste disposal servicesprovider that has held “preliminary sale discussions.”
Prior to forming Lariat, Mitchell ran RedCloud with Sam Simpson, who formerly worked aschief executive officer of Stewart’s Beverages. Simpson is still on board as a managingdirector, as well asVice President Josh Sartisky, who formerly worked at Lariat.
RedCloud works closely with entrepreneurs to help them scale their businesses, Mitchellsaid.
“Most of these entrepreneurs are very successful in their own way, but they get to a point
where they don’t want to risk all their own capital anymore,” Mitchell said.
“One of the things we bring to the table in every deal is we help them develop more of astrategic selling effort, where we have to develop an external effort or hire salespeople,develop a value proposition and actually go find who would be the ideal customer,” Mitchell said.
RedCloud is confident in its ability to reenter a competitive independent sponsor market,largely in part because of the experience of its team, who have worked with traditionalprivate equity funds and independent sponsors.
“We were an independent sponsor before that terminology ever came into play. I don’tthink that term even existed in 2004,” Mitchell said. “We spent 10 years developing ourbusiness model as an independent sponsor. We’re very entrepreneurial, we have a smallteam, we can make decisions quickly, we’re very adaptable and can move quickly.”