Since its founding in 2014, Garnett Station Partners (GSP) has compounded at 33%[1]. The firm invests in the trillion-dollar franchise and consumer services industries and currently manages $2.3 billion. Matt Perelman and Alex Sloane started GSP as 26-year-olds, when they bought 23 Burger King restaurants. Over the past decade, they have made 26 other multi-unit investments, buying gyms, funeral homes, car washes, pet care services, and restaurant chains.
Their firm is first quartile or better for net MOIC, IRR, and DPI against its peers[2], but the stat GSP’s founders are most proud of, Matt especially, is its loss ratio: sub 0.5%[3]. GSP has lost money only once, in its second platform company, MAACO, in 2015.
“I think they’re the next generation,” legendary credit investor Marc Lasry said in a recent interview.
Matt and Alex were fresh out of private equity, in the middle of an MBA at Harvard Business School, when they inadvertently started GSP by buying a Burger King franchise managed out of Garnett Street train station in Henderson, North Carolina. They wanted to buy a Quick Service Restaurant (QSR) for three reasons:
- Trillion dollar TAM. Franchising is a huge part of the US economy. The wealthiest person in most towns is often the McDonald’s franchisee, the funeral director, the hotel owner, the local beer distributor, or the Ford dealer[4].
- Attractive supply/demand mismatch. There were 150,000 tier-one fast food franchises in the US[5], many owned by ‘mom and pops’ who were creeping up on retirement age. But the deal sizes were too small for institutional capital and franchisors have strict rules on who can become a franchisee, leaving a small pool of qualified buyers.
- Margin expansion opportunity. The industry was mature, growing around 2% a year, but small operators had lower margins than larger, multi-unit franchise owners, suggesting there were opportunities in the middle of the P&L to make a difference.
The MBA students planned to buy a small franchise for 3–6x EBITDA, improve it, use cash flow to bolt on additional units and sell the larger, consolidated franchise to an institutional private equity firm at 6–7x EBITDA. Matt and Alex had no designs to build a firm. They wanted to triple their money and return to their jobs at L Catterton and Apollo.
Three months into their MBA, they bid for five KFC restaurants in Vermont, but the day before the deal closed, KFC rejected them. They didn’t meet any of the franchisee requirements. “They said we had no money, no experience, and were too young,” Matt remembers. “Other than that, they loved us.”
Rejections from other tier-one franchisors followed until they reached out to Burger King’s owner, Restaurant Brands International, which was working through a turnaround. Alex Macedo, Head of Burger King North America, saw potential in the young investors and needed new franchisees in his system.
When I first met Matt and Alex, I had this feeling that they had already won the game before it had started. They were so well prepared and had such a solid plan, I knew they would do well. Still, it turned out better than I thought.
–Alex Macedo, Head of Burger King North America
Burger King gave Matt and Alex an opportunity to acquire a distressed Burger King franchise in North Carolina. They spent the summer of business school living with Ray Meeks, the franchisee, doing diligence. When class began again in September 2014, they owned his company.
The business had no equity value from Ray’s perspective. It needed $8 million to remodel stores and would incur losses as soon as it began closing restaurants for renovations. Matt and Alex agreed to acquire it for no cash consideration, taking on its lease and remodeling obligations.
They unlocked cash via the acquired real estate, renovated restaurants, and incentivized employees to follow Burger King’s best practices. Within a year, Matt and Alex completed two follow-on acquisitions and Burger King began to direct more deals their way.
“We quickly realized that there was a much bigger opportunity where we could take the playbook we were developing and apply it to a much broader set of businesses. We built an investment firm to capture that opportunity,” Alex said.
In 2015, they created a Special Purpose Vehicle (SPV) and bought a car collision repair franchise. The following year, they raised two more SPVs to acquire a funeral home business and baby product distributor. By the end of 2019, they had raised their first fund and deployed their Burger King playbook into a further seven multi-unit business concepts.
The same year, they sold the Burger King franchise to a listed business, Carrols Restaurant Group.
In five years, they had grown the Garnett Street franchise from 23 locations to 165 Burger Kings and 55 Popeyes restaurants across 23 states.
Matt and Alex took board seats plus an ownership stake in Carrols. GSP exited the business for good in January 2024 when Burger King bought Carrols for $1.0 billion.
Matt and Alex’s experience buying, operating, and growing Burger King restaurants established the playbook for everything to come. To date, GSP has raised $1.9 billion across four funds and bought 27 companies. The firm has sold nine businesses at a weighted average Net IRR of nearly 40% and is now recognized as a premier investor in the franchise and consumer services world.
An investing marriage
For the past 11 years, Matt and Alex have eaten three meals a day together, four days a week. On Fridays, it’s just breakfast and lunch. Dinner is for family. Virtually all of their money, every dollar they’ve made, much to the chagrin of their wives, is invested in GSP’s funds.
They are a formidable partnership that was cemented in friendship when they were children. You cannot speak to one of them. Try and you will quickly be on an email chain or group message with both of them. They sit next to each other in the office, take every meeting together, and always travel together.
Alex concedes, “It’s not the most efficient working style in the world but it’s a big part of our success.”
They have built GSP into a sizable firm, in not only assets and businesses, but also people. They have 25 investment professionals alongside a bench of 12 operating partners, but the investment committee is small. It’s Matt and Alex. Any decision must be unanimous, whether they’re doing a deal, hiring, or traveling. They don’t do anything unless they’re both in agreement.
“Our partnership is really special. We value it as much as anything in the world, and it’s become part of our firm’s culture. We fight all the time but we always end up on the same page, and we always have fun. Even in the hard days, at least we’re going through it together,” Alex said. Jordan Garay, their first hire, explained the impact of their relationship on the firm’s culture.
“It’s very GSP for everyone to have an opposite view. We discuss, debate, then commit. Everyone commits. That comes from Matt and Alex. You’re never going to one person and asking their opinion. The fact there’s two of them creates a natural discussion, which leads to better outcomes.”
The ultimate test to their professional marriage came during the pandemic. “On Sunday March 13, 2020, when Covid hit, we may have had the scariest portfolio in the history of private equity,” Matt recalled.
GSP’s entire portfolio was 100% foot-traffic-dependent. They use leverage conservatively but when your top line starts with a zero, any dollar borrowed is one too many. Every day, Matt and Alex walked to the office, spoke with their CEOs and LPs, read government updates, and watched movies to pass the time while waiting for another call to come in.
They didn’t lose a single business, nor did they have to put in a dollar of rescue capital. No covenants were breached. And together, they kept each other sane. “There is zero percent chance either of us could do this by ourselves. Some people can. I find that incredible. To be able to withstand the lows by yourself and fight back to the highs. I couldn’t do it,” Matt remarked.
They are great fun to be around…And they have superb finance IQ—I mean, top quality. Usually, you find one or the other. Rarely do you find them together.
–Royce Yudkoff, Professor at Harvard and Co-founder of ABRY Partners
Rigor and likeability
When asked for the secret to Matt and Alex’s success, their Harvard Professor Royce Yudkoff, who co-founded private equity firm ABRY Partners and wrote the book on entrepreneurship through acquisition, explained:
“They combine two skills rarely found together in private equity. They are great fun to be around. They draw people in by being affable, engaging, and curious; we can call that great salesmanship in the field. And they have superb finance IQ— I mean, top quality. Usually, you find one or the other. Rarely do you find them together.”
Tony Lamb, a Kentucky-based founder of the largest food truck business in the US, spoke with hundreds of PE firms as he considered selling a stake in his business, Kona Ice.
He likened all the investors he met to vacuum cleaner salesmen—his former vocation. The difference was that the PE folks wore suits. They all asked the same questions about EBITDA and reducing expenses, and said they could bring capital to the business.
Matt and Alex were different. “Our first phone call was phenomenal,” Tony recalls. They asked if they could fly to Kentucky. They were there the next day. They spent the meeting talking about Tony’s family and his dreams for Kona Ice. They encouraged him to spend more, not less. Tony’s 82-year-old father was there. “He’s a great judge of character and he liked them. I put a lot of stock in that, and I felt the same way. I liked the guys immediately, even though they ate fried chicken with a knife and fork,” Tony said.
After months of discussion and plenty of air miles, Kona Ice had a new partner in GSP. Since the deal in 2019, the team has implemented GSP’s playbook and quadrupled the company’s value.
As Tony’s experience shows, being fun to be around counts for a lot. The other half of the equation, as Alex explained, is rigor.
“We’re very clear on what it means to partner with us. It’s intense. As part of our diligence, the founders need to understand that. It’s not all going for dinners and having a good time. That’s important. But we’re really intense. We’re very rigorous. Life is going to change.”
Matt has been known to scare his own team when his smile turns into a scowl over a mistake deep on page 77 of a memo. He has a photographic memory. Even Alex admits it’s a sight to behold.
Attention to detail matters because every point on the P&L counts when you invest in 15–20% EBITDA businesses. Take labor as an example. Every new employee in GSP’s multi-unit businesses costs between $3,000 and $5,000 to train. When you own thousands of multi-unit locations, where the average industry turnover can be as high as 130%, bringing that number closer to 100% through technology, data, and incentives can make you big money.
Network effects
In the sectors they invest in, Matt and Alex have met virtually every franchisee and franchisor in the US. They have operated 3,000 locations across the country and have recruited a world-class team.
Alex Macedo, who was President of Burger King North America, is their Lead Operating Partner. The former Head of Technology at Domino’s Pizza—sometimes called the Google of franchising—is another operating partner. So is Fernando Machado, who was CMO at both Activision Blizzard and Restaurant Brands International. Royce Yudkoff, their Harvard Professor, is a Senior Advisor. Even their bosses at Apollo and L Catterton remain mentors.
Their network creates a distinct advantage. WOW Carwash, a 12-unit business in Las Vegas owned by GSP, wanted to sponsor the local NHL hockey team. Fernando Machado helped them work through strategy and pricing to secure sponsorship.
When the firm bought Woof Gang Bakery & Grooming, a 137-location pet services franchisor, it installed a management team that was used to running multibillion-dollar public businesses. Alex Macedo became Woof Gang’s Chairman.
In 2021, the firm saw an opportunity to build a multi-unit business in the auto collision repair industry. GSP used its contacts to hire a CEO who had already built a 20-unit system in the same market and location. He was in place before GSP bought its first shop.
Matt and Alex have a term for this: overmatch. They borrowed it from the military, and it roughly translates to being stronger or better equipped than the opposition going into a battle. Colloquially, they talk about bringing bazookas to knife fights by arming their portfolio companies with leaders their competitors can’t attract.
You can trace the initiative back to their second investment in a business called MAACO, a collision repair and car painting company. After their early success with Burger King, Matt and Alex were offered a deal to buy MAACO’s LA franchisee, which had 16 shops in 2015.
“We couldn’t have made more poor decisions if we tried. It was very humbling to get beaten up, and quickly. But in some ways, it was the best thing that ever happened to us,” Alex said.
In retrospect, they used too much leverage up front and put young people with little experience in positions of power. At the time, GSP consisted of Matt, Alex, and Jordan Garay. They were all in their twenties. To salvage the investment, they brought in Howard Norowitz, a consultant with 25 years of distressed investing experience. He helped them identify what went wrong and restructured the business.
They recovered 40 cents on their initial dollar, but more importantly, they convinced Howard to join them full-time as employee number four. He has become known as GSP’s left tackle—around to make sure nothing like MAACO happens again. And it hasn’t. It’s the first and last time they’ve lost money on a deal. It’s also the last time they’ve gone into a deal understrength.
“We invest in simple businesses, but they are difficult to run. Experience really matters. Today, we only hire people with decades of experience building value in exactly what we’re trying to do,” Alex noted.
“We are not power law people”
The best 4% of listed companies explain the entire net gain for the US stock market since 1926[6]. Similarly, Venture Capital is fueled by outliers, not averages. Power laws explain a lot of investment success. To GSP, however, investing is a game of reps.
“We are not power law people. We’re driven by consistency. If you look at our returns, it’s the opposite of a power law. It’s like the Ted Williams strike zone in terms of compactness. A lot of 2s, 3s, 4s, and 5s. No zeros and no 12s,” Matt said.
We’re driven by consistency.
–Matt Perelman, Garnett Station Partners
In November 2023, GSP sold VIVE Collision to a leading middle-market sponsor for $275 million. The firm founded the auto collision repair business in 2021, achieving its target investment return in two and a half years. It is an archetypal GSP investment. No flashy power law returns. Just steady, healthy growth.
The industry ticks all the team’s boxes. Cars are among the most expensive assets people own. They use them often, and they are aging. The average US car is 12.5 years old[7]. They need fixing on a regular basis, and in the event of a collision, the cost is borne by an insurance company. But the insurer is not the decision maker, meaning repair shops compete on service rather than price.
It is a fragmented market. 40,000 collision shops operate in the US[8] and the ninth largest multi-unit player only has 13 units[9]. Consolidated businesses trade at higher multiples because of the favorable macro tailwinds, as well as the cost and revenue synergies you can create. However, GSP could not find a multi-unit collision repair business to buy and grow.
So, the team built one from scratch. They committed $50 million of capital and hired Vartan Jerian Jr. to build a platform in the Northeast. He spent 25 years as COO of repair business H&V Collision, which was the first large, multi-unit acquisition in the Northeast when it was sold to a national player in 2018. GSP also brought in two younger financiers with eight years of M&A experience as co-founders. Then, it set the new team a simple task. Do what you’ve already done.
“We’re not trying to find a needle in a haystack,” Alex said of their investment process. They look for recession-resilient industries where consolidations have been done before. They hire operators who have done the consolidation before. And they sell when others might continue to build.
Over two-and-a-half years, GSP’s team built VIVE Collision from nothing to 37 locations across seven states. They paid less than 5x EBITDA for the units they bought and the consolidated business was doing $20 million in EBITDA when they sold it for a double-digit multiple in 2023. The business was performing well, but GSP had executed its playbook, and it was time to repeat the process somewhere else.
The GSP Playbook
As much as any investor can, Matt and Alex have tried to refine their craft into a science. It is codified in the GSP Playbook. This is how the firm creates value and they are not shy about sharing their secrets. Alpha is not in the idea.
“Of course, everyone is going to make a gazillion dollars in some Excel model, but it’s really hard to go do this stuff in the real world. These are operating businesses. They are hard to run.”
Matt and Alex lead the firm’s sourcing efforts. They have built a network and reputation that enables them to see almost every deal in their sector.
They look for markets that are highly fragmented, supported by tailwinds that will last the duration of their holding period (as well as that of the next buyer), and with industrial logic for the consolidation. More isn’t more here; more needs to be better.
MAACO tripped them up in part because no one had consolidated those businesses before, so there was no technology available to help manage the units more efficiently. These days, they won’t invest in a business with no history of consolidation.
The businesses themselves must be high quality. The strongest predictors of quality are long-tenured general managers, same-store sales growth (driven by traffic not price), and consistency of past performance. They like to partner with an active founder or owner, and the firm must have a best-in-class Net Promoter Score[10].
“Everything we’ve invested in over the last few years has had the highest average unit volume in its category. Every concept has had at least 20% store-level margins, which is top decile for multi-unit businesses. They all had sub-three-year paybacks on new builds, and they were number one in their category for consumers’ intent to return,” Matt said.
If the setup is right, they will price the deal to target a 3x MOIC in five years. Since inception, that’s meant paying single-digit EBITDA multiples vs. a peer group that often buys for 10–12x. Purchase price matters because it immediately impacts your cash flow yield. If you buy for 5.5x, your day-one yield is 18% (1 divided by 5.5), so you’re positioned to achieve a healthy return right away.
“On top of that,” Matt explained, “every deal should have at least four ways to win. When we’re underwriting a deal, we always ask: what do we need to believe to make 3x our money? How many ‘ways to win’ do we need to hit? We’re not that smart so we need them to be attainable.”
One way to win could be a tech implementation that boosts same-store sales growth from 2% to 4%. Another is the acquisition roadmap; can they keep buying units for 3–5x EBITDA and integrate them?
Each way to win represents a ~500 basis point return. As an illustration, if one hits, their expected return increases from 18% to 23%. If two hit, it goes from 23% to 28%. When you compound 28% over five years, you multiply your investment by 3.4 times.
1. Grow same-store sales. Increase sales by 4–5% through technology and experienced management
2. Improve the middle of the P&L. Focus on COGS, labor and rent, to enhance margins by 2%
3. Develop and acquire new units. Redeploy cash flows at 20–40% ROIC by building or buying locations
4. Realize multiple expansions. Create a diversified, professionally managed business that commands a higher price
…if one [win] hits, their expected return increases from 18% to 23%. If two hit, it goes from 23% to 28%. When you compound 28% over five years, you multiply your investment by 3.4 times.
They don’t rely on multiple expansion but, so far, they have beaten their benchmark of 3x in five years because they have consistently sold at a higher multiple than they’ve bought, which fits with their consolidation thesis. They make the businesses they’re buying more valuable by diversifying cash flow streams, adding talented management teams, and installing effective technology solutions, among other initiatives.
Leverage and integration are the two biggest sources of failure in this style of investing. The median private equity firm buys with 4x leverage. GSP starts with 100% equity on average, and targets a 3x debt service coverage ratio when it adds debt later in the build-up. Virtually all of its debt is fixed via interest rate caps and swaps.
When a deal closes, the team strengthens the balance sheet. They want their firms to have enough liquidity to be aggressive in a downturn but they’re also intent on changing their owners’ mindsets. Most small business owners are concerned with how much cash they have at the bank. GSP frees them up to worry about how many +25% IRR projects they can find.
GSP surrounds its businesses with operating partners. Its partners helped Kona Ice build a software tool and fleet of coffee trucks during the pandemic, both of which are now valuable assets. Without those partners, Tony admits he would have been looking through the Yellow Pages for coffee companies and simply wouldn’t have spent money on software—“I thought it was a black hole”.
In every deal, GSP upgrades the finance function. Building out a back-office team with experience and a track record of navigating cycles is crucial, especially to ensure smooth integration. The goal is to increase annual same-store sales by 4–5% and store-level margins by 2%. The team starts by fixing the middle of the P&L where three important costs sit: people, COGS, and rent. Technology helps, as Matt explained.
“Staffing levels are influenced by weather, traffic, and factors as localized as whether the local high school football team is playing. That matrix is impossible to solve by hand, but it’s easy with technology to pinpoint moments in a day to ramp up or reduce labor.”
Technology is often recommended by the franchisor, but franchisees are put off by the multimillion-dollar sticker price. Investment in technology is frequently the best-performing dollars that GSP spends.
In 2022, GSP acquired Woof Gang Bakery & Grooming, the largest pet services franchisor in the US, from its founder. At the time, the business was operating 137 locations without a point-of-sale system, making it virtually impossible to manage the business effectively. The franchisor had no visibility into how much each franchisee increased prices by or which products sold best, for example. The only way to know if they were receiving the right amount of royalty was by asking franchisees to take pictures of receipts on their phones. That works when your business is small, or the founder knows everyone in the system, but it’s not sustainable when growth is the goal.
GSP put together a management team most public businesses would be proud of. Matt and Alex brought in Ricardo Azevedo, former Regional President of Tim Hortons US, as CEO and Alex Macedo as Chairman. They installed a new CFO, CMO, and COO. Then they supplemented those directors with a board that included Dennis Maloney, Domino’s former tech leader, Tony Lamb, CEO of Kona Ice, and Eric Hirschhorn, Founder of Frida Baby.
The team immediately added a point-of-sale system and increased G&A costs from $2 million to $8 million so that they could grow the business from 137 locations to 1,000. In many instances, like this one, they initially add costs, rather than reduce them, to grow the top line and take advantage of operating leverage.
GSP relies on data to manage its portfolio. Every morning, the team receives daily sales reports on thousands of locations across the country. “It quite literally determines our mood for the entire day,” Matt said. On a weekly basis, they get flash P&Ls, which boil down to revenue, COGS, and labor. With those metrics, they know if the system is performing well.
They rarely buy businesses with real estate assets upfront because it tends to be an efficient market with sophisticated sellers, but they often renegotiate lease terms. Rent is not a fixed expense, as many operators believe. If franchises come with real estate, they tend to separate the physical asset from the operating company in a sale-leaseback and monetize part of their value.
Once the stores are operating in the GSP way, they look to redeploy cash flows at 20–40% return on capital through bolt-on M&A and unit development.
They’ll also look to recapitalize the business with leverage. This helps to de-risk their investment while adding capital efficiency moving forward. Now the business has been professionalized and scaled to ~$10 million of cash flow, it’s better able to cope with leverage.
The final step in the playbook is to sell. They call it ‘ringing the bell.’ DPI, Distributions to Paid in Capital, or returning capital to investors, is a critical part of GSP’s model. They are not power law people. The goal is to improve, grow, and sell to institutional buyers.
Buy in order to sell
Baby boomers and small business owners are expected to sell or bequeath $10 trillion of business value over the next two decades. On the other side, private equity is looking to spend $6 trillion in this market. GSP is building a bridge between baby boomers and Wall Street. The firm has been the first institutional capital into 25 of the 27 businesses it’s bought so far.
At the first board meeting, GSP writes a CIM (Confidential Information Memorandum). Effectively, the team writes the sale memo they want investment banks to show PE firms and strategic buyers three to five years later.
It’s not for show, as Alex said. “Every single decision made during our holding period refers back to that document. We constantly think about the sale. We’re very clear with our prospective partners during the sourcing process that this is the goal. Investors give us a dollar. Our aim is to give them three back.”
In one of our conversations, they said some variant of ‘sell’ 33 times. That is not normal. Matt and Alex embrace the idea that they are a build-to-suit firm. They understand what private equity wants and, with thousands of reps operating multi-unit businesses, they know how to create what PE wants.
“Typically, we try to scale these consolidations up to $15–40 million of free cash flow. That’s where we find a sweet spot because there is a large market of potential buyers. You have the whole middle market and some of the larger PE players who are looking to start a consolidation and grow it dramatically. They want consistency, professionalization, and scale across multiple markets and that’s what we give them,” Matt said.
The sale is not always the end, though. GSP often rolls over equity so it has a small stake in the future of the business it helped create.
Make your firm an expression of yourself
On the wall of GSP’s ‘Kibitz Room’, which is filled with books and memorabilia dedicated to American capitalism and finance history, is a photo of Matt with his arm around Steve Kislow, CEO of Firebirds Wood Fired Grill. Steve is wearing a shirt that says, ‘Best Decision EVER.’ Matt has a brown paper bag packed with Firebirds’ steak in his left hand. Alex is behind the camera.
The image is from the day GSP invested $110 million to acquire 66% of Firebirds and partner with Steve. Matt and Alex had wall-to-wall meetings that day but wanted to celebrate the deal with Steve in person. They canceled their plans and flew to Charlotte for a quick hug, picture, pick-up delivery, and a celebratory shot at the Firebirds HQ—before getting back to the airport to catch the next flight home.
“It’s a big part of our culture,” Matt said of the picture. Whenever a deal is struck or a new unit opens at any of their companies (a weekly occurrence), someone from GSP is there. “We don’t just email a DocuSign contract and say, ‘well done’. We get on the plane, give them a hug, and toast the achievement.”
Outside the Kibitz Room, hanging on another wall, is a board that lists GSP’s values. One of them reads: ‘Get on the plane—in person is everything’.
Matt and Alex’s greatest fear is that GSP will lose the culture that has made it successful. As a result, they make every effort to instill what matters most to them throughout the organization. Rich Reuter and Max Hoberman moved to Mandeville, Louisiana, to work on Fat Tuesday in the same way Matt and Alex relocated to North Carolina to buy that first Burger King franchise. Brett Bakies made a similar move to Orlando for Woof Gang Bakery.
Howard Norowitz explained how they got that level of buy-in. “Matt and Alex go out of their way to engage everybody. They’re great at building morale. They instill a tangible sense that this isn’t just a job. Everyone is heard. There truly is an entrepreneurial spirit here. We don’t know how to do everything. We haven’t been around for 30 years. We try stuff, figure out what works, and do more of that.”
It is no coincidence their first value states: ‘At GSP, you are an owner. Act like one at all times. If this is your job, you won’t last long.’ That responsibility is double-edged. It means ‘Sunday is a work day’ (another of their values) but also that achievements are shared.
“We do a really good job of celebrating wins. That’s everyone, not just Matt and Alex. We also get together a lot. Last Friday, the whole firm played basketball and dodgeball together. Everyone had custom uniforms with nicknames Matt thought were hilarious but left most of us confused,” Jordan Garay said.
In GSP’s office that overlooks Union Square Park in New York, employees are surrounded by memorabilia that matters to the firm’s co-founders. There’s a Garnett Street Station sign, a Fat Tuesday’s sign, and a Popeyes Kitchen sign on various walls. Pictures of Matt and Alex with all their mentors clutter shelves across the office. American flags adorn everything, including their swag and website. There’s even a poster that Michael Milken made in 1985 and sent them.
Everyone in the firm must read The Predator’s Ball, which chronicles the early days of what is today known as the private equity industry. Matt and Alex re-read it every January because “It’s inspiring. There are people in that book who built some of the most successful companies on Earth and they were even less experienced than we were with less of a road-map. We stand on the shoulders of those giants.”
The rest of the Kibitz Room, which is Yiddish for an informal place to chat, is stacked with first editions of every finance book written from 1979 to 2024. Most young people don’t know their financial cycles well enough, Matt and Alex say. To work at GSP, you need to know about 2001, the early ‘90s, ‘87, and the 15 years leading up to 1981. It gives you a better understanding of capital structure, valuation, and liquidity, all of which help guard against the number one rule at GSP, “Don’t lose money.”
GSP 2.0
Howard Norowitz encapsulates the spirit of GSP better than most. After helping Matt and Alex with their investment in MAACO, he had offers from big firms but chose to join GSP full-time.
“It was going to be an adventure. They were young and ambitious, and they were trying to build something new. We’ve stubbed our toe at times but we learn from our mistakes and it’s been the adventure I was hoping for, and then some. I love working with them. I love what we do. We were $300 million when I joined. Four of us in a couple of rooms. We’re over 40 people now with $2.3 billion under management and just about to move into a bigger office in midtown. The adventure is not over.”
11 years in, Matt and Alex have built a leading firm in a trillion-dollar market. To become a great firm and fulfill Marc Lasry’s premonition, they will need to turn a wonderful start into a scaled business. Their advisor and mentor, Royce Yudkoff, put the challenge this way.
“GSP is like a consumer electronics company. The team can’t just focus on what works today. Those areas will reach their sell-by date. They must constantly work on R&D. When you’re small, that can be done on nights and weekends, but as the portfolio gets larger, your best people need to spend a meaningful chunk of their time looking for new areas to invest in. That’s painful and seems unproductive because the energy is always around new deals. Scaling that effort with the growth of their portfolio is critical.”
The repeat game never ends.
Performance figures included in this presentation were obtained by Colossus from available data concerning GSP and were not prepared by GSP and/or Colossus for purposes of this publication. Actual gross and net returns for investment vehicles managed by GSP will vary from the figures referenced in this publication, and past performance is not a guarantee of future performance. Any such performance figures are qualified in their entirety by performance data maintained by GSP, which is available upon request.