John Larkin joined Clarendon Group as Operating Partner in May of this year with prior experience at Stifel Financial Corp. as Managing Director of the Transportation and Logistics Investment Banking Team. With a seasoned career in the industry, Clarendon’s acquisition of Larkin looks to be of great value for the private equity firm.
Larkin discussed how Clarendon operates with FreightWaves CEO Craig Fuller as part of the FreightWavesTV show, “Fuller Speed Ahead.”
Clarendon Group is a private equity sponsor that specializes in investment opportunities and advisory services to those in the transportation, distribution and logistics segments. The company has made nine investments to date in those sectors, making Clarendon one of the most active investors in the space, according to its website.
Clarendon’s goal is to add value to a partnering business by working alongside owners, investors and management teams. According to its website, Clarendon approaches opportunities through strategies such as formulating ways to take advantage of value creation opportunities unique to the transportation sector, tailoring engagement and deal structure to achieve the individual goals of participants, as well as developing an in-depth understanding of an opportunity by leveraging the transportation and logistics knowledge of the team, etc.
“We’re looking for companies that are looking for a $5 to $100 million equity check. If there’s a $100 million equity check involved or something in that vicinity, we’d probably need co-invest funds from limited partners or from another private equity firm,” said Larkin. “At the end of the day, we’re looking for proprietary deals in the transportation and logistics space that are a little below everyone else’s radar.”
Clarendon’s services are mostly sought by early-stage and middle-market companies that have high growth potential but are going through a transition period.
“I think most of the people that we connect with, who are interested in evaluating at least a transaction, are people who are going through some sort of transition in their corporation,” said Larkin. “Perhaps they would like to replace a silent partner, or they would like to replace a family that ran a company they merged with three years ago. Perhaps it’s a generational change within a family-owned business.”
According to Clarendon, they are devoted to learning the participating owners’ objectives to craft a plan and financial strategy that will best achieve those objectives. Each company has a unique set of objectives, which means each company requires a tailor-made solution.
“I know one fellow that is third-generation management. He has one daughter who doesn’t want to be a trucker. So he’s thinking through ‘what do I do; I don’t have an heir that wants to run the business. I probably need to monetize what I, my father, and my grandfather built,’” said Larkin. “We can offer him an interesting solution where he can still be involved and maybe roll some equity forward but work with a group that has experience and can in a very collaborative way help to build the company to new heights over the next five years.”
Larkin added that he and his team are very diligent in selecting candidates to work with.
“My approach has been to visit a company, get to know the management if I don’t know them already, and really try to determine whether or not they’ve fully embraced their strategy, understand their competitive positioning, have a handle on cost and on what’s happening in the technology world where things are changing so rapidly,” Larkin said.
He continued, “If they’re in a little silo and are insulating themselves from what their competitors are doing and what’s happening in the freight tech world, then you begin to say these folks may not be good candidates. They’re going to continue to operate the business in the same manner, no matter what, and in a changing world, that’s a very dangerous approach.”
Hear more from John Larkin and the rest of our speakers at FreightWaves LIVE Chicago, on November 12-13.