Question: Vincent, what inspired you to found Cranemere?
A lifetime in finance and building businesses has taught me that, in an increasingly complex and uncertain world, among the best ways to create value is to own outstanding companies for the long term.
The traditional private equity structure requires that you sell those businesses within three to five years, regardless of whether that’s the right decision for the business. In fact, many of the industry incentives encourage selling the best businesses quickly. That doesn’t make sense! Selling a business incurs substantial costs and is a significant distraction for management. For the private equity firm, it creates the problem of having to buy a new and equally good company when you have just sold an excellent business you knew very well.
Not only that, when you have a short-term mindset, commitments to innovation, expansion and the well-being of people and the environment are too often neglected – weakening both the businesses and society.
Cranemere was established to solve this problem. We have perpetual capital in a corporate structure that enables us to focus on the best strategy to create value over the long-term and aligns the incentives of shareholders, management and the companies with whom we partner.
We employ a collaborative approach to decision making and we ensure that our model provides equivalent or superior management economics, relative to other alternatives, without forcing a premature sale of the business.
Q: What attracts companies to the Cranemere approach?
To put it simply, Cranemere aims to be a trusted partner with the means and capabilities to continue to build the strong companies of today into outstanding companies of the future. The companies we partner with are market leaders that have the potential to grow over the long-term with a supportive partner like Cranemere.
Our sole objective is to create more value, measured over decades not quarters. We don’t distract management with the need to sell their businesses or raise capital. We don’t overburden businesses with debt. We don’t impose bureaucratic approval processes. We look to protect and advance the legacy and values of our partner companies because we know that is central to what drives distinctiveness and competitive advantage. We employ a collaborative approach to decision making and we ensure that our model provides equivalent or superior management economics, relative to other alternatives, without forcing a premature sale of the business.
Q: How is Cranemere leading the innovation in long-term business building – what is it about Cranemere that is different than other approaches?
Our strategy and structure are distinctive, and I do not believe anybody else is doing it quite this way. Of course, buying businesses for the long-term is not new. Warren Buffett and others have been doing it for decades. Cranemere has taken this theme that marries the discipline and process of a top tier private equity firm with the benefits of long-term strategic partnership, global reach, and business building expertise. We try to do this in a transparent way with the economic interests of our team and our shareholders being fully aligned.
Now that we have a few years of experience with our approach, we are seeing that the opportunities for us are bigger than we had anticipated. We have found there are many excellent privately-owned companies that are looking for a long-term partner like us who is committed to growing the business in a thoughtful and strategic way, working collaboratively with management. In many cases, these are situations involving founders or families who are going through an ownership transition. Many of these business owners didn’t know a company like Cranemere existed and it has been very satisfying to engage with them to explain the power of our approach for meeting their needs.
Q: One of your principles is “Business is a force for good.” What do you mean?
We believe that building great companies of enduring value and promoting the well-being of people, the environment and our communities go hand in hand. Sustainability is therefore an integral part of our strategy – from enhancing our diligence processes to driving value creation in our companies. Population growth, depleted and stressed natural resources, climate change, increased demand for food, water and energy, and rising demand for healthy and natural products are creating long-term opportunities for companies that are proactively and directly addressing these challenges.
We are actively engaged with our operating companies to identify the intersection of where sustainable business practices can lower costs, reduce enterprise risk, drive innovation, enhance workforce engagement and ultimately contribute to strengthening their competitive advantage and resiliency. Our long-term horizon enables us to commit meaningfully to capturing value from employing sustainable business practices.
Q: In time, what do you hope Cranemere is known for?
We aspire to build a firm that will be admired for generations to come: to serve, with a lasting commitment, all our stakeholders – from the companies we own, to the people, environment and communities around us and, of course, to the shareholders who have put their trust in us.