Here’s the Deal on Adam Fahrer
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Member Profile: Adam Fahrer, GreenShoot Capital Management
A numbers and finance guy, Adam Fahrer spent 20 years working on Wall Street. After the Great Recession of 2008, Fahrer said the work/quality of life dynamic changed dramatically for the worse.
Fahrer and his family had been vacationing at the Isle of Palms for years. They loved the Charleston area and began to consider making the move south. “We decided to flip the script and choose where we wanted to live instead of having it dictated by job location,” he said.
So in 2014, Fahrer and his family left the rat race of the Northeast and relocated to Mount Pleasant. Settled in his new home, Fahrer began to think about his next professional venture.
Four years ago, Fahrer partnered with Carl Yost to form GreenShoot Capital Management, making long-term investments in small and medium-sized businesses mostly in the South and Southeast.
Fahrer said they made the conscious decision to acquire small, profitable companies versus investing in startups.
“With a startup, there’s a high probability of losing all your money. It’s risky. It’s boom or bust,” Fahrer said. “That’s not the right risk-reward profile for us.”
GreenShoot Capital Management often works with baby boomers who have successful businesses but no succession plan. “There are a lot of quality businesses in that opportunity set,” Fahrer said.
Typically the company can make back its investment in three to four years.
As they launched GreenShoot Capital, Fahrer said they were meeting a lot of like-minded Charleston transplants who were also looking for what’s next. They were too young to retire, had a wide array of impressive professional skill sets, and capital to invest.. So GreenShoot added seven operating partners who bring their expertise to the table when the need arises.
GreenShoot Capital currently has three companies in its portfolio. The process of acquiring a business takes time and centers on trust.,Fahrer said. The market for these companies is neither efficient nor liquid, which we believe lends itself to the idea of permanent capital, buying without ever intending to sell.
Once it acquires a business, GreenShoot uses its expertise to improve aspects of the business, stepping in to help run the company and increase its profitability.
“We’re not interested in being passive,” Fahrer said. “We want to leverage our skill sets and at minimum be an active board member.
Fahrer calls GreenShoot’s work “acquisitional entrepreneurship.”
“For us, it’s more about taking something that exists and making it better,” he said. “I’m not very good at creating something that doesn’t exist, but I can look and see how to make something better.”
Fahrer is a self-described “investor at heart.”
“I like the process of finding an attractive investment,” he said. “Vetting a company is similar to finding a stock to buy. You figure out scenarios, research and analyze the probability of different outcomes.”
GreenShoot Capital isn’t focused on one specific industry, opting to work with companies in business services, manufacturing, hospitality, health care services and the automotive industry. The biggest consideration is whether the company is profitable and, secondly, if there is a competitive advantage.
Fahrer said for GreenShoot, the deal pipeline is organic. They don’t actively solicit companies, but instead rely on relationships with those who might be able to introduce them to a business owner looking to sell.
Charleston Deal Alliance is an important conduit for those connections as well as finding capital partners interested in working with GreenShoot on larger deals.
“Right now we fund deals with proprietary capital but realize we could probably have the same impact on a company three times the size by taking on outside funding.,” Fahrer said. “My time commitment is the same so it makes more sense to do it on a larger scale. We lose some control of ownership, but assuming it works, there are bigger gains to have.”
Chairman & CIO, GreenShoot Capital Management
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