In the early days of Empresario Capital Partners, the venture company’s three partners, Robin Chakrabarti, Mike Cordoba, and Al Cave, were honing in on a major cross-border acquisition. They were confident in a closing after months of due diligence. Significant amounts of money had already been spent on legal and accounting costs.
“Our level of emotional and financial commitment was escalating as each day passed,” says Cordoba. A few weeks before completing the deal, final legal due diligence revealed complications that made it clear that executing the business strategy would be higher risk than they modeled. In light of the new information, the deal no longer made sense, in spite of the investment that had already been made. They decided to walk away.
At the time, it may have seemed like a misfire, but the discipline to take the long view that the partners showed in that moment became a part of the company fabric. “Choosing to walk away was one of the hardest decisions we have made at Empresario,” Chakrabarti says. “It had a great financial and emotional cost in the short term. But in the long run, it was the correct call.”
Since that time, there have been many more correct calls: We Care, The Pantry, Rockwell’s, RAMMP Hospitality Brands, Mr. Lube, and MR MIKES SteakhouseCasual, to name a few. Cave says that the acquisition of MR MIKES was a milestone for Empresario.
“It was tough sledding during the first couple of years because the brand was moving in the wrong direction, but strong franchisees provided a bedrock on which the brand could be transformed,” he says. “By bringing to bear our strategic thinking and understanding how to build an emotional connection with the brand, plus our experience delivering great food and ambiance to our guests—we have positioned MR MIKES for long term success.”
Empresario was launched to acquire and invest in midlevel businesses that are somewhat successful but that can benefit from an infusion of capital and guidance to get to the next level. The partners are as comfortable in work boots as in dress shoes and this unique perspective allows them to consider every new acquisition with an in-depth understanding of the mechanics of how a business works. When deciding whether or not to work with a business, for example, the partners look at five elements.
“A team that has fun together builds stronger relationships, has more trust, and is able to overcome challenges and setbacks more effectively.”
First is people. Empresario wants to build a relationship with the owner and senior leadership team that is based on trust, matching values, and mutual respect. “This relationship lasts long after the closing of a transaction,” Chakrabarti says. “We want everyone involved to be proud of what we accomplish together and the legacy it leaves for the business and its customers.”
Next, they want to understand what makes the business unique. They look into the history of the business and try to discover the stories behind its success. Then they study the businesses’ competition, and look at short-term opportunities and long-term trends that will dictate the strategy moving forward.
After that, they seek to gain a deep knowledge of customers and the value proposition. “We want to get to know customers, their habits, how they purchase products and services, and what they think of the brand,” Cordoba says. And finally, the transaction has to be a win for everyone—the owner or shareholders, the employees, the customers, and Empresario.
Inside Empresario, the business culture is based on three core values that the partners agreed upon at the company’s inception: work hard, play hard; value family and friends; and execution is everything.
“From our own careers and through our experience in leading teams, we have always found that employees and ourselves thrive and achieve greatness when having fun,” Chakrabarti says. “The fun is the payoff, but it also creates the energy to work hard and achieve a goal. A team that has fun together builds stronger relationships, has more trust, and is able to overcome challenges and setbacks more effectively.”
The second core value, family and friends, ensures that there is no discordance that can interrupt the company’s goals. “When you start a business, the trials and tribulations affect not only you; they also impact those close to you,” Cave says. “Support, understanding, and patience from your family is critical to your success. The decision to own and operate your own business is effectively the decision to go all in on your family’s future, because your long-term success becomes dependent on you and your business partners.”
The final value is execution. “There are ample great ideas in the marketplace,” Chakrabarti says. “Every day, creative people are coming up with new and innovative ideas but ideas are useless if they are only thoughts or words on paper. The true skill underlying success is the ability to transform an idea into reality. Results matter. Outcomes count. Sustained success is based on executing at the front lines of your business, every day, over many years.”
The partners all agree that some of the timelines they had set at Empresario’s beginning were too short; through experience they’ve learned to temper their aggressiveness and be more patient and realistic. But as they move forward, the core values they set down at the beginning continue to drive their decision-making.
“We want to continue to deepen our relationships with all our stakeholders, from franchisees to supply partners to team members,” Cordoba says. “We will only continue to be successful if they are successful. With success and growth comes the challenge of staying true to the values that we began the journey with. Regardless of how many portfolio companies we are involved with, we will keep our compass aligned to working hard and playing hard, surrounded by family and friends.”