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For Charlesbank, the future is hyperspecialized

Founded in 1998, Charlesbank Capital Partners is a Boston-based private investment firm that invests in middle-market companies primarily in North America. The firm focuses on its five core sectors: business and financial services, consumer, healthcare, industrial, and technology and technology infrastructure. Charlesbank launched its dedicated tech strategy in 2019, and its Technology Opportunities Fund provides a specialized platform geared toward lower mid-market technology investing. Managing Director Darren Battistoni reflects on the past year of growth, driven by companies’ innovative use of technology, and sees the firm strongly positioned for the future with its combination of hyperspecialization and collaborative partnerships with management teams.

What have been the biggest drivers of growth within your business over the past 12 months?

Over the past year, Charlesbank Tech has experienced robust growth, driven by our strategic focus on investing in the dynamic mid-market tech sector, which has seen a surge in new business formation and the rise of innovative companies addressing new challenges through technology. This sustained momentum has led to more companies seeking partnerships with firms like ours.

At Charlesbank, we play a pivotal role by providing not only capital, but also invaluable expertise. As companies aim to scale and achieve market leadership, we are committed to fostering growth by offering the necessary resources and guidance, positioning us as a strategic partner in their journey. This intersection between a growing number of mid-market technology companies and recognition of the value Charlesbank brings has been instrumental in driving increasing activity levels at Charlesbank over the last year.

What has been the most significant change youve observed in the private equity industry in the past 12 months?

The private equity industry has recently emerged from a historically low, near-zero interest rate environment, which had previously facilitated easy access to cheap debt and capital. During this time, we saw two distinct market trends: one segment heavily leveraged portfolio companies with cheap debt, with another invested in companies burning substantial free cash flow.

We take pride in our unwavering discipline throughout this period. Our philosophy avoids overleveraging portfolio companies and focuses on investing in companies with fully funded business plans. This steadfast approach has resulted in a robust and healthy portfolio for our Technology Opportunities Fund, enabling our companies to maintain an offensive stance and to continue developing as market leaders over time.

How is your strategy best positioned to mitigate some of the challenges facing private equity funds today?

Our strategy is resilient because it positions us for long-term sustainability in two core ways. 

Firstly, we are not just tech specialists; we are hyperspecialized within specific areas of technology, cultivating deep intellectual property and gaining insights into nuanced trends. This allows us to strategically position ourselves with the most promising companies in these growing subsectors.

Secondly, we develop collaborative partnerships with our portfolio companies. We actively engage in supporting initiatives like organic growth, team building, global expansion and accretive acquisitions. Our efforts are directed towards transforming these companies into market leaders, realizing a shared vision.

 What are you proud of, and what are you most looking forward to?

We’re proud of our success over the past year, driven by disciplined valuation, conservative use of debt for our portfolio companies and avoidance of strategy drift. This steadfast approach has been a cornerstone of our recent success and reflects our dedication to sustainable growth.

Moreover, we believe our strategy is poised for long-term success. As we hyperspecialize within the technology landscape and collaborate closely with our management teams on value creation initiatives, we are well-positioned to continue having a meaningful impact as our companies look to develop into market leaders. We’re excited to maintain focus, stay ahead of industry trends and continue to identify the market leaders of the future.

 


 

Darren Battistoni, Managing Director, Charlesbank Capital Partners, Technology Opportunities – Darren is a Managing Director at Charlesbank, where he leads investments in growing software companies. He joined Charlesbank in 2018 to launch the firm’s Technology Opportunities strategy. Darren has over 20 years’ experience investing in enterprise technology. He has led investments in segments such as cloud computing, cybersecurity, fintech, healthcare technology and software. He began his private equity career at Welsh, Carson, Anderson & Stowe in 2004, where he focused on technology investments for over a decade. Darren earned a BS in economics from The Wharton School, University of Pennsylvania.

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