A Warren Buffett Protégé Is on the Hunt for Small Companies. She Now Has Millions More to Spend

A Warren Buffett Protégé Is on the Hunt for Small Companies. She Now Has Millions More to Spend
A Warren Buffett Protégé Is on the Hunt for Small Companies. She Now Has Millions More to Spend

Summary

Tracy Britt Cool and her partners are on the hunt for midsize businesses with a competitive edge and have raised $220 million.

For years, Tracy Britt Cool and her partners have been on the hunt for the type of companies that might have once excited famed investor Warren Buffett.

These are midsize businesses with a competitive edge, or a “moat," to use one of Buffett’s favorite terms. Cool spent a decade working for Buffett before co-founding a company called Kanbrick about four years ago. It aims to be an alternative to private equity for family- or founder-owned businesses that want to cash out, or grow, but with some new help.

The investment firm has already bought a maker of boat covers based in Missouri’s Lake of the Ozarks and a Louisiana servicer of industrial calibration equipment. It now has more cash to pursue such deals.

Kanbrick has raised $220 million, which it plans to use to buy one or two companies a year, and then hold them over the long term. The young firm has yet to exit any of its early investments.

“We want to be really selective," Cool said in an interview. “We’re going to be partnering with these companies for 10-plus years."

Kanbrick evaluates about 150 to 200 companies a year, focusing on consumer businesses and those in industrial or business services with about $5 million to $50 million in earnings before interest and taxes. It rules out companies in financial services, healthcare, real estate and many other industries where the firm doesn’t feel it has expertise.

“We’re looking for businesses we can understand that have a moat or competitive advantage—something that we can get our arms around," she said.

Cool, who is 39, joined Berkshire Hathaway at age 25, getting the job after writing Buffett a letter and showing up at his office with corn and tomatoes. She initially worked as Buffett’s financial assistant and later developed a reputation within the conglomerate as someone who could revive businesses. She became chief executive of cookware company Pampered Chef and served as chairman of paint maker Benjamin Moore, among other positions.

Buffett once told The Wall Street Journal that he considered Cool his “fireman," noting that “anything I’ve assigned her she’s done a first-class job on."

Cool declined to say whether Buffett participated in the fundraising round, noting the company doesn’t comment on individual investors.

Though Kanbrick shares many of Berkshire’s principles (and its tradition of sending an annual letter to investors), it also operates differently. Cool and her colleagues are involved in operations of businesses Kanbrick acquires. She and her co-founder, Brian Humphrey, another Berkshire veteran, join the boards of the companies they acquire, and evaluate whether they have the right people and growth strategies in place.

The firm has nine employees and offices in Nashville, Tenn., and Charlotte, N.C. Its team includes people such as a former Bain consultant who helps newly acquired companies. At Marine Concepts, the boat-cover maker, Kanbrick is establishing a dealership network across the South to boost sales, for example.

In evaluating hundreds of companies, Cool said she sees parallels across businesses. Many families and founders are fatigued: exhausted from managing their companies through the pandemic, labor challenges, inflation and change. For those who don’t want to sell to private equity, she is positioning Kanbrick as another option.

“I think people are starting to really realize that there’s different homes for businesses and may result in different outcomes," she said.

Though Berkshire is part of her own legacy, she is also careful to note that Kanbrick will be different. “There’s no business that can replicate what Berkshire has built," she said.

Write to Chip Cutter at chip.cutter@wsj.com

A Warren Buffett Protégé Is on the Hunt for Small Companies. She Now Has Millions More to Spend
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A Warren Buffett Protégé Is on the Hunt for Small Companies. She Now Has Millions More to Spend
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