Independent Sponsor Spotlight: Megan Horvath of Steinbeck Investment Company

July 5, 2023

The interview below is part of a series from McGuireWoods that features interviews with impressive independent sponsors as part of our ongoing commitment to the independent sponsor community. To recommend an independent sponsor for a future interview, email Jon Finger at [email protected].

Megan HorvathQ: What are key contributors to your and your firm’s success?

Megan Horvath: At Steinbeck Investment Co., we focus on the lower middle market in the consumer, healthcare, distribution and commercial services industries. One of the unique things about us is that we are an affiliate to Beckway, a team of operators who work in the private equity industry helping portfolio companies with matters like heavy lifting on value creation initiatives, filling interim executive roles and due diligence. Steinbeck can leverage the great operating resources at Beckway as we evaluate new opportunities.

As for my background, I have a finance degree from Notre Dame. Following Notre Dame, I worked in investment banking and then joined a distressed private equity firm in the summer of 2007, right before all the banks fell. It was great to work at a smaller private equity firm, as I was able to wear a lot of different hats early in my career. I did work that I expected, like modeling and analysis, but also spent significant time doing business development, deal execution and serving on the boards of four portfolio companies.

There is a great trifecta with my background in special situations, being an independent sponsor and having all these impressive operators. We can look at opportunities creatively, get to know companies and then figure out how we can best help grow them.

Q: What do you like most about being an independent sponsor?

MH: My favorite part of being an independent sponsor — and the private equity process in general — is the first call or meeting with an owner. I love hearing the owner’s story about how they founded the company or how their family members founded the company, learning about the business, hearing their passion and figuring out how we can help them. They’re often at a crossroads of wanting to retire and be relieved of some of the day-to-day burdens. We want to figure out a tailored approach for each of the companies we look at partnering with so we can help them grow and succeed.

Q: Why do you think the independent sponsor model is growing?

MH: The feedback we receive from owners as they’re speaking with other potential financial and strategic partners is that private equity firms often have a set playbook. This can rub owners the wrong way. These owners see their business and the people in their business as a family. Some private equity firms do not want to learn or take the time to learn what’s unique about a business, or they come across like they don’t care about what’s unique. That’s where I think an independent sponsor that can be creative and flexible has an advantage. There are great companies that might be overlooked by larger private equity firms or that don’t fit their model.

Q: What’s a recent highlight for your firm?

MH: There was an event in February put on by the iGlobal Forum where Steinbeck was named the “emerging independent sponsor of the year.” We were nominated because of a joint acquisition involving Stanz Foodservice and Troyer Foods. The companies had gone to market together and were looking for a buyer. This effort initially failed. As I became an independent sponsor and started networking to look for new deals, this opportunity involving Stanz and Troyer was off market. Thanks to our operational expertise with the Beckway team, this seemed like a great opportunity for us. Both companies are food service distributors. During the COVID-19 pandemic, due to supply chain and logistics issues, the food service industry was particularly challenged.

In the case of Stanz and Troyer, one company was family owned, with no family members to take over the business, and the other company was ESOP (employee stock ownership plan) owned. The companies came together with the idea that they wanted to be more competitive in the very large food service industry, but they were concerned about selling to a large strategic buyer because they wanted to make sure their employees were able to continue growing the businesses and serving their customers.

We acquired both companies on the same day in February 2022 with a new lender, a sale leaseback and then family offices and individual investors putting in equity. It was quite complex, and we were grateful to be recognized at the iGlobal event.

Q: What advice would you give to people early in their investment careers?

MH: When I started in private equity, I had the opportunity to attend a lot of events. I was advised to go out and meet people who were my age because, as I advanced in my career, they would be advancing in their careers as well. What’s great is, now that I’m a partner at Steinbeck, there are other people in key roles, such as sell-side advisers, accountants, lawyers and lenders — individuals who are more senior in their careers — whom I have known for 20 years. These relationships are invaluable.

People are very busy these days, regardless of what level they’re at within a firm. In terms of career development, it is vitally important to be proactive, especially in this virtual world, and ask the leaders on your team about new ways you can help. Are there calls you can be on? Meetings you can attend? I asked these questions early in my career, and it got me more involved and gave me more opportunities to participate in the various steps in the deal process. The networking and speaking with people also helped me develop and polish these very important skills.

About Megan Horvath

Megan Horvath has nearly 20 years of experience in private equity, investment banking and consulting. She is a partner at Steinbeck Investment Co., where her responsibilities include investment thesis creation, deal sourcing, investment evaluation, due diligence, deal execution, financing and portfolio oversight.

Horvath was previously a principal on the investment team at Resilience Capital Partners, which manages in excess of $600 million for a global base of institutional investors. Horvath led the transaction of Diversified Global Graphics, the “industrials deal of the year” at the M&A Advisor Annual Turnaround Awards in 2016.

Horvath was also a director of business development at INSIGHT2PROFIT, an analytics, technology and strategic advisory firm focused on pricing and commercial excellence. She fostered relationships with private equity firms and their portfolio companies to identify value creation initiatives.

Horvath began her career in corporate and investment banking at KeyBanc Capital Markets. She earned a BBA from the University of Notre Dame.