Austin Emerges as a Prime Destination for Private Equity Firms

Why Austin is the Next Big Thing for Private Equity Firms

Austin, Texas, known for its lively music scene and vibrant culture, is becoming a hotbed for private equity firms. As the tech revolution continues to reshape cities globally, many are looking to the heart of Central Texas as the next great investment opportunity.

Why Austin? The Charm of Central Texas

Just like San Francisco and Seattle before it, Austin is emerging as a prime location for private equity investment. With a perfect blend of mild weather, beautiful landscapes, and a talent pool rich with qualified professionals, it’s no wonder the city has caught the attention of top finance execs. Folks can run their businesses from virtually anywhere these days, and many are finding that Austin checks all the boxes for quality of life. Private equity firms are eyeing this city as a promising place to set up shop.

Talent Galore from the University of Texas

One of the major draws is the University of Texas at Austin, which boasts a renowned McCombs Business School. Each year, this institution produces a fresh batch of eager graduates, ready to join the workforce in a city that’s anything but boring — think two large annual music festivals, miles of scenic trails, and lakefront properties.

John May, founder of private equity firm CORE Industrial Partners, recognized Austin’s potential almost two years ago. Relocating his firm from Chicago wasn’t just a smart business move; it was a lifestyle choice. “I think what’s happened is that managers like us have realized that Austin is a great market to hire in because it’s good for attracting talent,” May explains. “You have the weather and the work-life balance, so it’s a good place to attract and retain talent.”

Investment Growth and Opportunity

So far, CORE Industrial has raised nearly $2 billion and acquired 52 companies in just seven years. The firm specializes in lower middle market manufacturing, industrial technology, and consumer products, making it well-positioned to thrive in Austin’s burgeoning eco-system.

The Education Factor

Austin isn’t just home to the university; it’s also known for its top-notch educational systems. From unique private schools like the Academy of Thought and Industry to publicly-funded Montessori charter schools, families in Austin have plenty of options. This education landscape gives May confidence that he’ll be able to find the high-caliber talent he needs to succeed.

New Trends on the Horizon

When discussing trends in private equity, May admits they can be tricky to pin down. However, he foresees a renewed focus on U.S. labor and a growing influx of technology applications that will change how we all work and live. “There’s a big trend of reshoring manufacturing and industrial-related jobs back to the U.S,” he adds, hinting at an exciting shift ahead.

The “Weird” Factor of Austin

Now, let’s talk about Austin’s quirky vibe. Traditionally branded as “weird,” with funky icons like Whole Foods and the Alamo Drafthouse, it seems the private equity game might further reshape this identity. May believes as more firms invest and scale, they’ll contribute to evolving Austin’s reputation even further.

What’s Next for Private Equity in Austin?

With many companies relocating or opening satellite offices in the area, the growth in private equity here is skyrocketing. May notes, “It’s moving very fast,” pointing out that people may not fully appreciate how many firms are making Austin their new home base. “There’s a lot of influx, which is what I find really interesting.”

A Bright Future Ahead

Despite the challenges of finding top-tier talent in the market, the presence of the University of Texas provides a hopeful outlook. “You still have a wide range of intelligent people who want to go into finance,” May insists, as young minds continue to gravitate towards private equity.

In summary, Austin is on the brink of becoming the next great city for private equity investment. With its educational opportunities, cost of living advantages, and an exciting cultural scene, it’s no wonder firms are setting their sights here. Whether you’re a budding entrepreneur or an experienced investor, it looks like Austin has a little something for everyone.