This series features interviews with Black dealmakers and trailblazers in the private equity (PE) and finance community. To help McGuireWoods spotlight professionals making a difference in their career pathways, please email Greg Kilpatrick at [email protected], Gerald or Thomas at [email protected].
Q: What attracted you to PE?
Tim Greenfield: Our team at Demopolis Equity Partners is led by people with operating experience in lower middle-market technology companies where we invest. We also have several team members who were consultants with McKinsey & Co. What attracted us to private equity was the opportunity to apply our unique mix of operating experience and strategy consulting to help grow lower middle-market companies. We have leveraged our combined experiences to create a track record that is ranked in the top 5% of 2014 vintage funds, according to Preqin.
Q: Why is it important for more Black professionals to pursue careers in PE?
TG: At Demopolis, we believe in the power of diversity. Diverse managers often have different perspectives and experiences that position them to identify compelling investment opportunities that would otherwise be overlooked. We take the view that fresh ideas and new approaches can come from new and diverse sources. We believe that diversity should be viewed in the way that businesses think about any untapped market opportunity or innovation. It’s about widening the aperture to identify new ideas that can become the foundation for future growth and exceptional returns.
Importantly, PE provides an avenue to narrow the wealth gap and can spur the growth of minority-owned businesses. In addition to providing capital, PE firms can help small companies grow revenue and professionalize their businesses by transferring knowledge. That transfer of knowledge is as important as the capital. It is what builds lasting enterprises. To the extent that you care about creating an ethos around enduring enterprises in our community, as opposed to cottage industries, PE is the best way to accomplish that goal, in my opinion.
While Demopolis does not focus exclusively on impact, we are networked in a community that is typically overlooked. When we acquire companies, they become minority-owned by virtue of our ownership. Importantly, the management team accrues wealth because we provide needed capital and expertise to grow.
Q: What is the biggest challenge facing Black entrepreneurs? What advice would you provide to overcome it?
TG: The biggest obstacles facing most small entrepreneurs are access to capital and mentorship. Black entrepreneurs often have limited access to capital, which causes them to underinvest in successful businesses. Mentorship is also often lacking or underappreciated, which can lead to avoidable mistakes.
I cannot overstate the value of mentors and advisers who can help steer small companies through the challenges they will inevitably face. The best mentors are people who have been successful in your space and are personally invested in your success. The Demopolis team believes in forming strategic partnerships. We were fortunate in that we were able to secure an anchor investor that can provide true strategic value as well as capital.
Q: How can Black professionals influence the PE industry?
TG: At Demopolis, we feel strongly that Black professionals will be able to influence the PE industry first by continuing to outperform key benchmarks. The NAIC’s recent report — “Examining the Returns 2023 – Further Evidence of Diverse-Owned Private Equity Firm Outperformance” — shows that diversity does not mean sacrificing returns.
Getting back to the mentorship notion, PE is an apprenticeship business. The industry has evolved significantly since public funds began committing capital to minority-led funds in the early 1990s. Since that time, many Black professionals have had the opportunity to “apprentice” in large and small buyout shops and as independent sponsors. History shows that they can and do deliver strong realized returns for limited partners when they spin out and form their own firms.
About Tim Greenfield
Tim Greenfield is the founder and managing partner of Demopolis Equity Partners. Greenfield has a long history in PE building strong teams and collaborating with talented management teams to generate above-market returns. In addition to his track record in PE, Greenfield is an experienced operator who has held numerous C-level positions in technology companies. His early career included training in GE’s Six Sigma management program and serving as a management consultant at McKinsey & Co. This unique combination of experiences as a professional investor, operating executive and consultant allows Greenfield and the Demopolis team to partner successfully with management teams to develop and implement strategies that drive growth and value creation.
Greenfield holds an MBA from the Kellogg School of Management at Northwestern University, a master’s in manufacturing engineering from the McCormick School of Engineering at Northwestern University and a BSc in mechanical engineering from the University of Michigan.