Five Questions with Andrew Olinick, partner and co-head, 3i North America Private Equity

1 – You were named co-head of 3i’s North America team last year with Richard Relyea. Why the interest in our region from a U.K. firm with offices worldwide?

We’ve had good returns here. We have good deal flow in the U.S. market. It’s becoming a larger and larger market for 3i. North America represents at least a fifth of 3i’s total deal flow from the past five years. I lead the investment activity for business services, one of three sectors at the firm along with industrial and consumer. We continue to build the team here. We’re expecting to add a vice president and an associate in the next several months.

2 – What’s the culture that 3i offers to prospective talent?

Our exit of Element Materials Technology to Bridgepoint [in late 2015] is a good example. … We’re trying to help businesses internationalize. We’re an international team that works together. We bought Element, a lab testing company, in 2010 in a joint effort between our Dutch, U.K. and U.S. offices. Eighty percent of Element’s revenue is in the U.S. We launched an active acquisition strategy including 10 add-ons, seven of which were in the U.S. and three in Europe. We supported the business from both continents. Overall, the deal shows how we bring together our sector and international knowledge. We made 4.5x our money on it. It was a successful deal.

3 – So what’s your own focus on business services?

We decided to focus on a couple of areas where we’ve been very successful. Businesses that help other businesses cope with regulation and risk are a key area for us. … Another thematic area is in education and training. Given that we’re in a knowledge economy, companies are looking for businesses to build their skill set. We’ve been spending time looking at scalable businesses with an education component – also the testing and certification sector.

4 – Another key platform for 3i is Dynatect Manufacturing Inc, which makes industrial protection components via seven manufacturing plants and two distribution locations in North America, Europe and Asia. How’s that investment coming along?

The thesis there is to continue to expand internationally and to build our presence in Germany and Asia. We’re working on that and hoping to make overseas acquisitions to service those customers in those geographies. We’ll build local manufacturing capability to improve their speed to market. International expansion is a way to increase the potential market size of a company. It’s easier to do that with a firm with that international footprint.

5 – How about sourcing acquisitions nowadays? Is it tougher than ever to find deals?

We’re trying to create our own deals rather than waiting for intermediaries to come to us. We work with a lot of operating executives, many of whom are willing to help us get introduced to sellers ahead of a process. If we get a book from an investment banker and we’ve never heard of the company, we don’t spend any time on it. We spend time where we like the team, we know the business and can get ahead of the process. The market is competitive and valuations are high. We have to have fairly high conviction on a deal to spend any time on it.

Photo of Andrew Olinick courtesy of 3i.