Q&A with Greg Case, LLR Partners

Greg Case should have no problem a few years from now recalling his first day on the job at LLR Partners. Case began working as a partner at the Philadelphia-based growth equity investor on Sept. 15. That was the day Wall Street was hit with the news that Lehman Brothers would file for bankruptcy protection, Merrill Lynch would agree to sell and AIG would soon receive a government bailout.

Case, though, took the news in stride. After all, he’s no newbie. An MBA graduate of the Wharton School of the University of Pennsylvania, Case previously worked at Apax Partners in New York for 16 years. He most recently was a general partner at Apax, running the firm’s growth tech investing operations in the United States.

He will work on the same kind of middle-market tech deals at LLR, which earlier this year raised $800 million for its third fund.

I talked to Case on the phone last week on the third day of his new job.

Q: So how was your first day at work?

A: Last Monday was interesting and wild, and it’s only going to get wilder. Very difficult to see so much pain and suffering going on.

But the transition to LLR was seamless after a long career at Apax in growth equity investing. Plus, I already knew a lot of the partners at LLR. So we got right to work at our Monday morning partner’s meeting.

What impact will this Wall Street crisis have on LLR?

For the most part, a private equity firm such as ours is insulated from some of the craziness going on. Since LLR focuses on growth investments and doesn’t rely on leverage to make deals, we are in a good position.

At LLR, we see plenty of opportunities despite the current financial environment. And the scale of LLR’s new fund and the firm’s focus on growth capital puts us in a great position to take advantage of opportunities in what has become a very difficult financing environment.

You don’t expect any problems deploying the $800 million fund?

When I started in this business, $100 million was a big fund. Now, traditional buyout firms are raising billions every couple of years. We’ve got a significant chunk of capital to invest. And even though we’ll be patient over the next few years as we invest from it, we have already made a number of new investments.

What impact will the recent Wall Street crisis have on the private equity industry in general?

Five years ago, everyone had access to capital. But it’s going to be tough now for many buyout firms because there is no leverage available. The debt markets have dried up.

Do you think more buyout firms will shift their focus away from large deals and do the kind of growth deals LLR is known for?

That would be tough to do for many of the traditional buyout firms. But I do see it becoming harder and harder to raise a multi-billion-dollar fund.

What’s your outlook on the exit market?

A public exit is not an option right now. It’s going to be a while before we can rely on an IPO. Neither is debt equity or refinancing an option, since as I said, the debt market is drying up, and it’s difficult to refinance.

But strategic buys will continue, Corporations are always looking for new products that they can purchase, and that’s LLR’s focus. The majority of growth equity deals are exited to strategic buyers.

Now that you left Apax to join LLR, are you moving from New York to Philadelphia, too?

No. I have lived Philadelphia. It’s where I from. I was commuting to New York, staying overnight in town. So this is great, I’m much closer to home now.

Actually, a few of my deals at Apax were in the Philadelphia area [Bluestone Software and Web Clients], and LLR’s focus is the Mid Atlantic and Eastern United States, so I’ll still be sourcing the same kind of deals in the same region.

Since you live in Philadelphia, does that mean you’re a Philadelphia Phillies fanatic? Getting excited about the playoffs?

Actually, I’m a New York Yankees fan, and I have been for a long time, way back when they were a really lousy club. But it’s football season now, and I’m an Eagles fan, so no one bothers me.

Your last name is Case. Are you related to Steve Case?

No. But he’s done OK for himself, hasn’t he.