Almost 40% IRR across 55 Platforms
Jason Faucett of Transition Capital Partners discusses 33 years of Dallas PE success, 55+ acquisitions, high 30% IRR, and why local networks create unbeatable competitive advantages.
Transition Capital Partners is a mainstay in Dallas private equity. Jason Faucett and his team are the 4th generation of partners at this 33-year old firm, with a track record that includes 55 platform acquisitions and a historical IRR in the high 30% range. TCP proves that local networks and reputational compounding are the ultimate competitive moats.
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TCP likes to play where they can win, and they dominate in their own backyard. Jason views Dallas as the capital of lower-middle market private equity, and his firm's strategy centers on maintaining strong relationships within the (North) Texas dealmaking community. Jason furthermore describes Dallas as the "biggest small town on the planet," where reputation matters and sellers can easily verify a firm's integrity. This localized approach allows TCP to compete effectively against out-of-state funds both before and after closing.
With an average hold period of 4.7 years, TCP firmly believes that their job is to sell businesses and return capital to investors. Their philosophy prioritizes the velocity of capital over empire-building. Once a thesis achieves a 3x MOIC, the disciplined move is to transact, allowing investors to decide where to deploy their gains next. This commitment to efficiency has resulted in a consistent and impressive track record, keeping limited partners excited for future opportunities.
Not every deal is a success: A hospice equipment rental investment was being staged to exit and tracking 3-4x MOIC when COVID suddenly turned everything upside down and resulted in a complete loss for investors. Jason emphasizes the crucial role of transparent communication during such crises, advocating for full accountability to maintain trust. By openly discussing mistakes, TCP aims to reassure LPs and reinforce their commitment to future success.
TCP stands out in the private equity landscape with its effective succession planning, having successfully transitioned through 4 generations of partners. Jason understands that the firm's true value lies in its people (who does the work), not the brand. Therefore, they structure economic incentives to the deal teams doing the actual work. They also focus on nurturing future leaders, which positions TCP for continued success as they look ahead to the next chapter of their legacy.
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