A Warren Buffett Protégé Is on the Hunt for Small Companies. She Now Has Millions More to Spend

livemint.com:

For years, Tracy Britt Cool and her partners have been on the hunt for the type of companies that might have once excited famed investor Warren Buffett. These are midsize businesses with a competitive edge, or a “moat," to use one of Buffett’s favorite terms. Cool spent a decade working for Buffett before co-founding a company called Kanbrick about four years ago.

It aims to be an alternative to private equity for family- or founder-owned businesses that want to cash out, or grow, but with some new help. The investment firm has already bought a maker of boat covers based in Missouri’s Lake of the Ozarks and a Louisiana servicer of industrial calibration equipment. It now has more cash to pursue such deals.

Kanbrick has raised $220 million, which it plans to use to buy one or two companies a year, and then hold them over the long term. The young firm has yet to exit any of its early investments. “We want to be really selective," Cool said in an interview.

“We’re going to be partnering with these companies for 10-plus years." Kanbrick evaluates about 150 to 200 companies a year, focusing on consumer businesses and those in industrial or business services with about $5 million to $50 million in earnings before interest and taxes. It rules out companies in financial services, healthcare, real estate and many other industries where the firm doesn’t feel it has expertise. “We’re looking for businesses we can understand that have a moat or competitive advantage—something that we can get our arms around," she said.