Private Equity Is a Talent Business - Flor Kassai, Inflexion

Speaker A: I personally believe that we are in the talent business more than in the investment business. Getting the Talent right is 95% of the equation.

Speaker B: You're listening to Fundshack. There's been talk for, uh, some time now about a flight to quality in private equity fundraising with limited partners. So the institutional investors reducing the number of relationships they have with private equity firms without reducing their overall exposure to, to the private equity asset class itself, on the contrary. And that's creating a kind of a winner take all or winner take most environment. And we're seeing that in play at the moment. So we all know of brand name private equity firms that have struggled to raise their latest fund. They're effectively zombie funds now. And that's the brutal calculus of private equity. You're only as good as your last fund, no matter how plush your office is or how stocked your trophy cabinet. Or on the flip side, we're starting to see the winners emerge from this threshing floor. And um, one of those winners is Inflection Private Equity. Back in 2024, Inflection raised $1.75 billion for a partnership fund led by David Wildman, who we had on the show episode 66. It's well worth a watch. A year later, in May 2025 it raised a 2.3 billion pound continuation fund. And now in 2026 it's raised 4.5 billion from for its latest buyout fund, doing so in just six months and well above target. Joining me today is the firm's managing partner and head of buyout, Florencia Casay Flor. Thank you so much for joining us and congratulations on your fundraise. How do you and the team view 2026 in terms of an environment for doing deals? Do you think it's going to turn out to be a good vintage?

Speaker A: Well, first of all, thank you for having me here, Ross. Pleasure to uh, be in your show. Um, so, so 2026, I mean no doubt this is a very tricky, uh, environment for investing. We have all sorts of, um, different, uh, pressures, uh, that we need to navigate. Ah, geopolitical pressures, AI saspokalypse, you name it. Quite a lot to digest in there. Uh, but I think times like this really sort of sharpen the focus on which are the key things to look for in an investment. So businesses that have a property pricing power, um, proper margins, um, a reason to exist and therefore sort of really zooming into those opportunities. I think, um, again, in times like this, having proper deep sector expertise, not just sector expertise, but I would go A step further and say, subsector expertise. So within your sector, knowing which are the verticals, uh, that you want to invest in and going really deep down, repeating playbooks that you have put to work successfully in previous investments, again, um, becomes a lot more prominent, um, because it's more challenging. At the same time, I think it's a fascinating time to be, um, in the market investing.

Speaker B: Okay, so there's a couple of things there I want to come back on. In a sense, it sounds like back to basics. You've got to focus on the basics of a business and whether it has command of its market. Um, so that's one side of it. And then you mentioned sectors. So the classic private equity approach is that you're organized by sectors, but it's actually a kind of a large swathe of the economy. And I think that's the case for inflection. You do do quite a few sectors. You're not focused on one or two. So strangely enough, it seems to be the subsectors that actually really matter. It's not just, let's say, software. It's specific things. Can you give me an example of a kind of a specific subsector or area or repeat play that's worked for you in the past or is working for you?

Speaker A: Yeah. So we invest across six sectors. So we go from financial services, business services, industrials, consumer tech and healthcare. But within each of these sectors, um, we focus only on 3, 4, 5 narrow verticals and we go very deep. Now we also have the ability to, because we invest across three fund strategies. So we have a buyout strategy, minority strategy. You mentioned David before, he runs the minority fund. And we have a growth capital, um, growth equity fund, the enterprise fund. So that gives us quite an ability to repeat that investment in that vertical across the different strategies. You then overlay the geographic dynamic as we invest in the uk, but we invest in Northern Europe. So we have offices in the Benelux in Amsterdam covering the Benelux in Stockholm covering the Nordics, in, um, Frankfurt covering dac. And we also have an office in the US to help us expand our, uh, portfolio companies into the us so that gives us a lot of room to pay. Pick one of these verticals and repeat that strategy either across different fund strategies or across geographies. So good examples of that is testing inspection certification. We've done eight investments in tic, uh, to date. And the last one being Sellnor, we invested a couple of years ago, is a business that, uh, we started from scratch, back to management team to buy A small business and been doing buy and build and of course the knowledge that you accumulate over the seven previous investments, what to do, what not to do, what mistakes you made and you don't want to repeat what things you did well and you want to double down on all of that comes to bear in every new investment that you do, you become better and better at doing it right. You sophisticate the way you operate. And so in the case of Sellnor, um, within in the last 12 months we've done 18 acquisitions on that buy and build. Now we've had practice, a buy and M build playbook with tic many times before, but 18 in a year is significant. But that's a case of testing inspection. I could talk about vet roll ups that we did in the uk. We then took that strategy to Ireland, we just took it also to Germany. Um, I could talk about fund administration and corporate um, services. So we invested in San, we invested in Okorian, we invested in outside in Spain. So if you go through inflection's track record, I think one of the main reasons of our success is this deep sector expertise. But then again and again going back to the sectors where we've been successful and sometimes as I say two, three, four times, up to eight times in certain cases and doing it again and again.

Speaker B: Yeah, that makes so much sense. Uh, it also means probably that you're, you're de risking the whole thing because it might look risky from the outside but not to you.

Speaker A: Well, and that's what I always say to investors is number one, we can price better because you can price risk better. Right. When you've done it many times, you know that, okay, the management team says this, the Excel spreadsheet says this, but I know that in practice I tried that and that's very difficult. That takes three times longer. Right. Whereas you know that actually there's some low hanging fruit X, Y, Z that I can recognize very quickly, I can put into the plan and I can also therefore potentially pay up if I need to. Yeah, and just uh, and you're very well networked in the sector and so as soon as you make an investment you can very quickly say, right, you know, what are the skills, what are the strengths that I have in this management team? But where do I need to complement and you know, people that you can bring in quickly to support you on a consulting basis or full time basis just to get the thing going so you can get to where you need to get to much faster, price risk faster and get there much Faster.

Speaker B: Private markets can be a growth opportunity for wealth management and advisory firms, but only if capability is embedded across the business, not concentrated in two or three people. That's the gap I see most often. Firms are adding products, but they still lack a clear house view, a consistent advisor standard and a practical way to build confidence at scale. The result is uneven client conversations, slower decisions and missed momentum. My private markets capability offer is designed to close that gap. We design your house view, assess advisors through a skills and capability matrix, and build confidence through a training accelerator that is shaped around what your team actually needs. If you want a fast read on where to focus first, take the five minute assessment. It'll show you where your capability is strong, where it's uneven, and what the next step should be. So that's what was going to be my next question. Because yes, there are repeat plays, but businesses are about people and management teams. So presumably this is a big factor when you're looking at this.

Speaker A: Absolutely. Look, I personally believe that we are in the talent business more than in the investment business. Number one thing is we're in the talent business. And why do I say that? Because I believe that getting the Talent right is 95% of the equation. And I think that that part is underestimated. Um, because if you have the right team with the right skill set, they're going to be thinking before you about what is the problem that is coming not tomorrow, but the day after and the week after and the month after and the two years after. They're going to be thinking about, um, what they need to solve for what could be around the corner that you maybe, as an investor have not thought about. They're a lot closer to the detail than you are. And they're going to be therefore still relying on you as an investor on your value add, uh, asking you for support in certain areas, AI or commercial, et cetera, et cetera. But they're going to be the ones saying, I have this specific problem. I've diagnosed it. This is what I need to resolve. How can you help me solve it? As opposed to you as an investor saying, I think you will have this problem. Why don't you think about xyz? They will have thought about that before you. And so because of this, we have invested a lot in our value acceleration team, which is basically infrastructure we created internally to support our portfolio companies. We have 20 people in house, but we have then another pool of probably 80 people that we constantly work with that are specialists in specific domains, in specific sectors that we, that we pull in. But out of that group, the area where we have invested the most internally has been in the talent team. Because being able to identify the right um, people to put into businesses, identify the gaps that there are in the business, to then be able to say I need to fill in that gap is super critical.

Speaker B: Okay. I've never heard it put in that sense that it's a talent business. So that's fantastic. And you're operating in the mid market, so I think you invest in businesses up to a billion pounds of enterprise value. Most will be therefore smaller than that. So there's plenty of Runway for growth. How do you find the businesses that you want to invest in?

Speaker A: So? Well, origination, I would say is one of our main differentiators as a firm. And I think the mid market, um, lends itself to direct origination. It's a market that is very relationship driven. It's a market where um, human interaction and human relationships really matter. And where for the most part, when I sort of stand back and I look at my 20 year career, what you're looking to do is you're solving for a human problem. You're solving for a founder, an entrepreneur that um, has a succession issue, that has a management incentivization issue, that wants to take on more risk to be able to grow faster, but is concerned about taking more risk because they have their entire wealth tied in the business. And so it's a very personal problem. And so the most important thing is first is to be able to understand what problem you're trying to solve, to then be able to engage in that conversation, uh, in a meaningful way. And I think that that's probably potentially part of the inefficiency I, uh, would call of the mid market that creates the opportunity set for people that know how to play it. Because how do you relationships? Well, first of all, you need to put in the time to build the trust. And trust is not built just in one meeting, it's uh, across several meetings. And therefore you have to be patient because I can meet you for the first time and the second time and I need to be meeting you without expecting to have a deal tomorrow. I need to be meeting you to get to know you and to be there the moment that you decide to sell your business. And it may be in five years time, it may be in two years time, it may be in 10 years time. We typically spend two years working up an opportunity before we make an investment. But I can tell you a number of examples. In fact, I'll tell you about one who invested a couple of years ago. EasyFairs is a business, um, in the events sector based in Belgium, but it's an international business. And um, we had been speaking with Eric Everard, the founder, for 10 years before we did that investment. And we were the only private equity firm, for example, during COVID where the business was on its knees because of course the events business was dead. We're calling him and we were saying, right, how are you getting on? This is what we're seeing in the market. This is what some of your competitors are doing to survive. He never forgot that we did that. And in fact, then when the business came off, uh, post Covid and came back very strongly, he came to us and he said, now I'm ready to do something, I want to do it with you. Because I've known you now for 10 years, I know what you're about and I trust you. So trust very important in the mid market. And then the other thing I'll say, especially for, um, firms like ours that are international, is locality. So being able to have feet on the ground, spending skin time with the founder, the CEO, the management team, because again, relationships are not built over teams, calls or zoom calls. They're built interacting with the other human being, you know, face to face. And that means therefore that, you know, having people on the ground speaking, ideally speaking the same language, where you can connect even at a more deeper level is important. And so again, this combination of trust, meaning you have to invest the time, locality, you have to have the local presence, local offices, as I said at the beginning, I think it creates an inefficiency in some way, because it's not that you can just, you know, AI your way to a list of companies that are potentially, um, you can use some screening to see how they could be up for sale. But actually that will tell you only sort of give you a list of names. It's all of the work that goes from converting that idea into an actual opportunity that creates the opportunity set for people that can work it through in the right way.

Speaker B: Yeah. In an AI world, inefficient places are where you want to be because that's the only place that value is going to be left. It's so interesting what you say as well, because private equity is often referred to as patient capital because you buy and hold, but actually you've got to be patient before you even buy. Clearly patient for a decade or maybe up to, you know, so that's a whole kind of feature that people don't even think about.

Speaker A: I Agree. And that's what I say also to our investors is it requires a big investment from the firm because you can imagine that you need a, to have a lot of people because you need to have, be having these conversations, many of these conversations simultaneously because you're just waiting for eventually things, you cannot crystallize them.

Speaker B: And you also need. So it also speaks to the skills that you have as investors because uh, an outsider might say, well to be a good investor you need to understand a balance sheet etc. Etc. But you also as well as that IQ need the EQ in order to get the deal in the first place.

Speaker A: Absolutely. And again that's why I think the mid market makes a difference much harder than the upper, the mega buyout where it's all about the last penny of financial engineering. Here it's about um, as I said there's a lot more at play. Um, and therefore of course the intellect is important, of course the financial um, savviness is important and as you said knowing your numbers and having a good strategy. But at the, the people side, the human side, the relationship side is absolutely vital.

Speaker B: What's the kind of geographic breakdown that you've had historically in your portfolio with regards to different parts of Europe and the uk?

Speaker A: We only opened our office investing uh, office outside the UK in December 2020. So until then we were 100% UK. What we realize is this is a challenge of growing uh, a mid market firm is that you have a lot of talented people that, that you need to create opportunities for in the firm. But at the same time you're capped because you cannot have funds that are too big because otherwise you go into the next level or you start reducing the threshold of quality of what you uh, invest in if you stay in a small market. And so that therefore uh, gave us the incentive to start looking outside of the UK and say well hold on a second, surely if we invested in a uh, testing and inspection business or insurance broking business or a vet roll up business in the UK, 90% of that playbook must be applicable in the same business in Germany or in the Benelux. For sure there will be local regulation that you need to adapt to and there needs some sort of specific of how that local market works that we'll need to uh, familiarize ourselves with. But the playbook itself, in terms of how you grow, it must be applicable. And so that was the thesis that we took. We opened our office first office in Amsterdam covering the Benelux. We then opened our office in Stockholm covering Nordics and more recently in um, 2024, Frankfurt covering DAC. And I think we've proven that strategy. And in fact if you look at our most recent uh, buyout fund that we are finishing investing now, around half of that fund has been invested outside of the uk.

Speaker B: Really. So that was a rapid shift, really.

Speaker A: Yes, yes. And going back to this point of locality, because we opened the offices, I think we got very good traction on the origination side being able to marry the vertical expertise that we brought with the local presence and language. So, so looking at a deal, for example, the vet deal that we did in Germany, we were teaming up the partner in the UK who led that deal in the UK with the partner in Germany who heads our office. And so you have a phenomenal proposition to the local management team because you're saying, look, I have a local partner for you who speaks your language, who can go out for a drink with you after this meeting. But at the same time I'm bringing all of the expertise of how you grow a business from X to Y over the next five years. Great.

Speaker B: And so you raised a continuation fund, is that for the buyout fund or across all of your strategies, the continuation fund?

Speaker A: We raised it last year. It's a, uh, 2.3 billion pound fund. It is the largest one multi asset continuation vehicle so far in Europe. Really, uh, was very successful. So we're delighted with the support. And the idea there was that we had four companies that were really special, um, where we knew exactly the playbook for the next um, sort of stage of ownership or growth. We knew exactly what we needed to do. Uh, but they were reaching the end of the fund, of the life of the fund in which they were in number one and number two. Those funds were also not left with enough cash to support them in doing M and A. And all of them were really good M and A roll ups. So they needed more capital to fund M and A. And so we said, well we have two options here. We can go and sell these businesses, fine. But then we said, well hold on a second. We're going to then really kill ourselves trying to find a business as good as this one. When we just sold this one to one of our competitors. What are we doing? And that's when this technology came super handy because we could sit and say this is what we will do. We know exactly what to do, we know the management teams want to work with us. There's less friction. Also in terms of every time there's a change of ownership, there is a little bit of friction because the new team from a new private equity house needs to get to know the management team, they need to understand the strategy. Whereas if you just continue with the same ownership, you just continue the same trajectory. Don't waste any time. And yeah, we were very fortunate and lucky that our investors supported us. They saw absolutely the rationale and we were able to raise the fund and basically continue to support this business in the next stage of growth. Now I know that that's a good use of the technology. There's also perhaps bad use of the technology as in anything. Uh, it depends on how you apply it.

Speaker B: Yeah, of course it's always context specific, but that sounds like a great story. Um, I just want to come back to. So you mentioning M and A roll up. So buy and build is clearly a big part of your strategy, but obviously there will be many levers that you want to pull. Um, do you know, do you have. You probably don't have the data to mine, but kind of Roughly what proportion of your returns tends to come from buy and build versus maybe organic growth or another way to look at it is how much of your own attention and your team's attention goes to one or the other.

Speaker A: Do we only do buy and build? No. So we invest in business. In fact, a very good example is uh, Medicaid which was one of our flagship uh, exits. Uh, last year we sold it to l'. Oreal. It's a skincare business. And in that case, um, there was no M and A. It was just an organic growth. We um, quadrupled the sales of the business during our ownership period. We trebled the um, employee base and ended up selling to massive hit. We still um, have a minority stake in that business alongside l'. Oreal. So we'll do those types of investments where there's no M and A and then we'll have other investments like the one I just mentioned. Cellnor. Or a roll up that we're doing now. Absolute finance in the wealth management space. Um, and so we have sort of both ends of the spectrum and then also in the middle, uh, a nice organic growth story that we supplement with some M and A, but doesn't necessarily need to be a roll up. So I think M and A, uh, is a really good tool to accelerate the growth of a business. In particular if you're trying to take that business internationally or into an adjacent business line or product line. Uh, it's a faster way to uh, get there, but it's not the only way to generate returns for investors. And likewise it comes with a set of challenges. Right. Every time you're doing M and A, you have to absorb the culture of the business that you're acquiring because if you don't integrate that business properly, it will be wasted money. You know, within a year or two, especially if you're talking about people, businesses, most of the great people will have disappeared. And so, and so how you bringing that business, keeping what made that business special, um, without you know, crushing it in the, with the. By the mothership is important. So there's a way of doing M and A and it's, it needs to be carefully done.

Speaker B: Yeah. Again, that's also an EQ as well as IQ challenge.

Speaker A: Absolutely.

Speaker B: Cultural thing.

Speaker A: Yes.

Speaker B: On the way here I was looking at your portfolio and when I look at mid market portfolios you expect to see certain types of businesses. But one jumped out to me and that's Nodor which makes darts. Can you tell me a little bit about that?

Speaker A: So it's a darts business. I mean darts is one of the fastest growing sports in the world. Is it?

Speaker B: Right?

Speaker A: Yes, yes. Ah, who would have thought? We didn't know it before we invested and we did a lot of work on it and it was a family owned business uh, that had been in the family uh, for decades and the husband and wife were now looking to really allow the business to grow, to benefit from this expansion in the sport. But they were struggling. They were based in Wales and they were struggling basically to attract the breadth of management team that they needed to properly scale the business. Um, the business also needed to be digitized because there's a technology that has now been that we are now um, launching, which is Autodarts, which is essentially we can beat different countries and playing darts against each other but it's picking up a lot of traction. And again they needed to go there but they didn't know where to start. They had developed some technology but it wasn't really working. And so they came to the realization that they needed to team up with a professional firm, um, like ourselves, who had helped other firms, not in Deutsche specifically but in digitization and international expansion and in sales growth and in how to build up a sales and marketing team from scratch, et cetera. And we spend a lot of time getting them comfortable with the idea of working with private equity, working with us in particular, what we were about, how we would work together, building that trust that I mentioned at the beginning and essentially um, ended up doing the deal together.

Speaker B: I've actually got a, this is completely random but a friend of A friend in the darts business, he tells me that the darts are actually made of tungsten, and there's a tungsten shortage at the moment. Did that feature obviously featured in your due diligence?

Speaker A: Yes, absolutely. And we have a big inventory of tungsten.

Speaker B: Good to hear. Um, tell me a little bit, uh, about yourself and your. And your own career. Did you always set out to be a private equity investor and managing partner?

Speaker A: No, No, I, um. So I'm originally from Argentina, and I studied, um, industrial engineering. So I thought I was going to end up working in a factory. In fact, I came to England, um, for an internship in ICI Paints at the time, and I was in the filling lines of paint. Um, but I realized very quickly that, uh, the factory was not a place for me and, uh, perhaps an office was a better place. Um, and then by chance, I have to say, I got recruited by, at the time, the largest private equity firm in Latin America. They had a consulting arm, and the guy that was running that division was a, um, grad from my university. He came and said, I want to interview the top 10 students. And I was in that group. And so, without knowing, I got hired into this amazing industry that, uh, opened my eyes. I didn't know that it existed, and I was fascinated by it. I found it so much fun because it was so diverse. You had the financial side, you have the commercial side, you have the interpersonal side. The only problem for me was that I knew that I wanted to leave Argentina because Argentina, for those of, you know, has a history of ups and downs. And as a child growing up, it's difficult when you face that sort of financial, uh, uncertainty and ups and downs. So, um, I knew I wanted to leave. And I had been lucky enough to get a really good education. I spoke English and French, and so I had sort of the doors to go. And I had a Hungarian passport through my grandparents. So, long story short is that I got, um, an offer from JP Morgan to go work in New York. And, uh, I sort of orchestrated my way to New York, worked there for a couple of years, then decided to do an MBA at Wharton. Uh, because I realized that if I was going to dedicate my life to finance, I needed to get a proper training in finance because I knew maths and physics and I was good with numbers, but I needed the specifics of accounting and finance. So I did that for two years. Again, fantastic. Having the education of that best business finance school in the world and best professor. It was just phenomenal. The problem was that I levered myself. So in true private equity style, I took on a lot of debt to pay for my mba. And it was impossible, of course, to go back to Argentina after that because it would have taken my whole life to pay for my debt. So I ended up using my Hungarian passport. By then, Hungary had been admitted into the eu. And so basically I got a job with Bain consulting. And I thought I tried to get a job in private equity then, and it was really, really horrible. I was not even getting an interview at that time. It was now 2004. Um, there were very few women in private equity, almost none. And I was an Argentine recruiting from the us, sort of. It was a very difficult story to understand. So I thought, right, come to Bain, went into their private equity group. And then once I was in London with Bain, I managed to move into private equity. I took a job with HG Capital.

Speaker B: Great fun.

Speaker A: They gave me, um, the chance. And I always super appreciative to them for having taken a bet on me. I was there for five years, really enjoyed it, great experience. And then, uh, in 2011, I met John and Simon, who had started inflection ten years before. But they were talking about how big it was going to become and what they were going to do with it, and I was excited about the project and so I decided to join them. Um, and so that was then. I then became partner. Then they gave me the job of, um, running the buyout fund. And then a couple of years ago, they asked me to join the two of them as managing partner.

Speaker B: Amazing. What a fantastic story. And thank you so much for sharing it with us. Floor?

Speaker A: No. Pleasure. Thank you for having me, Sam.