CD&R’s Conway: What Downturn?

For CD&R, the financial crisis was a time to deal, not disappear, says managing partner Kevin Conway

To some investors, days of volatility and uncertainty mean it’s time to pack up the portfolio and wait for the storm to blow over. But for Clayton, Dubilier & Rice, the deals continue, rain or shine.

Privcap: It’s been a challenging few years in the financial market. How did CD&R respond?

Conway: We were very busy. We invested a little over $4 billion in the last five years. We’ve had $7 billion of realizations. We bought 14 companies, we brought some new people on to the firm, so it has been a very productive, very good time for us to be investing.

Privcap: What made the firm confident it could thrive in such perilous times?

Conway: Why we were more active than others is also our conviction that we can perform through the cycle. If you’re more of a cycle investor or more of a growth investor, when the macros turn sour or the uncertainty level goes up you pull in. It doesn’t mean necessarily your portfolio is in great shape, but you’re maybe not so anxious to put more money to work. We’ve frankly found some of the most attractive opportunities because it wasn’t that people were forced to sell, but there was more of an opportunity to structure transactions, to partner with people looking to sell a business that might not be quite ready to sell or might have issues around its performance. And that really fits our way of doing business, our capabilities, and our team.

Privcap: What does the performance of your portfolio companies tell you about where we are in the current cycle?

Conway: Well we’ve got a relatively good spread. We’re seeing a lot of growth in healthcare. We’re seeing more sporadic growth and if not weakness in some of the consumer businesses. And then we’re seeing sort of a relatively steady recovery, and in some cases more dramatic recovery in some of the industrial and commercial businesses. ■

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