Z2 Investment Management Brings Flexible Capital to the Lower Middle Market

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Z2 Investment Management, LP (Z2), a new alternative investment manager focused on debt and equity investments in non-sponsored, lower middle market businesses in North America, launched today.

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Monday, October 24, 2022
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Asset Management, Professional Services, Finance, CFO, Heart rate, Life, Growth, BNY Mellon, Investment, BK, Barrett, NYSE, Research, Philosophy, Senior, Gold, Partner (business rank), Goal, Arena, AG, Spinal muscular atrophies, Corporate development, Athlete, Environment, Angelo, Angelo Gordon, Basin, Financial services, Security (finance), Real estate, Bank, Z2, LP
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UNITED STATES, NORTH AMERICA, CONNECTICUT
Summary
Key Points: 
  • Z2 Investment Management, LP (Z2), a new alternative investment manager focused on debt and equity investments in non-sponsored, lower middle market businesses in North America, launched today.
  • Z2 will make direct investments in mostly private companies with a targeted investment size between $10 million and $100 million per company.
  • We saw a void in the direct lending sector serving lower middle market private companies needs for growth capital while maintaining their independence, said Scott Gold, Managing Partner, Z2.
  • Since 1998, Gold has made over 100 investments in lower middle market companies, representing over $1 billion of invested capital.


Z2 Investment Management, LP (Z2), a new alternative investment manager focused on debt and equity investments in non-sponsored, lower middle market businesses in North America, launched today.

Z2 will make direct investments in mostly private companies with a targeted investment size between $10 million and $100 million per company. Financing options for these companies is often limited, forcing owners to choose between not pursuing the next phase of growth or turning over control of their companies to institutional equity capital. This is exacerbated in the current high interest rate environment where it is increasingly more challenging to secure credit from commercial banks or other traditional financing sources. Z2 will originate privately negotiated direct loans and opportunistic equity investments using its large, proprietary sourcing channels.

“We saw a void in the direct lending sector serving lower middle market private companies’ needs for growth capital while maintaining their independence,” said Scott Gold, Managing Partner, Z2. “We believe that non-sponsored, directly originated financings can yield compelling investment risk-adjusted returns while simultaneously supporting this critical and underserved sector of the U.S. economy. This segment is generally overlooked by regulated banks and direct lending investment funds. Our expertise, having spent more than 20 years exclusively focused on understanding the dynamics of these companies, affords Z2 the competency, insight, and confidence to support their growth. Our research and direct connections to these businesses allows us to source unique, attractive opportunities for our investors.”

Z2 seeks to invest across the capital structure in debt and growth-oriented equity investments that are structured to meet each company’s unique needs. Z2’s founders have been actively investing in middle market companies since 1998, representing hundreds of privately held companies and billions of dollars of deployed capital. Scott Gold is joined at Z2 by partners Bobby Barrett and Jake Sussman.

Scott Gold, Managing Partner, leads strategy and overall management of the firm. Prior to co-founding Z2, Gold was a Managing Director and head of Corporate Private Investments at Arena Investors, LP (Arena), where he built an investment team and portfolio of debt and equity investments. Gold has held board positions with numerous private companies. Prior to Arena, Gold served as a Senior Vice President and founding member of the direct lending strategy at Alcentra Capital, a subsidiary of BNY Mellon (NYSE: BK). Since 1998, Gold has made over 100 investments in lower middle market companies, representing over $1 billion of invested capital.

Bobby Barrett, Partner, was previously a Managing Director at Angelo, Gordon & Co. (AG), where he was responsible for deal sourcing, diligence, and portfolio management in the industrial, infrastructure and renewable energy sectors. Barrett led more than $500 million of investments on behalf of AG managed funds, SMAs, and third-party co-investors. Prior to joining AG, Barrett was a Managing Director and Executive Vice President at Basin Holdings, a private industrial holding company that owns and operates global industrial manufacturing and energy service companies. Barrett joined Basin at inception and served as Global Head of Corporate Development and CFO of the rental and manufacturing divisions where he co-built nine platform companies and led over 30 acquisitions and 10 start-ups. Barrett has served as a Director of several companies and currently serves as a Director of Independence Contract Drilling (NYSE:ICD).

Jake Sussman, Partner, was most recently a Director of Corporate Private Investments at Arena Investors, LP alongside Scott Gold, where he was responsible for deal sourcing, conducting and overseeing due diligence and portfolio monitoring. Jake Sussman built and trained Arena’s corporate origination and investment teams, led underwriting on most transactions and served on several boards. He was recognized in 2021 by M&A Advisor as an Emerging Leader in the 40 under 40 category.

About Z2 Investment Management

Founded in 2022, Z2 is an alternative investment company focused on investing across the capital structure of non-sponsored, lower middle market companies in North America, making debt and equity investments that are structured to meet each company’s unique needs.

Z2’s name reflects its founders’ philosophy on life and investing. Endurance athletes train using heart rate zones. Zone 2, or Z2, is the optimal heart rate zone for those athletes to generate long-term and sustained endurance gains. Z2 is not focused on quick returns, we understand long-term value is created by operating efficiently, putting in a steady effort day-in and day-out to achieve our goals.

For more information, please visit Z2’s website at www.z2mgmt.com or contact Z2 by email at [email protected].

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