• Deal-by-deal team to focus on transactions requiring around USD 30m to USD 250m in capital
• Will involve companies with USD 7m-USD 75m in EBITDA, USD 50m-USD 750m in EV
• Cascadia also eyes restructuring/liability management practice, industry coverage expansion

Cascadia Capital’s new deal-by-deal advisory platform positions the investment bank to capture opportunities in a market it views as being in its early stages, CEO Michael Butler told Mergermarket.

“We believe the sponsor-driven, direct deal market will continue to grow,” he said. “There’s significant upheaval coming in private equity, and we see these as fundamental changes.”

Austin, Texas-based Cascadia Capital recently tapped two senior former Houlihan Lokey bankers as co-heads of the deal-by-deal platform, as previously reported by Mergermarket. Simeon Ketchum and Peter Purcell have joined Cascadia as managing directors, based in London and California, respectively. Both bankers were key figures in advisory firm Triago’s directs and co-investment business before its acquisition by Houlihan Lokey last year.

In a challenging fundraising environment, the deal-by-deal, or single-asset, model is increasingly favored over traditional blind pool-funds.

It is a market requiring specialist expertise. Investment in these transactions is no longer solely the domain of family offices, Ketchum noted. Many institutional investors now have dedicated co-investment and direct investment teams; this sees them invest outside their primary funds roster, partnering with sponsors without being a fund LP.

“Everyone wants to get into this area, but it takes a proprietary investor network to do so given the investor universe is distinct from primary PE funds and secondaries,” he said. “Cascadia saw the opportunity to recruit a tactical team.”

Ketchum and Purcell’s equity capital solutions team will focus on advising both independent and funded sponsors looking to tap the direct, deal-by-deal market, as well as family offices.

Independent sponsors will be one key focus, with Ketchum highlighting “spin-out teams” — referring to experienced managers setting up their own firms — as a focus area. “This can include folks at larger firms who want to do middle- and lower-middle-market deals,” he explained.

Traditional blind-pool sponsors, meanwhile, are also increasingly turning to the direct market. “They may be falling short of target in the current fundraising environment and need to raise third-party capital for deals,” Ketchum said.

LPs are increasingly saying they are “tapped out” and have received all the co-investment they’ve requested and budgeted from their fund GPs, he noted. “The result is that fund managers can no longer count on their existing LPs to round out equity checks.”

Meanwhile, fund sponsors are interested in earning economics on co-invest capital whereas they previously gave it away fee-free to their fund LPs, Ketchum said.

Warehousing equity is a popular tool being used in these scenarios, he added. This involves a sponsor that is between funds raising capital for an acquisition on a deal-by-deal basis and engaging with an investor to warehouse a portion of the deal equity. Upon first close of the next fund, the stake is transferred in as an initial portfolio asset. The investor then typically keeps a portion of the equity for themselves in the single deal special purpose vehicle (SPV) alongside the fund, in which it can also make a commitment.

Overall, the focus will be on deals requiring around USD 30m to USD 250m in capital, though Cascadia will maintain flexibility to take on mandates outside of this range, said Ketchum. Transactions will range from majority buyouts to significant minority stake sales, as well as growth equity transactions and post-close syndications, typically involving companies with between USD 7m-USD 75m in EBITDA, and worth around USD 50m-USD 750m in enterprise value (EV). The capital used will include common equity, preferred equity, junior debt, and hybrid capital.

For Cascadia, the move into the direct market builds on its capital markets platform, which has expanded since Bob Diamond’s Atlas Merchant Capital invested in the investment bank in 2022. “Their track record in many transactions for emerging sponsors is very attractive, not only to supplement the capital markets business, but the firm’s coverage efforts overall,” said Tom Mills, head of capital markets at Cascadia.

Until now, he said the practice had a focus on debt capital raising for companies with USD 10m–USD 50m in EBITDA, in the same sweet spot as Ketchum and Purcell’s team.

The deal-by-deal practice will fit into an integrated set-up that will see it collaborate closely with adjacent teams, such as Cascadia’s sponsor coverage team and its industry bankers. “Everyone here is incentivized to help grow the business,” Ketchum said.

Cascadia will lean on this integrated approach to help deliver comprehensive support across all stages of a sponsor’s investment—from initial fundraising to add-on acquisitions, financing needs, and, ultimately, exit.

“Our goal is to help our clients through the life cycle of the investment,” Butler said. “Our industry bankers and financial sponsor coverage group remains focused on the fund and the asset throughout the life of that asset.”

Among other strategic priorities that will contribute to this goal, Cascadia is also planning the potential launch of a restructuring and liability management practice. “Given the high level of activity in our capital markets practice and the quality of our relationships, we’re aware of many assets that are over-levered and need restructuring,” Mills said. The firm is actively hiring and could launch the practice in 1Q26.

Industry expansion

Looking ahead, the firm is also monitoring opportunities to expand across industry verticals. “We want to continue to build out our industry coverage,” Butler said, noting that industrials and technology are among the highest priorities. The firm could announce further hires in these key areas, he added.

Overall, the expectation is that growth will largely be organic, with hiring prioritized to expand into new fields. However, Cascadia could pursue strategic acquisitions as they arise.

“With respect to M&A, we want to grow our business organically, but when and if M&A opportunities present themselves we will absolutely take a hard look,” Butler said.

In January 2024, the firm notably announced the acquisition of Threadstone Capital, a New York-based advisory firm focused on consumer, retail, and beauty.

Looking forward, healthcare and infrastructure are two areas where M&A would make sense given the scale needed to build a practice. “We think that one or two MDs are probably not sufficient to build the type of practice we would like,” Butler added.

Founded in 1999, Cascadia has grown rapidly since Atlas’ investment in 2022. The firm now has offices in Austin, Los Angeles, Minneapolis, Nashville, New York, and Seattle, boasting more than 100 bankers.

Declining to comment on Cascadia’s revenue, Butler noted that the firm –now the second largest independent investment bank in the US market— has healthy cash flow. For now, he expects the firm to remain independent, with the continued backing of Atlas.

“I think we’re still in the second or third innings,” he said. “These are still early days.”