Kayana Capital
Private investment firm. Milwaukee, Wisconsin.
Kayana Capital acquires labor-intensive services businesses in the middle market as an independent sponsor and serves as operating partner to private equity sponsors on the labor model within their portfolio companies. The firm is affiliated with Kayana, which builds and manages offshore operating teams for companies in the United States.
Investment Approach
Investment Approach
Kayana Capital evaluates businesses on two sets of criteria. The first are the market characteristics any buyer would examine. The second measure whether the labor model of the business can be rebuilt with a dedicated offshore operating team while client relationships and the quality of work are maintained. The firm invests where the second set of criteria accounts for a material part of the expected return.
Market criteria
Fragmentation, recurring demand, growth, the assets that matter in the category, and the extent to which institutional capital is already present.
Operating criteria
The share of work that can be performed remotely, the share of cost that is labor, the degree to which processes are documented, the exposure of the work to automation, and the availability of domestic talent.
Valuation
The expected operating improvement is estimated before an offer is made and reduced for any portion already reflected in the seller's cost structure or the market price. Where the improvement is not material, the firm does not proceed.
Capital Structure
Capital Partners
Kayana Capital does not manage a committed fund. The firm sources, structures, and leads transactions and capitalizes each one with equity partners who invest alongside it. Separately, private equity sponsors engage the firm as operating partner for the labor model within portfolio companies they already own.
Family offices
Long-duration equity for transactions the firm leads.
Institutional equity partners
Co-investors and independent sponsor capital programs for larger transactions.
Private equity sponsors
Sponsors engage the firm as operating partner for the labor model within their portfolio companies: underwriting in diligence, building the operating team at close, and ongoing accountability for its performance. The firm may co-invest where appropriate.
Value Creation
Value Creation
In both roles, as owner and as operating partner, the firm is responsible for the labor model of the portfolio company. The work falls into the following areas.
Operating improvement
Returns are underwritten to changes in how work is performed: who performs it, where, at what cost, and with what documentation. Leverage and multiple expansion are not assumed.
The first hundred days
The operating team is designed during diligence and the build sequence begins at close, so the value creation plan has dedicated staff rather than depending on the existing management team's capacity.
Organization design below the executive team
Finance, operations, customer service, and data functions. The work determines which roles remain local, which are built offshore, and how the two operate as one team.
Finance function and working capital
Accounting, monthly close, accounts receivable, and management reporting are typically the first roles built. Order-to-cash processes are labor-intensive and are addressed in the same build.
Workflow design with AI
Teams are built around work where AI increases the output of a skilled operator. Work that AI is expected to replace outright is excluded from the model.
Measurement and exit readiness
Documented and repeatable processes are maintained through the hold period and are part of what a subsequent buyer evaluates. The operating improvement is measured and reported in the sponsor's scorecard.
Focus Areas
Focus Areas
The firm concentrates on services businesses in which the work is performed remotely, labor is the principal cost, and processes are documented.
Accounting & Financial Administration
- Bookkeeping and outsourced accounting practices
- Tax preparation and advisory practices
- Retirement plan and benefits administration
- Captive management and fund administration
Insurance Services
- Specialty insurance distribution
- Policy servicing, certificates, and renewals
- Claims processing and administration
- Wholesale and program administration
Compliance & Business Services
- Compliance and risk management
- Revenue cycle management
- Audit preparation, monitoring, and reporting
- Specialty professional services
Businesses outside these areas are considered where they meet the same criteria.
Investment Criteria
Investment Criteria
Established, profitable companies headquartered in the United States.
Size
$2 million to $15 million of EBITDA. Larger transactions with equity partners
Ownership
Control positions in founder-owned and closely held companies, including succession and partial liquidity transactions
Management
Management teams prepared to change the operating model, whether they remain after the transaction or transition out
Fit
Businesses in which the expected operating improvement is material, measurable, and not already reflected in the cost structure
Leadership
Leadership
Chris Nolte
Founder and Managing Partner
Chris Nolte leads Kayana Capital’s investment and operating activity. He has acquired and operated small and middle-market companies as a principal and serves as operating partner to private equity sponsors on the labor model within their portfolio companies.
He co-founded Marcus Investments, the investment firm of the Marcus family, and spent seventeen years there, the last four as President. He founded Berengaria Development, a programmatic developer of donation-retail real estate that completed more than $500 million of construction and became Marquee Capital, which today owns roughly $500 million in assets. As President and CEO of Verlo Mattress for eight years, he was both the franchisor and the system’s largest franchisee.
He is the founder of Kayana, which builds and manages offshore operating teams for companies in the United States, and the author of Operational Alpha. He holds an MBA from the Kellogg School of Management at Northwestern University and is based in Milwaukee.
Contact
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