Yale ICF Advisory Board Member Spotlight: Adam Blumenthal '89

In this blog series, the Yale ICF will highlight ICF Advisory Board Members who are practitioners from various finance fields and alumni of the Yale School of Management and/or Yale University. Our board members enjoy giving back to the Yale community by participating in panels, guest lecturing, and taking part in Q&A sessions with students. Their generous financial support allows the Yale ICF to host events, sponsor academic initiatives, provide research support to faculty, and much more. The Yale ICF is grateful for their continued support!

What is your current role and industry?

I’m currently chairman and managing partner of Blue Wolf Capital Partners. We’re a private equity firm that manages $2.9 billion in capital, and we focus on making transformational investments in middle market companies. Roughly half of our investments are in manufacturing, and half are in health care. In particular, we look to invest in companies where growth is being hindered by issues that Blue Wolf is good at managing, but which may deter other PE investors. There are a lot of business skills that are table stakes in our industry, but we invest where those skills alone aren’t enough. Often those are situations that involve managing labor and government – for instance in health care, we look to align our investment strategy with the population health Triple Aim of better outcomes, lower cost and greater patient satisfaction, and we know how to work with payers and regulators to use that alignment to fuel growth. In manufacturing, we try to align productivity, quality, engagement and compensation, and reduce labor-management conflict.

How did you get into this field?

I came to SOM 35 years ago with an interest in using ESOPs and employee ownership to restore and rebuild American manufacturing. My background had been in union and community organizing. When I graduated, I worked on structuring and negotiating those types of investments. This was when there were very few PE funds in existence, and we needed a lot of creativity to find the capital for our deals. As private capital became more available, it was a natural evolution.

What are the biggest challenges and opportunities that professionals in your industry face today?

We live in a world where global instability affects everything, even mid-size domestic companies. So underlying assumptions about “how the world works” have to be probed and questioned if we’re creating companies that will perform well for the next decade. Asking the questions about where risk lies for specific companies, and then creating resiliency in the face of that instability is the challenge for control investors – whether that has to do with building resilient global supply chains, improving recruitment and retention of healthcare professionals in the face of that industry’s challenges, or identifying companies that will be propelled forward by the need to respond to climate change. 

Where do you see the industry going in the future?

In a volatile world, the ability of PE-backed companies to operate quickly is going to be a competitive advantage that outweighs economies of scale achievable by large public corporations in many cases. As a result, the industry will continue to grow.

What advice do you have for someone new to the industry?

Private equity gets criticized for focusing on financial engineering and prioritizing cost reduction over innovation and growth, and certainly there are investments where that happens and firms that promote those strategies. That approach can look appealing on a spreadsheet where competition and macro factors don’t interfere – but they have a nasty habit of blowing up both companies and careers over the mid-term. Take responsibility for your career and investments. We’re privileged to occupy the seats we do, and we make choices about what we work on and what priorities we set and strategies we embrace.  If you want to roll the dice, go to Vegas. 

Bio

Adam Blumenthal is Founder, Co-Managing Partner and Chairman of Blue Wolf Capital Partners.

Prior to founding Blue Wolf in 2005, Mr. Blumenthal served as First Deputy Comptroller and Chief Financial Officer for New York City from 2002 to 2005, where he managed the assets of the city’s pension system. During his tenure, the city’s pension assets increased from $65 billion to $85 billion, primarily as a result of strong investment gains. Prior to that, Mr. Blumenthal built and managed American Capital Ltd., a publicly traded buyout and mezzanine fund (NASDAQ: ACAS). During that time, Mr. Blumenthal played a central role in building the company from an unfunded start-up into a publicly traded company with over $1 billion invested in 63 middle market companies at the time of his departure.

Mr. Blumenthal served from 2011 to 2017 as independent trustee and chair of the investment committee for the UAW Retiree Medical Benefits Trust, a $60 billion fund that pays health benefits for over 750,000 retired autoworkers. Early in his career, from 1980 to 1984, he worked as a community and union organizer.

Mr. Blumenthal currently serves on the Advisory Board for the International Center for Finance at the Yale School of Management (SOM) and is a Lecturer in the Practice of Management. From 2004 to 2007, he served on the Board of Advisors at the Yale SOM and was named a Donaldson Fellow in 2009.

In addition to serving on numerous boards of directors for middle market companies, Mr. Blumenthal also has been a trustee and chairman of the investment committee of the Nathan Cummings Foundation and the Community Service Society of New York.

Mr. Blumenthal received a B.A., magna cum laude, from Harvard College and a M.B.A. from the Yale School of Management.