Text taken from the original magazine feature article on Cory Sandrock
Boasting a unique background comprised of both qualitative and quantitative skillsets, Cory Sandrock is a rare gem within the finance industry. For more than 20 years, he has followed a remarkable career path—from theater and film production to investment banking and private equity—with every role combining his creative approach and robust analytical skills. Even his educational background marries the arts with finance, beginning with a B.S. in theater from Northwestern University and ending with an MBA in finance and economics from The University of Chicago Booth School of Business. The lifelong storyteller has succeeded in blending the best of both worlds: writing and directing numerous theatre productions while also garnering extensive experience in finance. Cory has managed over $3 billion in financing transactions and holds expertise in capital markets, strategic planning, financial analyses, commercial real estate, and investment management. He has also held lead financial, operational, and transactional roles for Northern Trust, The University of Chicago, UBS, and many other well-known companies.
Today, Cory is the founder and managing director of Pareto & Company, a private investment firm in Chicago, IL, that targets highly fragmented industries with numerous owner-operators. He also holds a key board role for most Pareto investments, serves as an adjunct professor of finance and economics at Northwestern University, and has lectured on other business skills at The University of Chicago. Cory recently met with us to share more about his unique career journey and all the benefits Pareto & Company has to offer.
Let’s start at the beginning. What inspired you to join the finance industry as a creative arts professional?
While producing theatre I frequently met with potential investors to pitch the shows I was launching, and they always asked me about returns and for projections. Since I had never studied such things before, I decided to pursue an MBA to make my pitches more effective. I originally had no plans of working in finance after business school, but when I learned about supply and demand in my first economics class, I discovered the tools to describe the challenges in creative industries and I was hooked. It was truly an “aha” moment where I realized that I not only loved finance, but also, I was good at it. That transformative moment set me on my current path, and I have been merging finance with creativity in different capacities ever since.
Explain the commonalities you see between finance and the arts.
Both industries involve storytelling. As you would for theater audiences, you must tell investors a clear story from beginning to end to garner their investment, just like the applause after a good performance. While I have done plenty of acting and producing, my favorite role is that of director and script writer. I want to create the story that leads to a great performance and this skill translates into what I do now because writing a script is part of creating opportunities for investment. Convincing investors is essentially performing with spreadsheets.
How did your former roles in finance lead to starting Pareto & Company?
In 2014, when I was working at Northern Trust, several investors and I were making some passive investments together. We began to see several additional opportunities that required more value add, but we were not set up to go in and really manage the businesses, so we had to make a decision: either say no to those opportunities or adapt. We chose the latter, and in 2016, Pareto & Company was born as a private equity sponsor geared toward reviving the classic merchant banking model of pairing smart operators with the right capital solution to promote growth.
Why did you choose the name Pareto?
In 1906, the Italian economist Vilfredo Pareto first observed that 80% of the effects come from 20% of the causes. This idea leads to powerful results and can benefit everything from sports to science, so Pareto & Company was founded to honor his discovery. We invest based on the Pareto Principle by curating a small number of investments that we believe will produce the best results.
What else should we know about Pareto & Company?
Pareto is a private equity sponsor focused on finding opportunities in overlooked industries, especially those which allow us to create significant value by combining investments with our expertise. We identify platforms that can be built via improved organic sales processes and complimentary acquisitions to consolidate within a fragmented industry. We structure transactions that pair growing businesses led by skilled leaders with the best fit combination of individual and institutional capital sources. We also enhance each acquired company by rolling up our sleeves and partnering with experienced industry leaders and smart capital providers to scale each business. Investing in a smaller group of transactions means we can devote more time to producing better results, and we have the flexibility to fit each deal’s structure around its unique needs—including varying the investment period or exit strategy to ensure success.
How does your approach differ from that of other private equity firms?
My background in theater and finance has had a significant impact upon the company’s approach to finance—meaning it is both creative and intelligent. We’re open to diverse opportunities, and we implement creative approaches to finding them. Pareto is also unique among lower middle market private equity firms because we are willing to go into small industries that larger firms with minimum EBITDA or revenue targets would overlook. We will work with companies at varying growth stages; however, we do not invest in pure startups since we look for companies with steady cash flows.
How do you go about helping companies grow?
Once we assess the needs of a company, we present the information to different funds and investors to create partnerships. This provides additional capital and expertise. If the process includes building out a company’s M&A arm, we put together a team to help, and we also assist with marketing and enhancing their sales process. Our founding investors are all operators who successfully developed companies, so we enjoy working with management on the everyday nitty gritty of running and scaling a business. For instance, if a company is having banking issues, we can use our connections with larger banks to get a better package and help them save money.
What areas do you most commonly serve?
We do a lot of business in the broader Midwest because many of our individual investors are there, but we look at investment opportunities everywhere and have a capacity to serve nationally.
Let’s end with more about you. How do you spend your time outside the office?
I live in Illinois with my wife, Kristina; our son, William; and our goldendoodle, Dublin. I’m an active supporter of Mercy Home for Boys and Girls in Chicago and of GreenMan Theatre Troupe in Elmhurst. I also still periodically write and direct shows whenever I can, because I never want to lose sight of the passion and creative skills that brought me to where I am today.
Originally published by Redwood Media LLC in the Top 100 People in Finance 2021 Special Edition