Meet Private Equity’s Quiet Corporate Turnaround Artist

Immanuel Onuoha was working as a sales associate at a Lululemon Athletica store in downtown Boston in 2018 when he struck a conversation with David Mussafer, a private equity executive who was studying the retailer. After a chat, Mussafer gave Onuoha his business card, which he passed onto his younger brother, Angel, then an undergraduate studying economics at Harvard.

The younger Onuoha emailed Mussafer the next day and received a reply almost immediately. Within days, he was touring the Boston headquarters of Advent International, the $81 billion (assets) global buyout giant Mussafer helps to lead as a managing partner. It had invested nearly $1 billion into Lululemon in mid-2014 and was turning the retailer around after negotiating a standstill in a bitter fight between the company and its founder, Chip Wilson.

The chance meeting wound up spawning a deep connection. As an undergraduate, Onuoha had created a non-profit connecting hundreds of black students at dozens of colleges nationwide to Wall Street jobs and internships. Mussafer’s firm became a sponsor of the effort and Onuoha himself worked as an interns at Advent. “David created this informal mentorship between us and it’s something that completely transformed my college experience,” says Onuoha. “He cares a lot about creating relationships and attending to them. He’s been a great sounding board for every major decision that I've made.”

Mussafer’s chance encounter turned new relationship came as he was walked Lululemon’s stores to get an unvarnished view of the company and executed one of the great turnarounds on Wall Street this decade.

When Advent invested in Lululemon in August 2014, its shares were limping along in the low $40s, about half their prior peak, and was still reeling from negative comments its founder Wilson had made about women’s bodies. Further complicating the situation was Wilson’s near 30% stake in Lululemon, which was setting up for a battle between him and the company, all while it desperately needed an e-commerce strategy to keep up with Amazon.

Mussafer, who had invested in Lululemon as a private company and took it public in 2007, negotiated to buy half of Wilson’s shares in return for $845 million in cash and the promise of a ceasefire. Then he got to work reshaping Lululemon, first by refreshing its board and hiring Glenn Murphy, the former CEO of the Gap, as chairman, and new director Emily White, a veteran of Google and Facebook, and Jon McNeil, a former Tesla executive. Each hand-picked guru brought a different skill; for instance e-commerce strategy, ideas on international expansion, or strategies on how to refresh its stores or use data to understand customers better. He also recruited Calvin McDonald, the former CEO of Sephora, to run the company after former CEO Laurent Potdevin resigned after having an inappropriate relationship with a designer at the company. 

By March 2019, when Advent sold off its stake, Lululemon’s revenue growth had nearly doubled to 24% and the company was worth about $20 billion, roughly five more than when Mussafer first invested. 

Then came the Coronavirus pandemic, where Lululemon’s heavy investments in a direct-to-consumer digital strategy really paid off. With stores shuttered for long stretches of the year, Lululemon saw sales rise 20%-plus and the stock nearly doubled from its pre-pandemic highs. It now carries a near $60 billion market capitalization and is one the most valuable companies to have ever been incubated by a private equity buyout firm.

Mussafer, 58, a soft-spoken Alabama native doesn’t fret about leaving money on the table.

“What you really want are companies to be successful after your tenure. It’s one of the things we're most proud of because we are an intermediate investor,” he says. “We come in and help a company untangle a complicated situation, or accelerate their growth... When we sell, it's like cutting the weight off of a balloon.”

“If Advent hadn't been involved, there was a less than zero chance that Lululemon would be worth over $50 billion,” says Glenn Murphy, chairman of Lululemon. “David is a big thinker. He was able to come in with a plan and get the right people around the table,” adds director Emily White.

In the world of buyouts, Mussafer cuts against convention, challenging his hundreds of dealmakers around the world to get out of the office and study new markets or technologies. His investment style prioritizes the importance of creating relationships with companies and entrepreneurs that may take years to pay off. Above all else, he considers his growing Rolodex with large public companies as its comparative advantage, versus competitors that may rely on financial sleights of hand.

During the 2008 financial crisis, Advent acted as a savior to Cincinnati-based Fifth Third Bancorp, which like all U.S. lenders, was reeling towards insolvency. With financial markets in free fall, Advent struck a 50/50 joint venture to carve out Fifth Third’s Vantiv payments business, valuing the unit at $2.3 billion and infusing the bank with emergency cash. As the crisis worsened, Mussafer had leverage to re-trade his JV deal and seek a lower price. Ultimately, he stuck with the original terms. 

“They might have been able to squeeze out a better price, but it would have put the partnership in a bad place,” recalls Charles Drucker, who became CEO of Vantiv. “It wasn't about the last dollar for Advent. They wanted to make a big profit.” 

The deal not only helped Fifth Third survive long enough to be recapitalized by the government’s 2009 rescue but Vantiv’s 2012 initial public offering and surging public market value wound up making the bank and Advent billions of dollars. For Mussafer, the deal compounded on itself.

A year later, ailing Royal Bank of Scotland put its valuable Worldpay payments business up for sale, searching for capital to shore up its balance sheet and eventually exit government conservatorship. Advent was the obvious firm to sell to and Mussafer’s outfit paid $3 billion for WorldPay in 2010. Seven years later, Vantiv acquired Worldpay for a staggering $10.4 billion cash and stock, making Advent multiples of its money. Two years later, Vantiv was acquired by Fidelity National Information Services for about $35 billion.

Those crisis-era payments investments made Advent one of the strongest performing and fastest-growing private equity investors in the world. Advent’s $3.3 billion 2005-vintage private equity fund generated a 42% net internal rate of return, according to data from Calpers. Its subsequent 2008 fund, Advent Global Private Equity VI, raised $10.4 billion and generated a 16%-plus net IRR, outperforming most peers. In 2019, Advent raised a record $17.5 billion for its Fund IX, one of the largest funds ever raised by a privately-held buyout firm.

“Our strategy isn't to be super clever with our dealmaking, '' says Mussafer. “It's about what we can do to create high-growth companies. Then, the exit multiple will take care of itself.”

Mussafer forged his path to the apex of the private equity world from a start far from Wall Street.

Raised in an upper middle-class upbringing in Alabama, Mussafer applied to just one college, Tulane University, where his parents had met years earlier and married. As an undergraduate, Mussafer’s father encouraged him to try finance, which he pursued as a major. After graduation, he took a position at Chemical Bank as a credit analyst and began to build models for the bank to finance the then roaring leveraged buyout market. Three years later, Mussafer matriculated to the University of Pennsylvania’s Wharton School to pursue an MBA.

By the 1990s, Mussafer wanted to execute private equity buyouts, instead of financing other people’s deals. Eventually, he was recruited by Advent International, a firm that had been founded in 1984 by Peter Brooke as a spinout of Boston-based TA Associates. In the 1990s, Advent was mostly known as a venture capital firm, with funds focused on biotech, IT, and even renewable technology investments.

The firm was earning mediocre returns by the time the dot-com bubble popped in the early 2000s, so Mussafer and a few partners began to reshape Advent, refocusing the firm on private equity funds with a mandate to invest globally, and cutting bait on its disparate venture capital activities. Founder Brooke handed down his shares to the partners, forming a private partnership that remains today where each partner owns a small piece of the firm’s profits.

“Failure really wasn't an option for the continuation of Advent,” says Mussafer. “With a sole focus and not much to fall back on, it really ignited innovation and collaboration.”

“We are a private partnership and there are no outside shareholders,” says James Brocklebank, a managing partner, who co-leads Advent’s European operations out of its London offices. “It's a tight collegiate group of people and it’s a very low ego culture of continuous improvement.”

In Advent’s new style, its dealmakers were freed to study industries deeply, in search of coming changes that could be capitalized upon. It was an early investor in the booming digital payments industry and began to be one of the most active investors in specialty retailers insulated from big box competition. Mussafer’s team also began to hire expert outsiders as operating partners to build contacts inside corporate boardrooms, eventually hiring an army of over 125 outside operating partners and advisors. 

As Advent started to succeed in complex carve-outs of businesses from giant corporations, it became one of the most active investors as financial markets bottomed after the crisis. More recently, large deals include Advent’s acquisition of Wal-Mart’s entire Brazilian business and its $18.7 billion acquisition of German conglomerate Thyssenkrupp’s elevator business. 

“David’s not flashy, but he's very analytical,” says Dan Springer, CEO of DocuSign and an operating partner for Advent. “He’s really good when you're trying to make a group decision and build consensus.”

Now, with its funds nearing $20 billion in size, Advent is marrying its penchant for carving out mammoth businesses with its identification of emerging growth trends, reserving a portion of its funds to bet on startup companies taking on large incumbents. 

It is a big investor in Thrasio, a unicorn rollup of merchants selling products on Amazon, and Brazil’s Nubank, a fintech company that is one of the world’s most valuable private startups. Other areas of heavy investment for Advent include logistics, where it has backed InPost and Hermes, and in healthcare with Zentiva and Definitive Healthcare. To make sure it stays at the leading edge, Advent is building a large in-house team of data scientists called Advent Labs, that use data to uncover potential investments or help with recommendations for the companies in its portfolio. 

With markets at all-time highs and private equity firms having to figure out how to make money beyond basic financial engineering, Mussafer believes the market plays into the hands of his now over 200-investor strong team, which has made 380 investments in 42 countries globally.

“The creative destruction and the opportunities that come from it have created more opportunities than we ever imagined,” says Mussafer. “Where every cool new company has been created, there’s also some incumbent that stubbed their toe and needs help.”