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Winter 2015

The Canny Investor

Pocket Résumé

Brian Knez ’84: CEO of Neiman Marcus and other top retailers turned private equity investor; founder Castanea Partners. Specialty: Building, growing, and managing small to middle market companies in branded consumer products and service industry sectors. Location: Newton, Massachusetts. Passion: His four children, triathlons, and serving on a variety of nonprofit boards.

He ran Neiman Marcus. Harcourt Brace, too. And, though he claims to have found his niche just by “casting about,” it’s clear Brian Knez ’84 has a head for retail and a knack for picking solid investments.

“I never aspired to run a company,” says Knez, who grew up in Tucson and decided to get a JD because his father was a lawyer. After graduating from BC Law School, he headed to Choate Hall & Stewart. “I loved the intellectual challenge and critical thinking, but I came to realize I was on the wrong side of the table,” he recalls. He went to General Cinema Beverages and then on to senior roles in the consumer products, retail, professional publishing, and education sectors.

Today, he’s a founding partner of Castanea Partners, a private equity firm that invests in companies that specialize in everything from apparel and fashion to health and wellness. Castanea typically invests between $15 and $75 million of equity capital in companies that are ready to take the next step in growth.

Knez decided to name the company Castanea, which means “chestnut” in Latin, because he set up shop in Chestnut Hill and he and other family members lived on Chestnut Street.

“We tend to work directly with company founders who are looking for partners,” explains Knez, who founded the firm with his brother-in-law. Together, they invested $75 million when the firm launched in 2001. The firm now has twelve other institutional investors and more than $1 billion in assets.

“We tend to look for companies where we can find two or three operating opportunities that, if implemented correctly, can help that business reach a new level of success and create significant additional value,” he says.

A case in point is Drybar, the hair care company that pioneered the “blow dry bar” concept: No cuts. No color. Just blowouts for $40. Founded by a brother and sister team, Drybar had eight shops when it partnered with Castanea.

“Drybar wanted to expand nationally and build out its own product line,” says Knez. “We helped them create a branded product line as well as a wholesale business from scratch. Drybar now has 50 shops and a robust business selling its products in its own stores, in Sephora retail stores, and on QVC,” he says. “They’re off to an incredible start.”

Other companies in the Castanea portfolio include 4moms, a robotics company that makes high-tech baby gear, and Essentia, a provider of enhanced, alkaline water. Past companies that the firm funded and then sold include children’s clothier Hanna Andersson and Fuze Beverages, acquired by Coca-Cola Company in 2007 for an estimated $250 million.

Quick to acknowledge that not every investment pans out, Knez also says the key to success is focusing on more than a quick profit: “It’s about building real businesses, real products, and creating real jobs. It’s less about being brilliant financiers and more about managing and motivating human beings to buy into a common vision for the company. It’s a great feeling to create wealth not just for ourselves and our investors, but also for our partners and the portfolio companies’ employees.”

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