Chenmark brings private equity predation to the local level
Vampirism has become a common cliché for the business practices of high finance and big corporations. Matt Taibbi memorably referred to the investment bank Goldman Sachs as “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money” in a 2010 article for Rolling Stone. This summer, opponents of Live Nation’s plan to open a music venue in downtown Portland put posters in windows calling the monopolistic company a “real live vampire.”
Like any writer or editor worth their salt, I try to avoid using clichés. But in the case of Chenmark Capital Management, an investment and holding company based in Portland, there is no more apt comparison than a brood of blood-sucking, dead-eyed, yet disturbingly alluring vampires hunting human prey.
Chenmark is essentially a private equity company: an investment group with very deep pockets that buys businesses and sucks all their profits out for itself. That alone is vampiric, but Chenmark does much more to earn that adjective.
Recall that when a vampire bites you, you die, then enter a twilight state between life and death. To those who knew you when you were among the living, you appear to be the same person, albeit perhaps more rakishly stylish. But you are not you or even a person anymore. You cannot stomach human food and our life-giving sun sets your skin on fire. You exist solely to drain the lifeblood of others, turning them into vampires condemned to seek the same sickening succor forever.
That’s what Chenmark does. But unlike the first wave of private equity ghouls, who’d typically buy one big company, like Toys “R” Us or Joanne Fabrics, and run it into the grave with debt and high management fees, Chenmark is pursuing a new approach — one that’s attracted hordes of the Wall Street undead since the firm was founded 10 years ago.
Chenmark buys small, local, usually family-owned businesses from people hoping to retire and promises to keep running their company “forever.” They then professionalize the enterprise by inserting Ivy League business school grads — who have little or no experience in the industry they’re entering — in all the top management positions to operate the mom-and-pop like a maximally efficient and profitable corporation.
All the revenue not needed to keep running the company and paying the new C-level bosses’ six-figure salaries is sucked up by Chenmark and used to buy more mom-and-pops — often tiny competitors in or near the same market, through a monopolistic expansion strategy called tucking in or rolling up in the cringey patois of the capitalist class. Yet Chenmark’s portfolio is also highly diversified, comprised of landscaping and snow-plowing companies, tourism businesses, paint stores and food manufacturers in several states and Canada.
Some of these acquisitions have made news, such as Chenmark’s purchase of the iconic Maine furniture-maker Thos. Moser this January, and the firm’s founding principals — brothers James and Palmer Higgins and James’ wife, Trish Higgins — have spoken openly about a few other buyouts on business podcasts. But for the most part, they prefer to work in darkness, keeping the full extent of their holding company’s holdings secret. They do not list their companies on their website, those businesses’ sites make no reference to Chenmark, and the founders did not respond to my interview requests last month.
Based on media reports and the founders’ past podcast comments, it appears Chenmark has taken over at least three dozen small businesses since 2015 and combined most of them to form about a dozen platform companies in specific industries, like lawn care.
For example, after making their first purchase, Portland-based Seabreeze Property Services, in 2015, the Higgins clan bought Piscataqua Landscaping & Tree Service, an Eliot-based company founded in 1979, the following year. Earlier this year, Chenmark ditched the Seabreeze brand, having merged those operations into Piscataqua Landscaping & Tree, now headquartered on Riverside Industrial Parkway in Portland.
Piscataqua had already rolled up Jacquelyn Nooney Landscape, also formerly based in Eliot; Community Landscape Company, based in Wolfeboro, N.H.; Labrie Associates, a design and landscaping firm in the Seacoast area; and CBH Landscape Contractors in Belmont, N.H. Chenmark also owns Mainely Grass, founded in York in 1999 and now based in Bedford, N.H. On a January 2022 podcast, Palmer Higgins let slip that Mainely Grass bought “three small lawn care companies” in the winter of 2019. We may never know how many others Mainely Grass has tucked in.
Another early acquisition was Cap’n Fish’s Cruises, a company that sells whale- and puffin-watching trips in Boothbay Harbor. A couple years ago, with no announcement, publicity or press, Chenmark snapped up one of Cap’n Fish’s only competitors in Maine, Portland Discovery Land & Sea Tours, when husband-and-wife owners Bill and Kathy Frappier sold their boat-and-trolley tourism business after over a quarter century on Commercial Street. This spring, Chenmark secretly took over Maine Day Ventures (formerly Maine Foodie Tours), a company headquartered in the Old Port that operates from Kennebunkport to Bar Harbor. Chenmark also owns numerous cruise tourism companies in Florida.
•••
What’s so evil about these investors that they should be likened to monsters? Chenmark’s founders say they’re helping older business owners retire with a nest egg worth at least several times the value of their company while preserving its good name for generations to come. They also speak, in their lifeless corporate tongue, of the impact they have on the many hundreds of wage laborers in their employ and those workers’ families, though not in material terms, like improved pay or benefits, which appear to be no better or worse than those offered by Chenmark’s competitors.
Chenmark’s business model is bad for workers and consumers for all the usual reasons associated with monopolies — price-gouging, uncompetitive wages, closing markets to entrepreneurs, stifling innovation. It’s also bad for entire communities, because all the profits are either sucked out of the towns in which Chenmark’s businesses operate and used to buy another company far away, or they’re spent to tuck in a local competitor who has little chance of competing against a rival backed by Wall Street-level capital.
On podcasts, Chenmark’s founders have noted the advantages of being able to move money from one business to another within their holding company as needs arise. They speak of their desire to attain pricing power in local markets, which can be wielded to raise prices on customers at will or lower them to undercut a competitor. And they boast of developing shared services among all their businesses to handle tasks like marketing and account management — a euphemism for cutting jobs made redundant when new acquisitions join the fold, or no longer using local service providers, thus siphoning yet more cash from the host community.
The bigger picture is downright dystopian. Chenmark is at the forefront of a veritable gold rush as rich investors — fattened by huge state and federal tax breaks and so hungry for higher returns that they’re buying imaginary shit like crypto — identify small family businesses as the last crannies left to jab their blood funnels in search of money made through somebody else’s hard work. And in a diabolical twist, the hollowing out of local economies exposes more prey.
Websites like BizBuySell and BizQuest offer hundreds of thousands of financially strapped mom-and-pops for sale online, business brokers are doing a brisk trade with armchair CEOs, so-called search funds backed by investors scour the country looking for successful family firms ripe for takeover, and traditional private equity and hedge funds continue to pick the carcass clean. Entire industries, from veterinary practices to optical shops, are in the process of being devoured.
Chenmark’s novel model — holding companies that keep their small yet profitable acquisitions long-term — is now being taught at elite business schools, where it’s inspired a new generation of M.B.A. grads who value the tangibility of owning and operating a real world business over staring at Excel spreadsheets in a hedge fund’s cubicle 80 hours a week.
The extent to which this new gold rush grows is the extent to which local family businesses run with genuine passion and know-how become, usually without notice, soulless compounding machines (in Warren Buffett’s literal coinage) run by Lost Boys in powder blue shirts whose primary purpose in life is to generate more profits for Chenmark. Dedication to craft and community, the personal pride and satisfaction of a job well done, building an enterprise together and collectively sharing in its success — none of that survives the bottom-line nihilism of private equity takeovers. Life itself is merely a means to make money in their worldview.
That view of life is, naturally, repulsive to flesh-and-blood workaday folks — thus the trope that it’s vampiric, unnatural and harmful. The Buy Local movement is one of the most visible campaigns of resistance to the corporatization of Main Street, and local battles erupt everywhere, all the time, to stop another Starbucks, another “Dollar” store or another Live Nation venue from taking root among the homegrown businesses that define a town’s character.
If they knew what Chenmark is doing and the consequences of what it does, most Portlanders would surely oppose it, which is undoubtedly a big reason these vampires strive to work in the dark. Grab some garlic, because it’s time to pry open this crypt.
Crrrreeeeeeak…
The marriage of James Henry Bertram Higgins and the former Patricia Grace Bissett made The New York Times in March of 2011, complete with a photo of the couple standing on a thin, rocky beach with a big city in the distant background. Then 26 and 25, respectively, they met at Yale University, from which both graduated. Trish was then working for a big hedge fund called Protégé Partners and “studying for an M.B.A. at Harvard,” the Times noted. Her father, then retired, was a partner at a law firm in Vancouver, B.C., where she grew up.
James and Palmer’s father is James H. Higgins III, then of Morristown, N.J. Also retired by then, Higgins III had been “a managing director of JPMorgan Chase in New York, where he was the head of its global private bank,” the wedding notice disclosed. He was also, at the time, president of the board of trustees at Groton, the prestigious prep school in Massachusetts. The brothers’ paternal grandfather, James H. Higgins II, who died in 1998, was chairman and chief executive of the Mellon Bank Corporation, went to Groton and Yale, and sat on several corporate boards, including that of Gulf Oil Corporation, according to his Times obit.
At age 26, young James, who’d also worked at Protégé, had already founded his own hedge fund, also called Chenmark Capital Management, the Times reported. (Chenmark is “a fictional family word meaning ‘question mark,’” the company’s current website explains. “Over time, it has grown to signify taking the plunge into the unknown. We named our firm accordingly to remind us always to face uncertainty head on, to challenge the status quo in search of excellence and to actively push the boundaries of our comfort zone in all aspects of our lives.”)
Four years later, in September of 2015, James and Trish Higgins were pictured smiling in the Times again, this time amid moving boxes outside their “charming Greenwich, Conn., townhouse,” which they’d just sold to move to Maine and run a landscaping and snow-removal business (Seabreeze).
“I feel like I’ve spent a huge amount of my career analyzing and very little actually doing something,” Trish, then not yet 30, told the Times. “I want to go out and get my hands dirty and use my education to contribute and be a business leader in a community.”
The couple was “part of a growing trend,” the Times observed 10 years ago: “people with an entrepreneurial bent who are not inclined to start their own businesses. Rather, these people look to buy small to midsize companies — often family-owned firms that are being sold by the founder — and help them prosper.” Low interest rates to borrow money during The Great Recession and the oncoming wave of baby-boomer business owners facing a financially insecure retirement were citied as reasons the investment trend was catching on.
Not that the Higginses, for all their Ivy League education and financial acumen, knew anything about buying or running a small business. In an oft-repeated anecdote, they typed “how to buy a small business” into Google, and as James told the Times in 2015, “found out there’s a whole world out there.”
Palmer Higgins, who’s four years younger than James, had joined his big brother’s hedge fund the year before and moved up here with them. He’s still smarting from the remarks some among his country-club cohort made upon hearing he was leaving Wall Street to buy a landscaping business in Portland.
“The response was some form of, ‘I don’t get it. You’re gonna cut my grass now for me?’ — in a very demeaning and derogatory way,” he told host Will Smith of the Acquiring Minds podcast in 2022. “I don’t talk to those people anymore, so that actually was a great filtering mechanism. But for those that weren’t in that category, they’re just stoked that we’re doing what we want to do. They find inspiration that we took that leap and they want to do something similar or have done something similar.”
“James, Trish and I, in a lot of respects, I don’t think we’re that special,” Palmer said on the same pod. “I’m not that special. James is incredibly smart, but I know I’m not that smart. But what the three of us have in common is a pretty unique and an extreme delayed-gratification muscle and a fairly high willingness to bet on ourselves.” Those qualities have “allowed us to do something that on the surface, or to other people, might seem crazy, or ridiculous, or irrational, but to us felt right.” Keep this quote in mind.
Granted, being the direct descendent of two global banking titans and having your own hedge fund can help a person develop a “delayed-gratification muscle” strong enough to survive a couple lean Maine winters. It’s easier to “bet on” yourself when you’ve already got plenty of money to lose. But to hear James Higgins tell it, it’s also about being true to your “core values.”
“The appeal of owning a small business and the associated tangibility and, in particular, autonomy that comes with it were very interesting and more compelling for us, from a values perspective, than, say, the number at the bottom of our W-2 — at least initially,” James said on that podcast.
“So,” he continued, “to Palmer’s point about delayed gratification, the tricky thing about trying to build a holding company that owns a lot of small businesses is, the first thing you need to do is move to Maine and buy a snow-plowing business and run that for awhile and make sure that goes well, and then maybe if you’re lucky you get an opportunity to buy another one.”
Chenmark’s founders try to appeal to mom and pop during sale negotiations by stressing that their company is also a family business. “Us being family and talking to small businesses which are either formally or informally, almost by nature, also family, makes us just different,” Palmer said on that 2022 podcast episode. “So being able to talk to an owner — with their spouse in the room, whether they’re on payroll or not — and explain that we are also a family business, and be able to relate to them in that way, I think is powerful.”
“What we look to do is a little bit arrogant, to be honest with you,” James Higgins added. “Typically we’re buying a company … from someone who’s run it for multiple decades. So the real asset that each of those owners has developed over time is just a very powerful, instinctual understanding for how the business works. And what that basically allows them to do is to operate the business without the really well-defined, transferable set of operating procedures — and nor do they need that, because, look, they’ve gone to the school of hard knocks for three decades, so they’ve earned the right to kind of fly by instinct.
“And we’re coming in and saying, Hey, guess what — we can figure out how to do all of that almost overnight by implementing process, data analysis, procedure, business intelligence, etcetera,” James continued. “It’s a pretty arrogant thing, and so it takes awhile to replicate that structurally, and just making sure to build in time for that to take place is important.”
The Higgins coven is keenly aware that blue-collar Mainers are unlikely to welcome a private equity takeover of their workplace with open arms and shared cigarettes on lunch break (not that these CrossFit junkies smoke). The M.B.A. grads accepted into Chenmark’s in-house Generalist Vice President (GVP) program need sharp financial minds, but they also need to know when to shut the fuck up and listen to the people who know how to run the business — because, after all, those are the people actually running the business from day to day to make Chenmark money.
Asked by Smith what he looks for in GVP candidates, Palmer Higgins replied, “Number one for me is humility, and true interest and understanding of what small business is, and a desire to get into that world. It’s very tangible, but you’re definitely in the action. So the way I phrase it is, ‘There’s no such thing as a boardroom CEO in the world of small business, but what you pick up is range, and so if that’s appealing to you, that can be a great fit.’”
Chenmark isn’t the place for yuppies “if you don’t like working with people in small business, everybody up and down the org chart,” Trish Higgins told a podcaster in 2023. Or if “you’re not excited by implementing the new ARP system and getting data on unit economics and figuring that out, or figuring out how do we hire new people or adjust pay rates, or ‘Can you believe that crazy thing that happened this morning when that person flipped out on me,’ or whatever it might be.”
In her case, Trish added, referring to her first season owning Cap’n Fish’s Cruises in Boothbay, a “crazy thing” was “having to step in to work in a parking lot for a big part of the summer and have people swear at me because I was charging them twenty dollars for parking, because that’s what was needed. … We want texture in our lives and all sorts of interesting experiences and meeting with all different types of people, and we find that to be incredibly rewarding and deeply enriching experiences.”
“I can sit on a bond trading desk and be a complete expert at reading credit agreements and covenant structures or whatever it happens to be,” James Higgins said on Will Smith’s pod, “but I may never have the opportunity to have to fire someone, have to hire someone, have to build out a marketing program, acquire another company, negotiate a price with a customer, any of these types of things. Oftentimes in our lived experience running Chenmark, we’re doing most of those things each day, to one degree or another.”
•••
Oh, one other thing it’s helpful to have when leaving Wall Street to buy up Main Street: lots of free labor.
When Chenmark moved to Portland and transformed from a hedge fund into a holding company, they rented office space in the Old Port and brought in several unpaid college interns to research potential business acquisitions, write reports to secure bank loans, and perform other tasks at least 10 hours per week, in addition to their course load and any jobs they had that payed. I interviewed one of those early interns, who requested anonymity for fear speaking out could harm their prospects of finding work in Maine’s tiny financial sector. I’ll call this intern Sam.
Sam burst into hard laughter when I mentioned “humility” being a Chenmark value. According to Sam, Trish Higgins was the relatively kind and open founder, while the brothers came off as stereotypical finance bros: arrogant, unreasonably demanding, and solely concerned with money.
Sam, being a local, tried to tell James and Palmer that Portlanders wouldn’t view their vulture-capitalist practices kindly. “It’s a small town,” Sam explained to them. “It won’t be a good look when people start hearing about it. … You should learn the social landscape of the environment in which you live.”
Sam’s suggestion was for Chenmark to buy at least one or two Maine businesses with a social or environmental aspect, like B Corp-certified companies or those with charitable programs. Although Trish showed some interest, the brothers’ response was basically, “But what are the numbers?” Sam said. They seemed unable to grasp the benefit of even appearing to be a socially responsible company.
There is some evidence the Higginses are making an effort to become part of the community. In 2018 and ’19, Chenmark produced over 15 episodes of a podcast called Big Time Small Business,on which they interviewed the owners of well-known local companies like Coffee By Design, Baxter Brewing, The Holy Donut, Bristol Seafood and ReVision Energy. And James Higgins is treasurer of the board of trustees of Waynflete, the elite private school in Portland’s West End, where his two children are students; he and Trish live in Cumberland.
During a podcast appearance in early 2017, when she and James were living in Portland, Trish shared an insight a friend from the financial world had given her: “Living in a small town is a competitive advantage, which it is, because living in Portland, Maine, the amount that the Chenmark partners have to compensate themselves is relatively low to have what I think [is] an incredible quality of life and pretty much do all that I really ever want to do.”
Six years later, as a guest on yet another financial podcast, Trish conceded that owning Chenmark is extremely time-consuming and requires some real sacrifices. “My kids go to lunch with, like, crappy peanut-butter-and-jelly sandwiches every day, because I don’t have time to make, like, some weird bento box with handwritten notes for my kids, right? I cannot do that well. They will be fine with some Goldfish and a PB&J for the next ten years, and it just is what it is. My daughter also goes to school often without her hair combed, as like, not a priority, not going to worry about it. Other things that are important [like help with schoolwork], I will find time to spend fifteen to twenty minutes every single day to go over that with her.”
When Chenmark talks, people listen
Earlier, I asked you to keep Palmer’s quote in mind regarding all the people he knows who think owning a small business is “crazy, or ridiculous, or irrational.” I did so because it reveals, in a backhanded fashion, the utter disdain wealthy people in this country have for anyone who actually works.
On podcasts, the Higginses are careful not to voice this sentiment themselves, lest a listener suspect their ears are distinctly more pointy than normal. But it leaks out in an academic paper I found that was co-authored by Trish Higgins last year for the Yale School of Management, “Exploring Holding Companies in the Search Fund Ecosystem.” Writing with fellow holding company investor Rich Littlehale and Yale School of Management lecturer A.J. Wasserstein, Trish Higgins offers a frank assessment of her investment model’s appeal.
“Although we do believe that aspiring holding company CEOs want to engage in the intellectual art of capital allocation,” the case study reads, “we think the real unspoken reason they are so attracted to this model is they do not want to be operating CEOs indefinitely. The holding company story weaves a narrative of the CEO not engaging in the nitty gritty, granular activities of running and leading a business.”
“Running a business is hard work,” the study observes. “It is humbling and exhausting, and avoiding that while still being a CEO and enjoying entrepreneurial economics is beguiling to our students. … [We] do not know how accurate it is for young MBAs to believe they will completely eschew wallowing in the morass of small business, but we expect not for at least a decade or so.”
The authors admit holding companies like Chemark are really “nano-cap private equity in disguise.” (Translation: private equity invested in businesses worth less than $50 million.) Or, further refining their point, so-called holdco operations like Chenmark “look like private equity without a sell-by date.”
And then they concede there’s always a sell-by date. “We believe [holding company] entrepreneurs will jettison their projects before several decades pass,” the study asserts. “They will get bored of their businesses no matter how lucrative they are; they will tire of the small business grind that can feel like a daily knife fight and will want to raise investment funds and become professional investors.”
Meanwhile, those fighting with knives down in the morass of small business are looking to Chenmark to save them from a penniless old age. During research for this story I had an informal, off-record conversation with a guy I know who’s own and run small tourism businesses in Maine. He said Chenmark has become a regular presence at industry gatherings, making their pitch to local operators, and has become known to the owners of small tourism companies across the country. The firm no longer has to spend all its time (or unpaid interns’ time) trying to find businesses to buy; tired or retiring owners are calling them these days.
This has engendered a gallows-humorous inside joke among tourist industry operators commiserating about the difficulty of staying in the game. The joke goes like this, my pal said: “Talked to Chenmark lately?”
Support our local investigative journalism by subscribing at bollardhead.substack.com.
