🔒CT’s lower Fairfield County has become a private equity hub; Here’s how

Matthew Allard spent nearly two decades making the grueling 2.5-hour daily commute from his Connecticut home in Greenwich to Manhattan, while climbing the ranks of the financial services world. But when it came time to launch his own private equity firm, Allard decided it was time for a change. Rather than setting up shop in a Midtown Manhattan high-rise, he opened Case Study Capital Partners this past July in a modest one-story commercial building in Old Greenwich — located less than a mile from his Riverside home. The shorter commute has given Allard something Wall Street couldn’t: more time with his family, including his daughter. “She’s still in high school here locally, so I get to drive her to school on a daily basis, and that I’ve never really had the opportunity to do,” Allard said in a recent interview with the Hartford Business Journal. “I participate in more family activities, but I also gained a tremendous amount of activities by finding 2.5 hours.”

Allard co-founded Case Study with Charlie Hill, a former colleague at New York-based private equity firm Brightstar Capital Partners, and longtime friend Jeff Cordover, who runs his family’s private investment firm, Corber Corp. Their decision to locate in Old Greenwich isn’t wholly unique. In fact, lower Fairfield County has become a stronghold for private equity firms, now home to the vast majority of such investment companies in Connecticut.

Escaping New York’s high taxes

Lower Fairfield County’s rise as a private equity hub is no accident, experts said. The stretch along Long Island Sound has attracted a dense concentration of firms as investors seek relief from New York City’s high costs and taxes — without sacrificing proximity to the global financial center, said Steve Utke, associate professor and Arthur Andersen LLP accounting professor at the University of Connecticut.

He said partners in PE firms that live or work in New York City pay a state income tax of up to 10.9% and city income tax of up to 3.786%. In some cases, the private equity firm may pay an unincorporated business tax of up to 4%. By comparison, partners in firms that live and work in Connecticut pay a maximum individual income tax rate of 6.99%. “That adds up to a big difference in taxes,” Utke said. “New Jersey would be another option, but its maximum individual tax rate is also over 10%.” Connecticut has had success in attracting New Yorkers. Between 2013 and 2023, the state added a net 161,456 residents from the Empire State, according to U.S. Census Bureau data. Meantime, Fairfield County has led the state in population growth, ending 2023 with 963,011 residents, up 2.2% from 2013, according to the Federal Reserve Bank of New York. The area’s reputation as a haven for hedge funds and financial services has only deepened with the influx of private equity. The region is now home to 291 of Connecticut’s 349 private equity firms, according to industry tracker Preqin. Greenwich leads with 125 firms, followed by Stamford (75), Westport (29) and Norwalk (21). Fairfield County’s largest PE firms, according to Capital Assets Under Management, include Greenwich-based Stone Point Capital with $49.1 billion in assets; Portfolio Advisors of Darien ($20.5 billion); and Wilton-based CF Private Equity ($17.3 billion). Still, New York City is the global capital of private equity — firms there have raised hundreds of billions of dollars in funds over the last decade, according to Utke. San Francisco and Boston are also major PE hubs. Overall, the U.S. private equity industry has grown significantly over the last few decades from about 1,000 firms in 2000 to more than 6,000 at the end of last year, according to the Carlyle Group. That growth has come as the number of publicly traded companies has shrunk significantly during that time period. More recently, there have been concerns about a private equity industry shakeout amid a higher interest rate environment that has made it harder for firms to raise capital.

Being in control

Case Study Capital Partners is among the firms looking for investors and investment opportunities. Now in its new Old Greenwich home, the firm is focused on acquiring majority stakes — typically at least 75% — in founder- and family-owned businesses with between $5 million to $25 million in earnings before interest, taxes, depreciation and amortization. The goal will be to drive growth in portfolio companies by introducing new leadership, enhanced capabilities and operational improvements, said Allard, the firm’s managing partner and co-founder. Prior to launching Case Study, Allard was a partner at Brightstar Capital Partners, a middle-market private equity firm. “While many family- or founder-owned businesses have been incredibly successful, they’re often not fully aware of the latest technology and tools that can be available to build up the organization, be that a head of HR, head of IT,” said Allard, who also formerly worked at investment banking firm Stifel and earned his MBA from the Columbia Business School. “(We can) bring those tools to help drive value.” The firm has not begun a formal fundraising effort but aims to launch a $250 million fund next year, supported in part by third-party limited partners such as family offices, foundations, endowments and high-net-worth individuals. For now, Allard said he and Cordover will fund a few independent investments. They are currently in discussions with about five potential portfolio companies and hope to close at least one deal within the next six months, Allard said.

Cheaper office space

Besides being closer to home, Allard said property costs also played a factor in his decision to open his firm in Greenwich. The location costs about 50% less than New York City lease rates, and is only a 45-minute train or car ride for his partners. “We’re all winning,” Allard said. He said numerous other private equity firms have set up shop in Fairfield County to give employees a place to collaborate in-person without having to spend hours commuting into New York City. “COVID made remote work possible outside of New York City, but what firms were missing was the personal interactions that come from an office environment,” Allard said. “With a corporate HQ in Fairfield County, you get the best of both — a limited commute and the informal interactions that are critical to a successful culture of a firm.” Allard said more private equity firms could relocate from New York City to Connecticut amid political shifts there, pointing to the Democratic primary victory of Zohran Mamdani, a self-described democratic socialist. If elected in November, Mamdani has pledged to raise taxes on incomes above $1 million. “If Mamdani is elected, we are likely to see many more people moving out of New York City,” Allard said.