Sir Martin E. Franklin, a prominent British-American businessman and investor, has forged an impressive career through the strategic acquisition and transformation of companies. His most notable success was the meteoric rise of Jarden Corporation, which he grew from a modest $300 million enterprise into a $10 billion consumer goods powerhouse. [1][2] Through his investment vehicle, Mariposa Capital, he continues his work of fostering long-term value across a diverse range of industries. [1]

On Business Philosophy and Strategy

  1. On Building vs. Deconstructing: "It was much less fulfilling to breakup a company. And when you're building something, everybody is sort of rooting for you. The investment community is rooting for you, employees are rooting for you. The establishments is rooting for you. And when I started on that path of building Benson Eyecare, it was just — all the energy was positive energy. And so, I found it much more enjoyable." [3]
  2. The Hybrid Identity: When asked to define his profession, he describes himself as a "business builder... a bit of an operator and an investor, I guess, a hybrid." [3]
  3. On the Futility of Corporate Headquarters: "One of the things I learned with the corporate headquarters for a bit of a waste of time and money... My father always used to say the quality of a corporation is in inverse proportion to its location from its headquarters. In other words, the further away they work from the headquarters, the better the business." [3][4]
  4. Long-Term Ownership Mentality: "We look at our businesses from a very, very long investment standpoint... once we own something, we intend to build it for the long-term. So, that affects decision making. The capital investments, long-term approach to ownership, incentives for employees and how we treat employees, I think, are very different in what I do to private equity." [3] He champions "owning assets rather than renting them." [5]
  5. Decentralization and Incentives: A cornerstone of his business philosophy is the empowerment of decentralized units coupled with appropriate incentives, a principle he credits to his father and Sir James Goldsmith. He is a vocal critic of the stifling effects of large corporate bureaucracies. [6]
  6. Focus on Core Strengths: "My job is to make our job, and the company's job is to make great products, get them to wherever we want them to go on time in the most efficient way possible and to price them fairly, that's our job." [2]
  7. The Importance of a Defensible Moat: His acquisition criteria remain consistent: "We looked for market leaders in the respective consumer markets... We wanted businesses that were defendable, had defensible moats around them. It's really the same strategy I pursue today." [2][7]
  8. Success is More Than M&A: "I will tell you that I don't think our success was just M&A, I think M&A was a good piece of it. Our success was really because we ran the businesses well and we built a great culture and we really managed to attract the best talent in each of the businesses we were in to those businesses." [8]
  9. Sticking to Your Lane: "I've been very fortunate. I think that my father always used to say you make more money on the deals you don't do than the deals you do... The only two times that I got out of my lane and did sort of venture capital things, I lost all my money. But... they were cheap lessons but they were lessons I didn't still (ph) forget. And so, I've tended to stick to my lane." [3]
  10. Permanent Capital Approach: "I'm in the permanent capital business... the only way that you know I'm a seller is if the company itself is sold because somebody comes along and makes an offer for all the shares." [4]

On Investment and Capital Allocation

  1. Goal-Based Investing: At his firm, Mariposa Capital, investment strategies are tailored to specific client goals, whether it be wealth preservation or saving for retirement. [1]
  2. Long-Term Focus in Investing: Mariposa Capital champions a strategic asset allocation policy, steering clear of speculative short-term market bets. [1]
  3. The Power of Diversification: His investment strategy leverages a high degree of diversification, encompassing non-US stocks, real estate, and commodities, a practice supported by academic and industry research. [1]
  4. Embracing Passive Investments: He advocates for the use of passive investment products like index funds or ETFs, citing extensive research that shows active managers seldom outperform the market consistently. [1]
  5. Cost and Tax Efficiency: "One of the easiest ways to increase returns is to reduce costs and taxes." [1]
  6. Prudent Use of Share Buybacks: "I'm a believer in share buybacks when it's appropriate. I think the mistake that a lot of companies have made is they're not very good at them... The great thing about being a public company is if you're a good capital allocator, you know when it's a good time to issue shares, you know when it's a good time to buy them back." [2][8]
  7. Timing is Key in Capital Allocation: "The reason we had a 34% compound return for investors over 15 years was because you know with the benefit of hindsight of course we time those things correctly." [8]
  8. On Activist Investors: "The takeover artists and think conglomerators of yesteryear are the activist investors of today. They're trying to push companies to find initiatives within themselves, rather than making takeover attempts and ask them to bust them up... you're bringing all those benefits to all shareholders as opposed to just the buyer." [2]
  9. Looking for Free Cash Flow: A critical element of his acquisition strategy is to "look for businesses that had good management teams and had generated a lot of free cash flow that we could you know buy for a reasonable multiple of those cash effort that was the strategy." [8]
  10. Rational Capital Allocation as a Competitive Advantage: Franklin asserts that a disciplined focus on rational capital allocation is a rare and powerful competitive advantage in the corporate world. [6]

On SPACs (Special Purpose Acquisition Companies)

  1. Pioneering Respectable SPACs: Franklin is widely recognized for his role in rehabilitating the image of SPACs, transforming them into a credible vehicle for deploying patient capital for long-term acquisitions. [5]
  2. Putting Skin in the Game: A key differentiator of his early SPACs was that "we put a lot of our own money to work in these things rather than just being promoters. We did them on a scale that people like City Group would underwrite them." [2]
  3. On the "Silly Season" of SPACs: During the SPAC boom in 2020, he famously remarked, "We're in silly season in SPAC-land," and issued a prescient warning: "This is going to end badly." [9][10]
  4. A Different Approach to SPACs: "What I do is very different from the US spec model. So I'm not really looking for the same kind of of opportunities mine are maybe a little more mundane. I'm trying to buy by very profitable businesses market leaders in their markets. Great management teams not necessarily story stocks." [10]
  5. The Advantage of Certainty: He has expressed a preference for the UK SPAC model due to the greater certainty it offers in acquisitions. "If you want to buy quality companies telling somebody you want to buy their business for two or three billion dollars but you have to run around to maybe get the vote... that's not that's i call that flow capitalism." [10]
  6. SPACs as the LBOs of Today: "You see all of these SPACs. They are, if you like, the LBOs of today's environment. They've become quite a trend." [2]
  7. Doing it the Harder, Better Way: Regarding his UK-based SPACs, he has stated, "I do it this way it's actually much easier to raise capital in america i do it in the harder way because quite frankly it's better for investors." [10]
  8. Avoiding Suboptimal Deals: He posits that the inherent uncertainty in the U.S. SPAC model has "driven u.s facts sometimes to do deals that i would call suboptimal." [10]
  9. History Repeats Itself: On the speculative nature of the SPAC boom, he drew historical parallels: "You know the end it's it's the same as 2000. there's you can read a book called devil take the hindmost we'll give you all the history it's all there." [10]
  10. SPACs for Long-Term Value: His utilization of SPACs is geared towards providing a permanent home for great businesses, not for generating quick profits through flipping. [6]

On Leadership and Personal Growth

  1. Mental Discipline from Extreme Sports: "I think mental discipline is fundamental in business... learning that you really can push to another level. I think that's some relevance there to one's business life." [2][8]
  2. The Spiritual Journey of Endurance: Reflecting on the grueling Badwater Ultramarathon, he shared, "it was as spiritual as it was athletic. and you know giving one time to think. and learning how to that you really can push to another level." [8]
  3. Lessons from His Father: "I loved working with my dad... he taught me a lot particularly how to treat people and what priorities were and never to take oneself too seriously or never to believe that just because you had some success made you any better than anybody else." [8]
  4. The Value of Good Partnerships: He has consistently emphasized the importance of forging sustainable and mutually beneficial partnerships, exemplified by his long and successful collaboration with Ian Ashken. [6]
  5. Humility and Avoiding Complacency: "I've never gotten complacent, and voy stayed fairly humble." [4]
  6. Learning from Failure: He admits to having a "very little appetite for living with failures and moving on from them. This approach has always been better for me." [2]
  7. Creating a Great Culture: He attributes a significant portion of Jarden's success to the ability to "build a great culture and we really managed to attract the best talent in each of the businesses we were in." [8]
  8. Empowering Entrepreneurs: A core mission of Mariposa Capital is "assisting entrepreneurs with their endeavor of achieving success and the attainment of prosperity." [11]
  9. The Importance of Continuous Learning: While not a direct quote from Sir Martin, his career embodies the principle of continuous learning, a theme highlighted in an article about entrepreneurial wisdom. [12]
  10. Boldness and Vision: Similarly, the same article underscores the necessity of being unapologetic about one's purpose and vision, a characteristic Franklin has consistently demonstrated in his ambitious business endeavors. [12]

On Specific Business Experiences

  1. The Jarden Success Formula: The triumph of Jarden was built on a decentralized model that combined the economies of scale of a large corporation with "the entrepreneurial freedom to build their businesses as they saw fit." [2]
  2. Forcing His Way In: On the acquisition that led to Jarden, he recalled, "I actually didn't join it. I forced myself upon it... I bought 9.9 percent of a company called Alltrista... and made a take... private proposal for them which they rejected but they made another and another." [3]
  3. The Genesis of Building Companies: His journey as a company builder began with Benson Eyecare, which he started by acquiring 11 optical shops from a bankrupt company using an SBA loan. [3]
  4. The Rationale for Selling Jarden: His decision to sell Jarden to Newell Brands was driven by his observation of the "decreasing relevance of the brands Jarden owned 'with his son's generation'" and the belief that the business required greater scale and cost efficiency to navigate future challenges. [6]
  5. Investing in What You Know: His diverse portfolio of companies, including Element Solutions, Nomad Foods, and Royal Oak, all share fundamental characteristics: they are market leaders in their respective niches, generate high free cash flow, possess strong management teams, and are protected by defensible moats. [3]
  6. On Competing with Private Label Brands: He remains confident that he could replicate Jarden's success today, even in the face of competition from private label brands from giants like Amazon and Costco, by maintaining a relentless focus on product quality and distribution efficiency. [2][13]
  7. The Value of a Good Brand: A strong emphasis on acquiring and nurturing established brands was a cornerstone of his acquisition strategy at Jarden. [2]
  8. Creating a Portfolio of Influence: "My goal personally is to have a portfolio... of five large you know nine figure investments in great companies whose capital allocation decisions I have a say in... if I really feel strongly that the wrong decision is being made in something I have the power to stop it." [8]
  9. No Ambition to Trade: "I have no ambition to trade those investments. i don't trade them in and out of them." [8]
  10. On the Future of Berkshire Hathaway: He draws a parallel between the future of Berkshire Hathaway post-Buffett and Munger and the evolution of Loews Corporation after its founders, anticipating that the quality of the assets will endure, but the "investment dynamism that existed with the founding entrepreneur" will inevitably be different. [3][4]

Sources:

Learn more:

  1. Our Approach - Mariposa Capital Management
  2. Sir Martin E. Franklin, Founder & CEO of Mariposa Capital/ Founder of Jarden Corporation, on SPACs, Capital Allocation, Acquisition Strategy and Business Success. - Value Investing Podcast - Boyar Value Group
  3. Transcript: Martin Franklin - The Big Picture - Barry Ritholtz
  4. Martin Franklin on Building Businesses (Podcast) - Masters in Business - Omny.fm
  5. MiB: Martin Franklin of Mariposa Capital - The Big Picture - Barry Ritholtz
  6. The SPAC Daddy: Sir Martin Franklin - The CorpRaider
  7. Return of the SPAC? Sir Martin Franklin raises $550m war chest with London IPO
  8. Sir. Martin E. Franklin, Founder & CEO of Mariposa Capital, Founder Harden Corporation - Episode 15 - YouTube
  9. Martin E. Franklin - Wikipedia
  10. Sir Martin Franklin on the launch of his new $1B blank-check company - YouTube
  11. Mariposa Capital Canada
  12. Powerful Advice for Entrepreneurs From America's Greatest Risk Takers
  13. Sir Martin E. Franklin, Founder & CEO of Mariposa Capital/ Founder of Jarden Corporation, on SPACs, Capital Allocation, Acquisition Strategy and Business Success. - Apple Podcasts
  14. Mariposa Capital Management - Investment Advisory - FinNotes