The private equity business has been in the news a lot lately, with Republican presidential candidate Mitt Romney having made his fortune in an industry that takes money pooled from endowments, pension funds and other big institutions and invests them in individual companies.
As the Chicago Tribune reporter who monitors such firms in the Chicago area, I got the scoop last April on a private equity deal that, while involving a relatively small amount of money in the private equity world, had several irresistible angles to the story.
Sterling Partners, a Chicago private equity firm whose specialties include companies in the education business, was making an additional investment of $5 million in School of Rock LLC, a children’s music-education chain founded in 1998 but most closely associated with a 2003 Jack Black movie of the same name.
One compelling part of the story was the pedigree of the chain’s chief executive. Chris Catalano was the former chief investment officer for McDonald’s Corp. venture capital arm. In that capacity, he helped take Chipotle public and oversaw growth of Redbox from one unit to 12,000.
In late May, I sat down with Catalano for an in-depth interview. He said he remembers, as a first-grader, going to take music lessons in a house that looked like it was out of the Amityville Horror. And his teacher smelled like mothballs. “But she’s a Julliard graduate,” Catalano’s mom would tell him. He didn’t care; he just wanted to play Elton John.
School of Rock’s approach is also novel: First, it focuses on rock and pop music, which many public schools and other more traditional instructors don’t, and it immediately immerses the kids in a performance setting with other kids, so they’re not relegated just to learning about notes, scales, chords and theory first, and then going home by themselves to practice at the edge of their beds. At the end of a season, they also get to play in a real venue.
School of Rock has nearly 100 schools now and plans to triple that number by 2015.
One of the most interesting facts I picked up in my reporting was that, contrary to conventional wisdom, music education in public schools has help up pretty well.
Time will tell whether School of Rock’s growth plans pan out, or whether private equity makes School of Rock un-cool, but for now Sterling’s additional investment will help it carry out its mission of “inspiring kids to rock onstage and in life.”
-- Becky Yerak
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