OpenGate Capital’s Nikou on why family offices are leaning into corporate carve-outs

NEW YORK, Oct. 1, 2025 /Crain Currency/ — Andrew Nikou is the founder and managing partner of OpenGate Capital, a New York- and Paris-based private-equity firm. He spoke with Crain Currency about how and why the complexity of corporate carve-outs is an extremely attractive investment strategy for family offices.

OpenGate is celebrating its 20th anniversary this year. Looking back, how do carve-outs reflect the way OpenGate has built its approach to private equity?

Our whole offense is centered around individuals in various areas of our team, and it is very adaptable to tackling corporate carve-outs. We have a business development sourcing engine, a team of business development folks, a team of M&A folks and a team of operators in-house. And so the corporate carve-out nature of what we do requires the M&A team and the operators to work hand in hand to be able to put forward an effective model and an effective plan. This ensures we not only structure and execute the right deal and price but also manage the carve-out that unfolds 12 to 18 months after closing. The orientation of our group is very much suited for corporate carve-outs, and that's how we built it over the decades.

Corporate carve-outs are notoriously complex. What makes that complexity attractive, especially for family offices seeking long-term returns? Can you walk us through a recent carve-out where the complexity actually created opportunity?

These deals are complex, hard to price and hard to execute; but that complexity creates mispricing and lowers competition. Carve-outs present large, operational upside and transformation opportunities for patient investors. They require patient capital to go through the different phases to get it to a point where you've optimized the business, as well as well-resourced investors who can really capture that opportunity. Historically, we have acquired businesses at multiples below fair market value. And the sole reason for that is the complex nature of corporate carve-outs. That pricing edge, the hidden operational upside and the higher alpha potential are aspects that appeal to family offices. Complexity also reduces competition and enables a multidimensional approach to value creation. Our model allows family offices to really move quickly without all the extra layers of bureaucracy associated with mega-funds.

In working with family offices, whether through co-investment or other structures, we’ve found that we're very like-minded. 

One of the most recent carve-outs was Player One [Amusement Group], a division of Cineplex. The business was one of the largest distributors of video games across North America, serving family entertainment centers, video game centers and movie theaters. After COVID, there was a big problem. Discretionary spending declined as people stayed home and avoided theaters, which affected the business. Cineplex deemed it was non-core and non-strategic, and we were able to really acquire the business at the right multiple and commercial strategy. We ended up selling it within a year, which was a fantastic result from start to finish. 

Roughly 20% of your assets under management now come from family offices. How does the co-investment model change the dynamic compared to working with traditional institutional LPs?

With family offices, their processes have been pretty lean. Decision-making is very, very quick. They generally like to participate in diligence at a fairly early stage with the transaction teams. The biggest plus of co-investments with family offices is their speed of decision-making. For a seller of a public company division, it's all about speed and certainty of close. So being able to go full throttle and be in discussions with co-investors who can make quick decisions — it just creates a very synergistic environment.

You’ve got a 50/50 split between U.S. and European family offices. Do you notice differences in how these investors think about carve-outs and co-investments? Are there regulatory or cultural differences that make one region more active or risk-tolerant than the other?

I think they're generally thinking about it the same way. They ultimately get to the same place. But I do find the Europeans have a different path than the Americans. I think it's more cultural. As someone who has a French partner, I can really attest to that. 

I do think Europe needs to do a better job overall from a regulation perspective. In the U.S., there is less regulation, more capital flows and probably the biggest capital markets environment in the world — compared to Europe, which has historically been highly regulated. If there were more relaxed regulations in Europe, I think foreign direct investment and capital flows into Europe would exponentially grow. But I do feel like things are changing considerably.

We’re pan-European investors, so we have alliances across the German markets, Spain, the Nordics and Scandinavia. We are starting to see a lot more deal flow in Europe. In fact,what regulation has done in some quirky ways is really allow some of the local champions and some of these sectors to really grow. Because they’ve eliminated the ability for foreign competition to come into their home turf, they've been able to capture a tremendous amount of market share. So we do see a good amount of corporate carve-outs in Europe that are much larger in size — in terms of revenue — and with interesting financial metrics due to regulation.

We've been doing it for 20 years, so we feel like we have an unfair advantage in Europe — in the lower to midmarket. A lot of U.S. private-equity groups don't really understand Europe. And that's great. I hope it stays that way. That's why we're doubling down in Europe at the moment.

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Are there any particular regions in Europe that you see a lot of potential right now?

France and Germany are probably the two biggest for us in terms of deal activity, by far.

Family offices often invest with legacy and multigenerational wealth in mind. How do carve-outs align with that kind of time horizon? Where do you see the greatest opportunities for these corporate carve-outs over the next five years?

It's a 10-year relationship with any GP[general partner]. We've had the ability to look at our portfolio and think about what types of investments we want to make as a part of portfolio construction. And some of these investments return capital faster, with DPI distributions back to the LPs under the U.S. waterfall structure. So you don't have to wait until the end of 10 years to actually see returns. It is almost like a deal-by-deal basis. But we also look at every investment from a very long view, where we want to make sure that all of our investments have reached their optimization levels. 

Right now, we're very bullish on Europe, especially in the industrials segment. Many companies in that sector have not really kept up with innovation, particularly around digitalization and AI, and a lot of these companies are falling behind. So I do think that there's a tremendous amount of non-core, non-strategic opportunities within Europe. There is an outsized opportunity there to acquire these very interesting companies within the segments and not only run our operational playbook but also technology adoption and the ability to really force-multiply their market positions within Europe, but also around the globe. 

A lot of these companies — often in the $200-million-to-$1.5-billion revenue range — are pretty substantial companies that could benefit from operational improvements and technology transformation.

What misconceptions do you encounter most often about this topic, and how do you address them? If you were advising a family office that has never invested in a carve-out before, what would be your top piece of guidance?

Quite often, we talk about lessons learned during executive team meetings, whether from transactions we were not able to acquire or operational hiccups that cost us margin, EBITDA or customers. It's always a constant adjustment, and it’s embedded in our culture to openly talk about our failures and make sure that we don't repeat those same mistakes. That's really one of the main reasons why, over the past few years, we've focused on what makes us win. And that's why industrial corporate carve-outs, particularly in Europe, have given us an exorbitant amount of returns. Compared with our investments in the U.S., our European track record has been outstanding.

Carve-outs are known to be messy, separating people, systems and contracts from a parent company. How do you balance the risks of that complexity with the potential rewards? Are these kinds of opportunities better suited to family offices with certain capabilities?

They've never done it. A lot of family offices have tremendous backgrounds. They've had great institutional experience, and they’re like-minded in terms of how they view and size up a deal. I think it starts with co-investing. And even if the family office is not interested in making a fund commitment, making as many co-investments with any one particular GP, I think, could be a useful exercise in understanding their playbook, their approach, their secret sauce and what that formula looks like that has made the GP so successful.

With more family offices engaging in private equity, do you see this becoming a mainstream strategy for them, or will it remain a niche play?

It will be more and more mainstream. Alternatives like private equity will help reduce reliance on public equities or real estate, which traditionally dominated family office portfolios. 

Do you expect more family offices to build expertise in this space directly, or will most continue partnering with PE firms to access these opportunities?

There will be a blend. However, more and more family offices will prefer direct investments rather than passive fund allocations. Partnering with private equity will allow them to be more hands-on, leverage industry expertise and align with long-term goals.