Keith Breslauer, Managing Partner & Founder of Patron Capital

Instead of diving straight into wisdom and ideas, let's walk through some deals.

Keith was a bit superstitious about running through deals with too much positivity, he has been doing this long enough to know that hubris has a way of finding you. But he shared a frame that explains why these particular stories matter:

"About half of our investments were complex situations where something had gone wrong. We recognised there was a gem buried inside, converted that gem into reality, and then sold it, sometimes the gem alone, sometimes the whole thing. But either way, the gem became the value proposition."

So the game is Gem hunting. Not buying good assets cheap, but recognising value that others have miscategorised.

The following section runs through three deals and with those three deals comes three lessons.

MFG came to Patron as a distressed portfolio of 48 petrol forecourts. The company owned the real estate but employed staff to run the stations, an operating model that wasn't generating adequate returns. On paper, it looked like an operational turnaround; fix the operations, improve the margins and sell to a trade buyer.

The Patron team saw something else. "The proposition was that there's real value in the underlying real estate that the market ultimately will value. Why don't we buy the whole business and somehow either free up the real estate or bring the story out bigger."

The plan was to convert operators into tenants. Approach the oil companies and restructure the relationships. Instead of employing staff to manage fuel sales, lease the sites and collect rent. Transform an operating business into a real estate story.

But 48 stations created a problem, the portfolio lacked scale to attract a broad buyer pool. The exit was uncertain. But they had a very good operating partner to help navigate the operational aspects. Then, something emerged that wasn't in the original underwrite. The MRH refinery came up for sale along with its network of petrol stations. Patron had no interest in buying a refinery, but through a circuitous route they managed to acquire just the stations, taking the portfolio from 50 to 373 sites almost overnight.

Scale solved one problem but the original challenge remained, which was how to drive income. By adding food and retail to the sites, they pushed that 9% to 14% and eventually sold at 10%.

The result was an operational business transformed into real estate, with food revenue layered on top to demonstrate growth. The lesson isn't "buy distressed petrol stations." It's that value often hides in plain sight. The market saw an operational turnaround but the Patron team saw a real estate story wearing the wrong costume. The gem wasn't buried, it was just mislabeled.

Punch had restructured multiple times. The original structure, convert pubs into tenanted properties, securitise the cash flows, use leverage to expand, had collapsed under its own debt load. By the time Patron looked at it, everyone in the market knew the situation.

The insight came from May Capital, Patron's partner on the deal. “The genius of Punch was the team we did the deal with figured out that they could sell to Heineken half the pubs day one at a good price."

Patron paid £402 million for 3,200 pubs at an enterprise value of £1.8 billion. Heineken paid £305 million equity value, around £1.2 billion enterprise value, for 1,900 of them. That left Patron with 1,300 pubs at a basis that gave them room to work.

From there, the plan was income growth through premiumisation, higher-margin products, micro-breweries, better food. Steady operational work from a cost basis that gave them margin for error.

Then COVID shut every pub in the country. But the low basis meant Patron remained solvent. They were generating positive cash flow even immediately after reopening. When others were fighting for survival, Patron was executing. The government implemented the “eat out to help out” scheme and Punch was really back in business. The exit came through what Keith calls flow, there were a few investors that were keen for a large deal, and Punch was a perfect size.  The buyer was looking for a large deal with a strong platform, with the right capital structure, and Patron had one at exactly the right moment.

The lesson isn't "buy pubs before a pandemic." It's that your entry basis determines your margin for error, and in a long enough hold period, you will need that margin. Punch survived COVID, because of structural decisions including restructuring the debt, made years earlier. The low basis wasn't just about improving returns. It was about surviving the thing you couldn't predict.

Generator is a hostel platform. The original location on Tavistock Place was a converted police barracks, walk through a tunnel to enter, no views, you're looking at other people's walls. The real estate wasn't valuable on its own. But someone had figured out you could bring 700 beds on top of a high-margin bar in an amazing location, and that was the business.

The thesis was simple, the office market was terrible at the time, so buy empty office buildings cheap and convert them into hostels using Generator as the platform. They got up to about 10 properties plus a leased property. But few understood the concept yet. Empty offices don't generate income, so banks wouldn't lend. "The equity per deal was very, very high. We ended up burning through the returns because we had too much equity in the deal."

The other deals Keith described were 40–50% levered. Generator was far lower . And then there was Paris. One asset at 964 beds, ate so much capital that it dragged returns for the entire portfolio. "While it was a great idea, looked great on paper, everyone was happy, we didn't make that much money on it. Largely because of the amount of equity. And time."

The lesson isn't "avoid hostels." It's that capital structure and time can kill a good idea. Generator wasn't wrong about the market opportunity, the thesis played out, urban hostels became a real category. But being right about the destination doesn't help if you run out of fuel getting there. The gem was real but they could not afford the time it took to polish it.

Three different sectors and three different outcomes. But the same underlying question: What's the gap between what this thing is and what it could become, and do we have the capital structure, team and time horizon to close that gap?

The skill is recognising which situations have gems inside them, and understanding what it will actually take to extract them. But here's the thing, even if you see the gem clearly, structure the capital correctly and back the right partner, you still need to know who's going to buy it from you and when. What the Patron team calls flow.

Keith defines flow as "sentiment and market demand, the ability to understand when interest will come in and out of an asset." Flow is seeing which capital pools want which assets before that demand surfaces in competitive processes. It's knowing when one investors wants scale or when a IS product specialist wants European exposure or alternative capital looking for safety, but perhaps most important when the domestic investor decides to re-enter the market.

The ability comes from operating in many markets, raising from many sources, and watching how different pools of money behave through different cycles. You have to see enough capital move to recognise the patterns. Understanding flow in Europe is particularly challenging. The continent isn't one market, it's dozens of micro-markets with different legal systems, tax structures, investor bases, and return expectations. Most firms either specialise in one geography and sacrifice scale, or try to operate across borders and drown in complexity.

"The problem of investing in Europe is that it's almost impossible to scale. Too many micro-markets. Too many regional variations. Too many regulations and tax issues."

The only way through, Keith argues, is time. You have to have done it long enough to understand it. Twenty-six years of pattern recognition can't be replicated quickly. Patron has seen how capital moved during the GFC, the European debt crisis, COVID. They know which investors got hurt and which emerged looking to deploy.

Which raises the question, if understanding flow depends on time, how do you make sure you don't waste the time you have?

The Patron team is fixated on the first 90 days after acquisition. "Within that first 90 days, you better have a very good handle on all your diligence, all your work, and all your plans. Because if something goes wrong a year later, it's too late."

The 90-day window is when you confirm or revise every assumption from underwriting. You own the asset now. You're learning what's actually true. The business plan has to be locked by the end of that window. What expenditures, in what sequence, on what timeline. To enforce this across 20+ investments, Patron maintains a weekly "what keeps us up at night"  document, tracking everything that can go wrong and making sure the team is on top of all.

He pulled it out during our conversation. About seven pages. Every investment gets a bullet list of specific issues, not metrics like occupancy, but the particular things that need to happen next. "Spanish residential: execute, sell. German light industrial: refurbish, lease, exit." Yellow highlighting shows what changed since last week. "Every single thing is tracked, measured. My recommendation for a great report is to write down anything that keeps you up at night. And then monitor it."

Patron’s senior team has been together for 18 years, and roughly 6% annual turnover in the investment team over 25 years. In an industry where two years at a firm is considered a good run, that's remarkable. And it matters because the flow thesis only works if the team stays together long enough for the pattern recognition to compound.

So why do they stay? Keith resisted a clean answer. But he worked through several factors.

Leading from the front. There's a military expression, meaning "after me." Patron doesn't delegate the hard parts, the senior partners must be and are responsible for every element of their investments. Even on fund raising, you need to lead from the front. For Fund VII, Keith ran 760 meetings over 18 months, roughly 500 with potential new investors; only fourteen said yes. I would argue that when junior people see this, watching the senior partners do the work and take that volume of rejection, teaches something about persistence.

Learning velocity. Patron is small enough that juniors work one-to-two or one-to-three on deals. At larger firms, you're one of ten on a transaction. "The knowledge base is huge if you want to become a principal."

Equity participation. Carry and ownership, not just salary and bonus.

Care when things go wrong. Patron has had about eight situations where team members faced serious illness. The firm supported them.

Length of tenure is a big deal in private equity, but not everyone is built for this kind of work. Keith is specific about what he looks for.

Keith cares less about credentials than about the individual he is hiring. "If I had apples to apples, one guy comes from an extraordinarily wealthy family and goes to all the great schools and did really well and comes to me and he's really bright, and another guy comes from a broken home and worked his f*cking ass off, maybe not as obviously bright but is super hungry, and it's sort of the same level of intelligence, I take that guy all day long."

Real estate is difficult when things go wrong. People who've faced adversity handle it better.

Beyond background, three things:

For operating partners, he adds "Absolute neurosis. At any moment in the day, you think someone or something is gonna screw you bad. Someone's stealing from me. As I'm sitting here today, someone's trying to steal money from me."

The good operators assume something is going wrong right now. They check and recheck. This connects back to the 90-day discipline, the neurosis isn't paranoia for its own sake. It's the kind of person that catches problems early, while there's still time to fix them.

There's a version of this story where the takeaway is that Patron succeeds because Keith is experienced, and well-connected. That's true but incomplete because the edge isn't Keith. It's the team, the system, and the way each piece reinforces the others.

Flow lets them see exits that aren't visible to local market participants. The 90-day rule forces specificity before problems compound. Team continuity is what makes flow readable, you need people who've watched capital move through multiple cycles to recognise the patterns. And finding operating partners with the right neurosis means problems get caught early, while there's still time to fix them.

The team stays because they learn fast and get taken care of. Because they stay, the pattern recognition accumulates. Because the pattern recognition accumulates, they can read flow. Because they can read flow, they can structure exits that aren't available to competitors. You could copy the 90-day rule or the weekly tracking document. But knowing the rules isn't the same as having the judgment to apply them, and that only comes from doing it long enough. The deal is only half the problem, the other half is everything that has to be true, about your capital, your time horizon, your team, your exits, for the gem to actually become yours.