The Watermill Group

Steven Karol, Managing Partner, has led the firm since 1980. His son Erik S. Karol also serves as Managing Partner, with both sharing responsibility for deal sourcing, underwriting, and portfolio oversight.

The firm relies on an in-house team for direct sourcing, supplemented by relationships with middle-market intermediaries, investment banks, and an extensive network built over decades. The Watermill Group often targets businesses where it can apply operational improvements as a differentiating factor.

It is a multi-family office that operates with the strategies of a private equity firm, but using permanent capital from the Karol family and select co-investors. It does not raise traditional closed-end funds, allowing for longer hold periods.

The firm focuses on control acquisitions of lower-middle-market companies, typically with enterprise values between $50 million and $200 million. It invests across both growth and turnaround scenarios, preferring businesses where operational changes can drive value.

Yes, the Karol Family Foundation is the firm's philanthropic vehicle, supporting education, community development, and other causes in Massachusetts and beyond. It is managed separately from the investment operations (per public record).

The firm typically avoids early-stage or venture capital investments, as well as assets requiring significant regulatory licensing in financial services. Its focus remains on industrials, healthcare services, and business services where operational expertise can be applied.

The Watermill Group is the primary family office for the Karol family, directly managing their investment portfolio and operating companies. It also provides advisory services to other families and closely-held businesses through a separate consulting practice, but does not commingle capital with outside LPs.