06/27/2019 Graham Winfrey, Senior Editor, Inc.

Tecum Capital Lands on Inc. Magazine's List of 50 Best Private Equity Firms for Business Owners

Tecum Capital on Inc. Magazine's Founder-Friendly Private Equity Firms

Inc.'s inaugural list of founder-friendly private equity firms highlights shops that treat entrepreneurs as partners and operators--rather than as part of the furniture.

Private equity firms have been called all kinds of nasty names over the years: asset strippers, corporate raiders, vulture capitalists. Don't be deterred by these labels. The PE firms making headlines over high-profile corporate bankruptcies such as Toys "R" Us are rarely the same investors who back small businesses. In fact, more and more companies are taking private equity investment. In the U.S., the number of PE-backed businesses is up 25 percent compared with 2014, according to research firm PitchBook. So don't forget to call PE firms something else: business builders.

PE by the numbers
$752 billion Amount of uninvested capital that PE companies have at their disposal. That's a record, up from $469 billion in 2014.
Source: Preqin

25% Increase from 2014 through 2018 in the number of private equity-backed U.S. companies, up from 6,177 to 7,737.
Source: PitchBook

10.1% Revenue growth at PE-backed middle-market companies in 2018. Non-PE-backed middle-market companies grew more slowly that year--7.9%.
Source: The National Center for the Middle Market at the Ohio State University

$713B The total value of private equity deals in the U.S. in 2018. That figure has increased by 35 percent from 2014.
Source: PitchBook

For some private equity firms, investing in founder-led businesses is a big part of the strategy--if not the strategy itself. Before you test the private equity waters, however, you should first take a hard look at your company. "Founders need to think about what they want out of a PE fund," says Nick Leopard, founder, and CEO of Accordion Partners, a financial consulting firm that works with private equity-backed companies. Some entrepreneurs turn to private equity to help execute their vision; others bring in PE firms to collaborate on new strategies or to finance acquisitions. "Doing that self-inspection first is really important," Leopard says.

Private equity firms are now sitting on a record amount of uninvested capital, which is good news for businesses seeking funds. That cash pile is prompting those firms to expand their purview and do deals with businesses that just five years ago would have been unlikely targets, according to Tom Stewart, executive director of the National Center for the Middle Market. "They're investing in younger, earlier-stage companies, and they're more willing to take a minority stake than they were because they've got to put the money to work," Stewart says. "It's more of a sellers' market."

Family businesses are often strong can¬didates for outside investment. "It's a rare family that can continue to evolve and grow a business without help from a third party," says Dave Brackett, co-founder, and CEO of private credit manager Antares Capital, which has helped finance acquisitions for more than 400 private equity firms. "You constantly need to innovate and bring people on board."
Selling a meaningful stake in your company can be life-altering. That's why we've created this list of founder-friendly private equity firms. We identified firms that have invested in founder-led companies, gathered data on how their portfolio companies have grown and asked entrepreneurs to tell us about their experiences--including what any founder should know about outside investors.

That research has yielded our list of 50 firms with a track record of successfully backing entrepreneurs. Think of it as the first step in doing your own due diligence.
 

The Top 50 Founder-Friendly Private Equity Firms

PE FIRM

U.S. HQ

SIZE OF TARGET PORTFOLIO COMPANIES

Accel-KKR

Menlo Park, CA

$15M-$200M annual revenue

Alpine Investors

San Francisco, CA

$5M-$100M annual revenue

Berkshire Partners

Boston, MA

$100M and above in annual revenue

Blue Point Capital Partners

Cleveland, OH

$20M-$300M annual revenue

Brentwood Associates

Los Angeles, CA

$25M-$500M annual revenue

Bridge Growth Partners

New York, NY

$50M-$500M annual revenue

CCMP Capital

New York, NY

$250M-$2B enterprise value

Clayton, Dubilier & Rice

New York, NY

Typically invests $100M and above

Clearview Capital

Stamford, CT

$4M-$20M EBITDA

Cortec Group

New York, NY

$40M-$300M annual revenue

Endeavour Capital

Portland, OR

$25M-$250M annual revenue

Frontier Capital

Charlotte, NC

$10M-$30M annual revenue

General Atlantic

New York, NY

$25M-$300M annual revenue

Genesis Park

Houston, TX

$5M-$100M annual revenue

Great Hill Partners

Boston, MA

$25M-$500M enterprise value

Gridiron Capital

New Canaan, CT

$75M-$650M enterprise value

JMI Equity

Baltimore, MD
San Diego, CA

$10M-$50M annual revenue

JMK Consumer Growth Partners

New York, NY

$2M and above in annual revenue

Kayne Anderson Capital Advisors

Los Angeles, CA

$5M-$50M annual revenue

LLR Partners

Philadelphia, PA

$10M-$100M annual revenue

Main Post Partners

San Francisco, CA

$25M-$250M annual revenue

MidOcean Partners

New York, NY

$100M-$500M enterprise value

Mountaingate Capital

Denver, CO

$5M-$25M EBITDA

Palladium Equity Partners

New York, NY

$10M-$75M EBITDA

Pamlico Capital

Charlotte, NC

$10M-$150M annual revenue

Permira

Menlo Park, CA
New York, NY

$200M-$5B enterprise value

Prospect Partners

Chicago, IL

$10M-$75M annual revenue

Quad-C Management

Charlottesville, VA

$75M-$500M enterprise value

Ridgemont Equity Partners

Charlotte, NC

$5M-$50M EBITDA

The Riverside Company

New York, NY

$400M enterprise value

Sagemount

New York, NY

$15M-$250M annual revenue

Serent Capital

San Francisco, CA

$5M-$100M annual revenue

Shamrock Capital

Los Angeles, CA

$20M-$300M annual revenue

Shorehill Capital

Chicago, IL

$3M-$15M EBITDA

ShoreView Industries

Minneapolis, MN

$20M-$225M annual revenue

Sole Source Capital

Santa Monica, CA

$35M and below EBITDA

Source Capital

Atlanta, GA

$10M-$75M annual revenue

Spell Capital

Minneapolis, MN

$5M and above in annual revenue

The Sterling Group

Houston, TX

$50M-$750M annual revenue

Stripes

New York, NY

$10M and above in annual revenue

TA Associates

Boston, MA

$100M-$250M annual revenue

Tecum Capital

Wexford, PA

$3M-$15M EBITDA

Thomas H. Lee Partners

Boston, MA

$250M-$2.5B enterprise value

Tower Arch Capital

Draper, UT

$20M-$150M annual revenue

TPG Growth

San Francisco, CA

$15M and above in annual revenue

Trilantic North America

New York, NY

$100M-$1B enterprise value

Tritium Partners

Austin, TX

$5M-$100M annual revenue

Trivest Partners

Coral Gables, FL

$20M-$200M annual revenue

TSG Consumer Partners

San Francisco, CA

Declines to disclose

Wynnchurch Capital

Rosemont, IL

$50M-$1B annual revenue

Note: "EBITDA" refers to earnings before interest, taxes, depreciation, and amortization. "Enterprise value" refers to the total value of a company.

From the July/August 2019 issue of Inc. Magazine

 

 

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