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Tecum Teams With Family Offices to Get Control Stake in Midsized Companies

By Patty Tascarella, Senior Reporter, Pittsburgh Business Times – Aug 5, 2022

After closing on a $305 Million fund in January, one of Pittsburgh’s biggest private equity firms has a new team effort underway.

Make that TEAM – short for Tecum Equity Alpha Management.

Wexford-based Tecum Capital Management, is working with multiple family offices and other institutional investors like fund of funds to invest in lower middle market companies, taking a control position of a least 51% ownership. It is targeting companies with EBITDA of $3 million to $10 Million, or transaction enterprise values from $25 Million to $100 million. Industry sectors include precision manufacturing, value-added distribution, logistics-transportation, waste, food manufacturing and field service businesses.

TEAM is proceeding on a deal-by-deal basis, at least initially, raising a fund has not been ruled out, said Stephen Gurgovits Jr., Tecum Managing Partner.

“Our check size will range from 5 million to $25 million,” Gurgovits said.

TEAM is separate from the $305 million SBIC fund Tecum recently raised, its third and largest to date with 21 banks as investors. SBIC, short for Small Business Investment Company, means the U.S. Small Business Administration is matching the money raised up to the SBA’s cap of $175 Million. Tecum is Pittsburgh’s fourth-largest Private Equity firm as ranked by capital under management which was $750 million.

The family offices were not identified.

“We have a target group of investors we are working with, but we expect to add names over time, and it may also vary by industry on a particular deal,” Gurgovits said. “We expect, although not require, multiple investors in each deal.”

TEAM conceptionally is similar to Tecum Equity Partners, an equity control buyout fund backed by Western Allegheny Capital that staked several companies including Pittsburgh Brewing Co. and Oberg Industries. Western Allegheny is the family office of Cliff Forrest, who is president of Kittanning-based Rosebud Mining Co.

Western Allegheny is not formally a part of TEAM.

“But we would certainly welcome the opportunity to work with them on future investments,” Gurgovits said. “Our experience with Wester Allegheny was a great one. I know we became better investors and had a lot of fun as a team, and we are sill appreciative for that unique opportunity. Now, we are excited to revisit that model over a wider investor base. I think every family office has their own unique criteria and style, so navigating that process is important and having a clear understanding of expectations upfront is critical.”

The TEAM model serves a niche, her said. It gives family offices access to direct investments and choices.

“We feel this is much more appealing than a blind pooled fund.” Gurgovits said. “That being said, it may be difficult for us to avoid ending up with a fund or fund-like vehicle if we continue to have success in the longer term. However, we are very comfortable with this model as we restart our equity control platform. For now, we are only expecting to invest in a few deals initially.”