Huron Capital Partners has announced that it will pursue non-control equity investments in addition to its equity investments in the lower mid-market, according to a statement from the firm.
The new equity team in charge of non-control equity investments will look at the same types of companies as their traditional buyout strategy the firm has been focusing on for the past 17 years, only under different ownership positions with smaller investment interests, according to the statement.
Doug Sutton and Charlie Sheridan joined Huron in January to lead the effort. Sutton has joined as partner and Sheridan as principal.
The non-control equity strategy will be able to capitalise on an area of the market that Huron felt it was missing out on and will allow the firm to support companies to grow without them ceding control, Sutton said. It will focus on companies that are not ready for a complete sale, either looking for an equity partner or to provide liquidity to shareholders.
The new strategy will typically take 20 to 49 percent ownership in companies with $10 million to $200 million in revenue, with EBITDA of $5 million to $20 million.
The transaction types will include recapitalisations, add-on acquisitions, ownership transactions, balance sheet enhancements and growth equity. The investment structure will be primarily preferred common stock and occasional use of subordinated debt. Focusing on sectors including consumer products and services, specialty manufacturing, business services and healthcare, according to the statement.
Sutton and Sheridan worked together at Bank One (acquired by JP Morgan) and Bank of Montreal (BMO) Private Equity for several years. Sheridan spent 13 years at BMO focusing on a similar investment approach. The new strategy will utilise analysts and members from existing Huron teams.
“It is natural for a private equity firm to grow externally, but we are looking for our firm to grow within the lower mid-market and not out of it. Often, firms grow out of their initial market,” Sutton said.
Huron is currently working on five portfolio companies and five add-on companies, according to Sutton.
Huron Capital Partners is an operationally-focused private equity firm, with a long history of growing lower mid-market companies. Founded in 1999, the firm has raised over $1.1 billion in capital through four committed private equity funds and invested in more than 100 companies.
The firm invests in equity recapitalisations, family succession transactions, market-entry strategies, corporate carve-outs, and management buyouts, according to the statement.