While activity in the overall middle market slowed down in 2015, Audax Private Equity soared ahead, raising its fifth fund, closing 100-plus investments (including 12 platform acquisitions and 91 add-on deals) and selling more portfolio companies than most of its competitors.

In September, Audax achieved a rare milestone in the middle market, when it completed the firm’s 500th transaction, a small add-on deal made by portfolio company Advanced Dermatology & Cosmetic Surgery (ADCS). The addition of Dermatology of Northern Colorado marked the thirty-first acquisition ADCS has made since the PE division of Audax Group bought the physician group in 2011.

“Buy and build is the central theme of our investment strategy,” says Geoffrey Rehnert, co-CEO of Audax Group, which was founded in 1999. The firm backs companies in the lower middle market in such sectors as industrial manufacturing, distribution and health care. Foodservice equipment provider TriMark USA serves as a good example of the Audax approach. When Audax first backed it in 2006, TriMark was fourth in its market and earned annual revenue of $260 million. Under Audax’s ownership, TriMark made six add-on acquisitions, grew revenue to more than $1 billion and became the largest foodservice equipment supplies dealer in the U.S. Audax sold it to New York private equity firm Warburg Pincus in 2014.

“What has stayed constant since we started Audax is our focus on the lower middle market,” Rehnert says. The firm’s first platform company was formed in 2002, when Audax merged two companies that made liquid-ring vacuum technology, The Nash Engineering Co. and Elmo, a spin-off of Siemens AG. Audax sold the combined company, known as Nash_Elmo Holdings LLC, to Gardner Denver Inc. for $223.5 million in cash in 2004.

From an originations perspective, 2015 was the firm’s best yet, beating its previous high-water mark set in 2007. In 2015, Audax sourced more than 2,000 deals, nearly 1,000 of which the firm considered in its sweet-spot of between $5 million and $35 million in Ebitda. In fundraising, 2015 was also a stellar year. The firm completed deployment of Fund IV (net of reserves) and raised Fund V at $2.25 billion, about 30 percent above its target of $1.75 billion, and 80 percent larger than its predecessor, which was a $1.25 billion fund.

“We have a differentiated business model that enables us to source, close, and manage more transactions than typical middle-market and lower middle-market private equity firms,” Rehnert says. “Our buy and build strategy and capability help us identify many excellent platform and add-on acquisition opportunities, even in uncertain economic environments, which enables us to create value for our investors." For more on Audax, watch our video interview with managing director Jay Jester. 

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