In a challenging economic period when many private equity firms have struggled to close deals, Huron Capital Partners LLC has succeeded in concluding a slew of add-on acquisitions throughout its portfolio, explains Gretchen Perkins, vice president of business development. The Detroit firm, which is currently investing out of its $350 million third fund, invests in lower middle-market companies.
Perkins, 48, is responsible for managing the firm's business development and investment sourcing activities, including outreach to deal professionals, such as business brokers, investment banks, attorneys, accountants and consultants. She was recently honored by the Association for Corporate Growth for her work chairing the Great Lakes ACG Capital Connection and for organizing a golf benefit.
Five of the deals Huron has closed over the last year have been add-ons.
In January, for example, the firm announced that its portfolio company TouchPoint Print Solutions Corp. had acquired Ginny's Printing, a provider of print and document process outsourcing services, for $25 million. It marked the seventh purchase by TouchPoint. Huron had first partnered with TouchPoint CEO Tom Simunek back in 2006, to pursue a buy-and-build strategy.
The firm announced another add-on acquisition in November, when Huron-backed Hughes Associates, Inc. purchased Edan Engineering Corp., a provider of electrical engineering services to the nuclear power and military markets, for $10 million. Prior to the acquisition, Edan had been a strategic partner to Hughes in the area of safe-shutdown analysis for nuclear power plants. The transaction expanded Hughes' capabilities in fire protection in the nuclear power market. One of the reasons Huron was attracted to Hughes when the PE firm originally invested in the company in May 2011 was its ability to serve as a platform for growth.
"We look like a strategic when we're doing an add-on," Perkins points out. "I think the sellers of those businesses look to join forces with another bigger company in their space and see that there's an ability to accelerate and grow faster than they would on their own."
Perkins reports that some business owners are still holding out until the economic climate improves. "For a lot of business owners, their numbers are still not back to where they want them to be. 2011 was better than 2010, but they expect 2012 to be better than 2011, and they want to wait for that to show up so they can sell off at a higher valuation."
Business conditions are getting better, Perkins reports. "I do think things are improving across the economy. We see that, across our existing portfolio, the companies that are really GDP-sensitive are, indeed, improving."
Like many dealmakers, Perkins is optimistic. "I think we'll see a really big surge in dealmaking activity in 2013, when these business owners have a great 2012 set of numbers."