Small funds outperform larger funds, and specialists outperform generalists,” says Kristina Heinze, who spearheads deal sourcing at ParkerGale Capital LP. Heinze co-founded the Chicago firm in 2014 to invest in founder-owned technology companies in the lower middle market.
ParkerGale recently closed a debut buyout fund of $240 million, exceeding the original target of $200 million. The firm makes majority investments in businesses that generate $2 million to $10 million in Ebitda. Portfolio companies specialize in providing tech-enabled business services that use, or are moving toward using, the Software-as-a-Service (SaaS) model for distributing applications.
“Private equity people love the visibility and the recurring nature of revenue in the SaaS model,” Heinze says. ParkerGale has already invested in two tech-enabled business service providers, Aircraft Technical Publishers, and waste monitor OnePlus Systems, which has also made an add-on deal in SmartBin.
“We have the benefit of working together as a full team for over a decade,” Heinze says. She and partners Dave Chandler, Devin Mathews, Jim Milbery and Ryan Milligan previously worked together at Chicago Growth Partners, where they made up the investment team. When they spun off as ParkerGale, they brought chief financial officer Corey Dossett and office manager Sharon Janowski with them. The firm has since added principals Alan Williamson and Kevin Fitzgerald and associate Cass Gunderson. Private equity industry veteran Tim Murray serves as the fund’s senior adviser. As the private equity industry matures, new players, including spin-offs from established firms, are entering the asset class.