ParkerGale Capital LP has closed a debut buyout fund of $240 million, exceeding the original target of $200 million. The private equity firm, founded by the former technology investment team of Chicago Growth Partners, focuses on acquiring profitable, founder-owned tech companies in the lower middle market.

The Chicago 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. 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.

"Private equity people love the visibility and the recurring nature of revenue in the SaaS model," says ParkerGale co-founder Kristina Heinze, one of the featured speakers at Mergers & Acquisitions' recent MM360 conference.

“Small funds outperform larger funds, and specialists outperform generalists," says Heinze, making the case for the young firm.

And while the firm is new, the team has worked together for more than a decade, she points out. ParkerGale was formed in 2014 by the former technology investment team from Chicago Growth Partners, including Heinze and partners Dave Chandler, Devin Mathews, Jim Milbery, Ryan Milligan, chief financial officer Corey Dossett and office manager Sharon Janowski. Private equity industry veteran Tim Murray serves as the fund’s senior adviser. BearTooth Advisors acted as strategic fundraising adviser, and Kirkland & Ellis acted as fund counsel.

As the private equity industry matures, new players, including family offices, independent sponsors and spin-offs from established firms are entering the asset class.

Technology