The 50 Best US-Based Private Equity Firms for Entrepreneurs – Graham Winfrey
Private equity firms have been called all kinds of nasty names over the years: asset strippers, corporate raiders, vulture capitalists. Don’t be deterred by these labels. The PE firms making headlines over high-profile corporate bankruptcies such as Toys “R” Us are rarely the same investors who back small businesses. In fact, more and more companies are taking private equity investment. In the U.S., the number of PE-backed businesses is up 25 percent compared with 2014, according to research firm PitchBook.
So don’t forget to call PE firms something else: business builders.PE by the numbers$752 billion Amount of uninvested capital that PE companies have at their disposal. That’s a record, up from $469 billion in 2014.Source: Preqin25% Increase from 2014 through 2018 in the number of private equity-backed U.S. companies, up from 6,177 to 7,737.Source: PitchBook10.1% Revenue growth at PE-backed middle-market companies in 2018. Non-PE-backed middle-market companies grew more slowly that year–7.9%.Source: The National Center for the Middle Market at the Ohio State University$713B The total value of private equity deals in the U.S. in 2018. That figure has increased 35 percent from 2014.Source: PitchBook
For some private equity firms, investing in founder-led businesses is a big part of the strategy–if not the strategy itself. Before you test the private equity waters, however, you should first take a hard look at your company. “Founders need to think about what they want out of a PE fund,” says Nick Leopard, founder and CEO of Accordion Partners, a financial consulting firm that works with private equity-backed companies. Some entrepreneurs turn to private equity to help execute their vision; others bring in PE firms to collaborate on new strategies or to finance acquisitions. “Doing that self-inspection first is really important,” Leopard says.
Private equity firms are now sitting on a record amount of uninvested capital, which is good news for businesses seeking funds. That cash pile is prompting those firms to expand their purview and do deals with businesses that just five years ago would have been unlikely targets, according to Tom Stewart, executive director of the National Center for the Middle Market. “They’re investing in younger, earlier-stage companies, and they’re more willing to take a minority stake than they were, because they’ve got to put the money to work,” Stewart says. “It’s more of a sellers’ market.”
Family businesses are often strong candidates for outside investment. “It’s a rare family that can continue to evolve and grow a business without help from a third party,” says Dave Brackett, co-founder and CEO of private credit manager Antares Capital, which has helped finance acquisitions for more than 400 private equity firms. “You constantly need to innovate and bring people on board.”
Selling a meaningful stake in your company can be life-altering. That’s why we’ve created this list of founder-friendly private equity firms. We identified firms that have invested in founder-led companies, gathered data on how their portfolio companies have grown, and asked entrepreneurs to tell us about their experiences–including what any founder should know about outside investors.
That research has yielded our list of 50 firms with a track record of successfully backing entrepreneurs. Think of it as the first step in doing your own due diligence.
The Top 50 US-Based Founder-Friendly Private Equity Firms
| PE FIRM | U.S. HQ | SIZE OF TARGET PORTFOLIO COMPANIES |
|---|---|---|
| Accel-KKR | Menlo Park, CA | $15M-$200M annual revenue |
| Alpine Investors | San Francisco, CA | $5M-$100M annual revenue |
| Berkshire Partners | Boston, MA | $100M and above in annual revenue |
| Blue Point Capital Partners | Cleveland, OH | $20M-$300M annual revenue |
| Brentwood Associates | Los Angeles, CA | $25M-$500M annual revenue |
| Bridge Growth Partners | New York, NY | $50M-$500M annual revenue |
| CCMP Capital | New York, NY | $250M-$2B enterprise value |
| Clayton, Dubilier & Rice | New York, NY | Typically invests $100M and above |
| Clearview Capital | Stamford, CT | $4M-$20M EBITDA |
| Cortec Group | New York, NY | $40M-$300M annual revenue |
| Endeavour Capital | Portland, OR | $25M-$250M annual revenue |
| Frontier Capital | Charlotte, NC | $10M-$30M annual revenue |
| General Atlantic | New York, NY | $25M-$300M annual revenue |
| Genesis Park | Houston, TX | $5M-$100M annual revenue |
| Great Hill Partners | Boston, MA | $25M-$500M enterprise value |
| Gridiron Capital | New Canaan, CT | $75M-$650M enterprise value |
| JMI Equity | Baltimore, MD San Diego, CA | $10M-$50M annual revenue |
| JMK Consumer Growth Partners | New York, NY | $2M and above in annual revenue |
| Kayne Anderson Capital Advisors | Los Angeles, CA | $5M-$50M annual revenue |
| LLR Partners | Philadelphia, PA | $10M-$100M annual revenue |
| Main Post Partners | San Francisco, CA | $25M-$250M annual revenue |
| MidOcean Partners | New York, NY | $100M-$500M enterprise value |
| Mountaingate Capital | Denver, CO | $5M-$25M EBITDA |
| Palladium Equity Partners | New York, NY | $10M-$75M EBITDA |
| Pamlico Capital | Charlotte, NC | $10M-$150M annual revenue |
| Permira | Menlo Park, CA New York, NY | $200M-$5B enterprise value |
| Prospect Partners | Chicago, IL | $10M-$75M annual revenue |
| Quad-C Management | Charlottesville, VA | $75M-$500M enterprise value |
| Ridgemont Equity Partners | Charlotte, NC | $5M-$50M EBITDA |
| The Riverside Company | New York, NY | $400M enterprise value or less |
| Sagemount | New York, NY | $15M-$250M annual revenue |
| Serent Capital | San Francisco, CA | $5M-$100M annual revenue |
| Shamrock Capital | Los Angeles, CA | $20M-$300M annual revenue |
| Shorehill Capital | Chicago, IL | $3M-$15M EBITDA |
| ShoreView Industries | Minneapolis, MN | $20M-$225M annual revenue |
| Sole Source Capital | Santa Monica, CA | $35M and below EBITDA |
| Source Capital | Atlanta, GA | $10M-$75M annual revenue |
| Spell Capital | Minneapolis, MN | $5M and above in annual revenue |
| The Sterling Group | Houston, TX | $50M-$750M annual revenue |
| Stripes | New York, NY | $10M and above in annual revenue |
| TA Associates | Boston, MA | $100M-$250M annual revenue |
| Tecum Capital | Wexford, PA | $3M-$15M EBITDA |
| Thomas H. Lee Partners | Boston, MA | $250M-$2.5B enterprise value |
| Tower Arch Capital | Draper, UT | $20M-$150M annual revenue |
| TPG Growth | San Francisco, CA | $15M and above in annual revenue |
| Trilantic North America | New York, NY | $100M-$1B enterprise value |
| Tritium Partners | Austin, TX | $5M-$100M annual revenue |
| Trivest Partners | Coral Gables, FL | $20M-$200M annual revenue |
| TSG Consumer Partners | San Francisco, CA | Declines to disclose |
| Wynnchurch Capital | Rosemont, IL | $50M-$1B annual revenue |
Note: “EBITDA” refers to earnings before interest, taxes, depreciation, and amortization. “Enterprise value” refers to the total value of a company.
From the July/August 2019 issue of Inc. Magazine
