The 50 Best Private Equity Firms for Entrepreneurs

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

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.

THE TOP 50 FOUNDER-FRIENDLY PRIVATE EQUITY FIRMS

PE FIRMU.S. HQSIZE OF TARGET PORTFOLIO COMPANIES
Accel-KKRMenlo Park, CA$15M-$200M annual revenue
Alpine InvestorsSan Francisco, CA$5M-$100M annual revenue
Berkshire PartnersBoston, MA$100M and above in annual revenue
Blue Point Capital PartnersCleveland, OH$20M-$300M annual revenue
Brentwood AssociatesLos Angeles, CA$25M-$500M annual revenue
Bridge Growth PartnersNew York, NY$50M-$500M annual revenue
CCMP CapitalNew York, NY$250M-$2B enterprise value
Clayton, Dubilier & RiceNew York, NYTypically invests $100M and above
Clearview CapitalStamford, CT$4M-$20M EBITDA
Cortec GroupNew York, NY$40M-$300M annual revenue
Endeavour CapitalPortland, OR$25M-$250M annual revenue
Frontier CapitalCharlotte, NC$10M-$30M annual revenue
General AtlanticNew York, NY$25M-$300M annual revenue
Genesis ParkHouston, TX$5M-$100M annual revenue
Great Hill PartnersBoston, MA$25M-$500M enterprise value
Gridiron CapitalNew Canaan, CT$75M-$650M enterprise value
JMI EquityBaltimore, MD
San Diego, CA
$10M-$50M annual revenue
JMK Consumer Growth PartnersNew York, NY$2M and above in annual revenue
Kayne Anderson Capital AdvisorsLos Angeles, CA$5M-$50M annual revenue
LLR PartnersPhiladelphia, PA$10M-$100M annual revenue
Main Post PartnersSan Francisco, CA$25M-$250M annual revenue
MidOcean PartnersNew York, NY$100M-$500M enterprise value
Mountaingate CapitalDenver, CO$5M-$25M EBITDA
Palladium Equity PartnersNew York, NY$10M-$75M EBITDA
Pamlico CapitalCharlotte, NC$10M-$150M annual revenue
PermiraMenlo Park, CA
New York, NY
$200M-$5B enterprise value
Prospect PartnersChicago, IL$10M-$75M annual revenue
Quad-C ManagementCharlottesville, VA$75M-$500M enterprise value
Ridgemont Equity PartnersCharlotte, NC$5M-$50M EBITDA
The Riverside CompanyNew York, NY$400M enterprise value
SagemountNew York, NY$15M-$250M annual revenue
Serent CapitalSan Francisco, CA$5M-$100M annual revenue
Shamrock CapitalLos Angeles, CA$20M-$300M annual revenue
Shorehill CapitalChicago, IL$3M-$15M EBITDA
ShoreView IndustriesMinneapolis, MN$20M-$225M annual revenue
Sole Source CapitalSanta Monica, CA$35M and below EBITDA
Source CapitalAtlanta, GA$10M-$75M annual revenue
Spell CapitalMinneapolis, MN$5M and above in annual revenue
The Sterling GroupHouston, TX$50M-$750M annual revenue
StripesNew York, NY$10M and above in annual revenue
TA AssociatesBoston, MA$100M-$250M annual revenue
Tecum CapitalWexford, PA$3M-$15M EBITDA
Thomas H. Lee PartnersBoston, MA$250M-$2.5B enterprise value
Tower Arch CapitalDraper, UT$20M-$150M annual revenue
TPG GrowthSan Francisco, CA$15M and above in annual revenue
Trilantic North AmericaNew York, NY$100M-$1B enterprise value
Tritium PartnersAustin, TX$5M-$100M annual revenue
Trivest PartnersCoral Gables, FL$20M-$200M annual revenue
TSG Consumer PartnersSan Francisco, CADeclines to disclose
Wynnchurch CapitalRosemont, IL$50M-$1B annual revenue

This Founder Turned a Unique Acquisition Into a $10 Million Business in Just 3 Years–Without Venture Capital

Recruiting software company Virgil was just three years old when founder Ron Mitchell went looking for an acquisition that would allow the business to scale faster. But, like many young firms, the Chicago-based Virgil, which matches workers with employers through testing, lacked capital. He did not lack experience, though, which has plenty of value in itself. “We’re not your 23-year-old CEOs,” the 49-year-old says. “It’s great to invest in the dream, but you have to look at fundamentals.”

His fundamentals said no to venture capital–too much focus on hyper-growth and not enough emphasis on cash flow. Mitchell had been down that road before as both an investor in the late 1990s and a serial entrepreneur in the career-development industry since 2002. And his acquisition target–a hospitality-talent-recruiting company called Hcareers–was being divested by a public company called DHI Group. He’d have to orchestrate a complex carve-out.

Knowing he’d need help, Mitchell brought in a friend, Doug Tutt, as a partner. Tutt had been COO of CapRock Communications, which had done a deal with Houston-based PE firm Genesis Park in 2010, and as Mitchell says, “There’s nothing better than knowing [them] personally.” Plus, Genesis Park had a track record with carve-outs.

How $4 Million in Private Equity Helped This Sunscreen Company Go From $1 Million to $40 Million in Sales

Holly Thaggard wasn’t looking for help for her San Antonio-based, kid-friendly sunscreen company, Supergoop. Being open to ideas, though, she met with lots of people. “I just took all those meetings. Investors wanted to get to know us. We were not obviously raising capital in a formal round at the time,” she says. One of those meetings was with John Kenney, a partner at San Francisco-based private equity firm TSG Consumer Partners. By the end of their con­versation, in late 2012, she had an investor.

Supergoop’s sunscreen sales amounted to about $1 million–not enough to interest TSG. Instead, Kenney offered to put up $100,000 of his own money. A sucker for an impassioned founder story, he was drawn to Thaggard’s verve and mission to protect people of all ages from cancer-causing UV rays.

In late 2013, Thaggard learned the 20-year PE veteran was leaving TSG to start his own firm, JMK Consumer Growth Partners. His goal was to make a handful of investments in com­panies with cult followings. Supergoop was a natural fit: JMK invested $4 million of a $6.5 million round in Supergoop, in 2015.

The 1 Decision That Helped Yeti Move From Cult Brand to Nearly $800 Million in Revenue

By early 2012, almost six years after its founding, Austin-based Yeti Coolers was hitting its stride. The maker of high-end coolers for the hook-and-bullet set had grown to 20 employees and finished the previous year with $29 million in sales, which would earn the company its third consecutive appearance on the Inc. 5000. Roy and Ryan Seiders, the co-founders, had faith in the company they’d bootstrapped, but they were concerned about having all their wealth tied up in it. “We homed in on the idea of bringing in an equity partner that could help us take some chips off the table and be a resource for us as we navigated the next stages of growth,” Roy says.

The Seiders fielded pitches from more than a dozen private equity firms before agreeing to sell Cortec about 70 percent of the company. While neither party will disclose the price, Roy admits that Cortec’s wasn’t the most lucrative offer on the table. But Cortec’s proposal had an intangible the brothers’ truly valued. “They gave Ryan and me a ton of confidence that we’d be in the right hands,” says Roy.

So far, that confidence appears to be justified. Yeti has become a cult brand that last year brought in $779 million in revenue and raised $288 million in its October IPO. (Roy’s holdings are worth more than $170 million.) The now-700-employee company has dropped “Coolers” from its name–thanks to an assist from Cortec in navigating the necessary trademark battles–and expanded the product line beyond $400 heavy-duty coolers to include drinkware (mugs and tumblers), bags, lawn chairs, and even an off-road electric scooter.

This Founder Sold His Company to the Same Private Equity Firm Twice. Here’s Why It Was a Genius Move

Selling your company to the same private equity firm twice may sound a little crazy, but that’s exactly what Bill Clendenen did. And if that doesn’t seem implausible enough, consider that the first time he sold Medic First Aid, a publisher of CPR and first-aid training materials, the business wasn’t even for sale. “We kept saying we weren’t interested,” Clendenen says.

He got interested in 2006, after executives from the Riverside Company, a New York City-based PE firm, flew to Eugene, Oregon, to pitch their rollup idea. To deal with his company’s two major nonprofit competitors, the American Red Cross and the American Heart Association, Riverside would use its Micro-Cap Fund, which acquires businesses with up to $10 million in ebitda, to acquire a majority stake in Medic First Aid. Then it would merge it with another competitor, a safety and health certification company called the American Safety & Health Institute. The combined entity would be rebranded as Health & Safety Institute.

The strategy was to transform HSI into a technology-enabled health and safety training company. Medic First Aid published and sold books and certi­fication cards, so it needed to digitize training materials and build an online learning platform. “There’s always going to be some skill testing, but a lot of that training can be done online, and it’s a much more efficient way to do it,” says Joe Lee, a partner at Riverside.

These Founders Wanted to Create the ‘Chipotle of Pizza.’ Now, Their LeBron James-Backed Business Is Aiming for an IPO

LeBron James, the Boston Red Sox, mall pretzels: These are crucial ingredients in Blaze Pizza’s ambitious recipe for growth.

Serial entrepreneurs and spouses Elise and Rick Wetzel co-founded their Pasadena, California-based company in 2011 with a simple, if hardly unique, idea: Let’s create the Chipotle of pizza. The dough and toppings would be “artisanal” (roasted garlic, balsamic glaze). The pies would be made to order, in an open kitchen behind a glass counter, and cooked for the hungry customer within three minutes.

It’s a popular franchise concept, one that has Blaze competing with several startups, including & Pizza, MOD, and Pieology, as well as giant incumbents like Domino’s. But Blaze has quickly become a leader, with more than 320 national locations, a projected $400 million in sales this year, and plans for an IPO. “From the very first restaurants we opened, we had this vision that we were going to grow it to a thousand,” says Elise Wetzel, the company’s chief marketing officer.

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The 50 Best Private Equity Firms for Entrepreneurs