A d d u c e n t

6/5/09 Update (to the email I received on 6/4).

Received the following message directly from the Co-CEO's of the Company:

 

Dear Dennis

We will continue our focus on finding and closing the most promising deals at the smaller end of the middle market. The fund will invest in growing North American-based companies with enterprise values of up to $200 million. We are coming off a record-setting 2008 in which we completed 31 investments. We complete a high volume of transactions by paying fair value, eschewing bait-and-switch tactics, and providing a very high certainty of closing.

The firm looks forward to continuing a strong pace of investment; we have already completed seven acquisitions in 2009 despite the challenging environment. The firm believes ours is the largest fund in the world dedicated exclusively to the smaller end of the middle market. Backed by the institutional strength of our global operations, we are poised to take full advantage of the many opportunities to find "little leaders" and grow them into exceptional middle market companies. This process has worked well for  us and our investors for more than two decades.

We encourage you to contact a member of our Origination team with any opportunities that meet our criteria.

Please contact either of us with any questions.

Regards,
SK, Co-CEO
BS, Co-CEO

 

6/4/09

Received the following email press release from one of our buyer clients:

From: RC
Sent: Thursday, June 04, 2009 10:45 AM
To: This e-mail address is being protected from spambots. You need JavaScript enabled to view it
Subject: We Closed our Largest Ever Fund at $1.17 Billion

(June 4, 2009) – Thanks to significant support from existing and new investors, We have closed our latest fund well above target. We had targeted $900 million when it launched in March 2008. On May 29, 2009 it closed on $1.17 billion – 30% above target and 56% above the total raised in 2003.

Our investment funds adhere to the core principles on which the firm was founded 21 years ago. It invests in healthy North American-based companies with EBITDA between $5 million and $15 million. Our strategy is straightforward; it builds these small companies into mid-market competitors by doubling or tripling EBITDA through add-on acquisitions and organic growth. The firm helps great management teams grow their little companies by using its dedicated operating and origination teams and the talents of world-class investment professionals. The final step in the strategy is to sell the formerly small companies at the higher level of earnings and enhanced multiples that larger and stronger companies demand. The team’s focus and professionalism has proven extremely effective – through March 31, 2009, the gross IRR on all exited RCAF deals was 57.7%, with a gross cash-on-cash return of 3.2x. Thomson Venture Economics ranks seven of the firm’s nine mature vintages as top quartile performers on a net cash-on-cash basis as of December 31, 2008.

With over $3 billion in capital under management, we target companies with enterprise values below $150 million. Since 2008, its average platform enterprise value has been $40 million, and as such, we tend to compete with much smaller regional or industry-specific firms. Like these firms, we employ local nationals in each country who fully understand and engage in local markets. But unlike these firms, we bring extensive global resources to small company investing. We are one of the world’s most active private equity firms, with 185 employees in 18 offices on three continents, who together manage a portfolio of 68 companies. We maintain dedicated originating, transacting and operating teams, employing institutional-quality resources not typically available to its small-market competitors.

“This is the worst fundraising market since dinosaurs roamed the earth,” says our Co-CEO. “But investors voted with their dollars in favor of our simple and proven value creation strategy coupled with our demonstrated execution. While over the past five years many private equity firms competed to do bigger and more highly leveraged deals, we stuck to our knitting and found smaller crown jewel companies that could be acquired for fair value and then made bigger and better. We’ve applied this ‘blue collar’ approach successfully, globally leveraging our brand and employing our dedicated origination and in-house operating teams. This heavy lifting has resulted in our two decades of consistently superior returns.”