Auxo Investment Partners, a new private equity firm based in Grand Rapids, Michigan, has launched. The firm seeks to invest in North America-based manufacturing, industrial, distribution and business services companies that have an EBITDA of $1.5 million to $15 million. Jeff Helminski, Jack Kolodny and Fred Tedori have founded the firm. Previously, Helminski and Kolodny were managing directors at Blackford Capital.
October 17, 2016 (Grand Rapids, Mich.) — Western Michigan is home to an innovative new private equity firm. Auxo Investment Partners (www.auxopartners.com), launched today in Grand Rapids, aims to help small businesses achieve their full potential for current and future generations of owners, employees and communities by making long-term investments and providing expert operational and strategic support.
Founded by three veteran investors and operators, Jeff Helminski, Jack Kolodny and Fred Tedori, the firm launches with an investor-centric business model and a commitment to integrating environmental, social and governance concerns (ESG) into its investment practices. Auxo’s capital comes from a select group of Founding Partners who invest not only in its portfolio companies, but also in the firm itself. That ownership structure, along with a heightened commitment to partnership and transparency, provides unprecedented alignment of interests between investors and managers.
“We view ourselves not just as investors but as stewards — of our Founding Partners’ capital and of the legacies of our portfolio companies and their owners,” said Helminski. “Auxo’s unique capital structure provides the flexibility we need to make decisions based on what’s best for all of our stakeholders in the long-term.”
Helminski and Kolodny previously worked together as Managing Directors at Michigan-based Blackford Capital, where they collaborated with Tedori on five investments among the dozens they worked on collectively. Tedori is also an accomplished entrepreneur who has founded three industrial firms and two financial services companies; as a private equity investor he has invested in more than 35 companies.
Unique alignment, total transparency
Their new firm, which takes its name from Auxo, the Ancient Greek goddess of growth, intends to raise approximately $50 million in equity, which it will combine with equity co-investments and modest levels of leverage to acquire 10 to 15 companies over the next five years. It has already secured commitments amounting to half of its equity target. The firm is holding discussions with a select group of additional Founding Partners, who could bring depth of financial investment capability, operational experience and networks in the business and deal communities.
“We are partnering with investors who share our vision of a private-equity firm that invests in companies for the long term,” said Kolodny. “We’ve created a model that also allows them to share in the success of the firm, and in the long-term successes of our portfolio companies. We believe there is no private equity firm like it anywhere.”
Under Auxo’s new model, the Founding Partners are also investors in the firm itself. They participate in all economic benefits generated by Auxo, including carried interest and fees, with a priority position ahead of the Management Partners. Company financials and management compensation will be fully disclosed to all Founding Partners. One Founding Partner serves as lead investor on the firm’s investment committee.
In addition, Meijer, Inc. Vice-Chairman and former Michigan state treasurer Mark Murray serves as a Senior Advisor to Auxo.
Bridging a gap for business owners
For business owners, Auxo bridges a troubling gap in the private-investment marketplace. Historically, family businesses facing a generational hand-off or seeking outside capital or partners to fuel growth have had to choose between traditional private-equity firms and family offices. It is an imperfect choice. Most private-equity firms combined high debt levels with short-term equity that comes with time constraints — they typically must sell companies again in 3-5 years — creating deep uncertainty for the sellers, their families and their employees. And most family offices lack the operating infrastructure or expertise to help businesses transition into scalable organizations.
Auxo avoids both of those shortcomings. Its flexible capital model allows for long-term growth oriented decision making without artificial deadlines. The firm doesn’t set predetermined timeframes for its investments. For certain businesses, the firm will take a perpetual approach — with no timeframe at all for a sale or other event — as it builds a portfolio of long-term holdings.
And the firm offers deep experience in operations; each of the Auxo Management Partners has a long and successful track record of providing strategic operational guidance to help companies unlock their full potential. They use that experience to help management teams develop strategies, source talent and build the infrastructure required for growth. The founders also understand the importance of staying out of the way when it comes to the day-to-day running of the business.
Auxo’s investment philosophy also reflects a broader responsibility to society. The firm adheres to the United Nations Principles for Responsible Investing and takes ESG considerations into account in every investment.
“Over-investing in company management with deep-rooted integrity will be a hallmark of our investment model,” said Tedori. “We believe you can’t do a good deal with a bad person, or without making a commitment to all of the stakeholders – employees, the communities where we operate and society at large.”
Auxo seeks to partner with firms that meet its investment criteria:
· North America-based
· Manufacturing, industrial, value-added distribution or business services industries
· EBITDA (cash flow) of $1.5-$15 million
· Owner-operators seeking retirement or family succession planning solutions; or existing teams seeking to grow their businesses
· Prefer majority-control investments but will consider select minority-partner opportunities
Founders and Management Partners
Jeff Helminski has compiled a diverse professional background over the prior 20 years including experience in private equity investing, manufacturing engineering, high-volume assembly operations management and real estate development. Prior to founding Auxo, Mr. Helminski was a Managing Director with Blackford Capital where he was a member of the firm’s investment committee, led the firm’s fundraising and was active in its deal execution activities. Mr. Helminski holds an MBA from the Stanford University Graduate School of Business, a Master of Science degree in Engineering from Purdue University, and a Bachelor of Science degree in Mechanical Engineering from Michigan Technological University.
Jack Kolodny, CFA, has 20 years of experience in investing, operations and consulting. Prior to founding Auxo, Mr. Kolodny was a Managing Director with Blackford Capital where he was a member of the firm’s investment committee and led the firm’s portfolio company team, working directly with a number of companies and developing and managing governance and operational-enhancement activities across the portfolio. Mr. Kolodny holds an MBA from the Stanford University Graduate School of Business where he was an Arjay Miller Scholar. He graduated Summa Cum Laude with Bachelors of Arts & Bachelors of Engineering degrees from Dartmouth University.
Fred Tedori brings nearly four decades as an accomplished entrepreneur, experienced industrial operator and seasoned private equity investor to the firm. Prior to founding Auxo, Mr. Tedori was the founder and CEO of numerous industrial companies including Plastibag, U.S. Tape and Enterplast, where he continues to serve as Chairman and CEO, and two regional banks. Mr. Tedori holds an MBA and a BS in Chemistry from Temple University.
For more information, please call 616-200-4454- or visit the firm’s website at www.auxopartners.com.