peHUB has learned that Jeff Rich, former CEO of Affiliated Computer Services (NYSE: ACS), and Todd Furniss, former president of the Everest Group, have partnered to form a new private equity firm focused on the IT-enabled business services sector. The Dallas-based effort is named PlumTree Partners, and will formally announce itself next week.
PlumTree has not yet decided on whether it will raise a formal fund, operate as a fundless sponsor backed by local family offices or become an investment holding company for a large corporation that has expressed interest. In general, however, is wants to invest between $25 million and $50 million of equity per year, in around four deals. If PlumTree were to pursue the formal fund structure, that would work out to around a $250 million target.
I’m pretty skeptical of most new PE firms in today’s environment, but this one certainly has big-name experience on its side. Rich began his career as an LBO banker for Citi in the 1980s, before getting recruited by ACS to be its CFO. At the time, ACS was doing around $290 million in revenue. Rich was soon promoted to COO and then to CEO. By the time he resigned (surprisingly) in late 2005, the company had around $5.5 billion in revenue, and Rich had been instrumental in around 80 acquisitions. His next goal was to get into private equity, but he soon realized valuations were way out of whack. So he waited (it helped that he got a $4m golden parachute from ACS).
Furniss began life as a corporate lawyer and then joined EDS, where his last job was running Asia M&A strategy. He left EDS in 2001 to join Everest Group, a consulting firm that advises buyers and sellers of IT-enabled services. Furniss says that he envisioned Everest miming the evolution of Bain & Co., another consulting firm that spawned private equity powerhouse Bain Capital. But Furniss met internal resistance to the plan, and resigned on October 1, 2008. The next day, he and Rich officially formed PlumTree.
“Our goal is to lead transactions,” Furniss says. “There may be instances where we get asked to play a different role due to our operational capabilities, but that would be more the exception than the rule.”
He adds that the current credit environment likely means that PlumTree will over-equitize some of its early deals, and that he and Rich have already looked at around 120 opportunities. “We’re getting ready to move into diligence on a couple of things” he says.
PlumTree plans to add at least one more senior investment pro within the next six months, and envisions a total staff of up to 15 people. It also would like to open an office in, or around, Delhi, India.