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Published 25 April 2012 15:59, Updated 26 April 2012 08:59
Three BRW Fast Starters companies are nestled in the portfolio of private equity company Anacacia Capital. The founder and managing director of the fund, Jeremy Samuel, explains that the firm’s ideal targets are small to medium enterprises with profits of $3 million to $4 million and revenue of $20 million to $30 million.
“Sometimes we miss out on great very early stage start-up ideas but that’s not our mandate,” he says.
An ideal business is one that is run profitably and has typically one of two characteristics where Anacacia can assist: those in succession planning or businesses with significant growth ambitions that may be realised through a combination of organic or acquisitive growth.
While Home Appliances managing director Owen Morgan approached Anacacia about setting up the business (see main story), the other two businesses, Appen Butler Hill and Rafferty’s Garden, sit in Anacacia’s care as part of carefully executed succession plans.
Baby food brand Rafferty’s Garden was started by Kiwi entrepreneur and father Adrian Pike. While running the business Pike was flying to Australia weekly but he wanted to spend more time with his young son. He now retains a minority share and sits on the company board. After approaches from other suitors, Pike decided on Anacacia because he felt they wouldn’t fold the business into larger operations and sack staff like a multinational might.
As part of Pike’s succession from running the business, Michael Tinkler was appointed as the new chief executive. Tinkler comes from management roles within fast-moving consumer goods companies including Unilever and Cadbury. He says the main difference for him, reporting to a private equity boss, rather than up a multinational hierarchy is while both require constant updates on financial performance, in his current role he is left alone by Anacacia to get on with the business. “We inform the board of what we’re doing and we’ll go ahead and do it. In a larger organisation you are constrained by regional and global frameworks.”
Anacacia bought into Appen, which supplies language services to technology companies and government agencies, in 2009. (The name was later changed after a merger with US company Butler Hill in 2010.) The business was started by Julie Vonwiller, a linguist, and her husband Chris, an engineer. The couple were, like Pike, seeking a succession strategy that would also foster growth.
Julie Vonwiller says the best advice for companies looking to give up equity in this situation is to be prepared. “We started getting ready early and this also helped us with giving up the baby,” she says.
Samuel is on the fund-raising trail and hopes to have a new 10-year fund closed by the end of 2012, which will give him about $100 million to work with in the new year. Depending on their persuasion, Fast Starter companies should either watch out or get their books in order.