28-Year-Old N.J. Firm Looks To Double Fund Size

DFW Capital Partners, a Teaneck, N.J.-based private equity firm, is getting ready to raise its next fund and might seek more than double what it raised for its third fund, Don DeMuth, a general partner who founded the firm almost 30 years ago, told Buyouts.

The firm will likely seek to raise $100 million to $125 million for the fund, DFW Capital Partners IV LP, DeMuth said. That’s a good deal larger than the $54 million in commitments DFW Capital garnered for its third fund, which it started raising in 2007 before finally announcing its closing April 2010.

However, DeMuth said it’s really in line with how much capital the firm typically manages because the firm’s limited partners typically co-invest in its deals. “For every dollar we’ve invested, we’ve probably invested a dollar or more in co-investment money alongside it,” he said.

DFW Capital will likely start raising the fund in the fourth quarter, DeMuth said. Griffin Financial Group LLC, a King of Prussia, Pa.-based placement agency, will help the firm solicit investors.

DFW Capital targets lower mid-market service businesses generating EBITDA of less than $10 million and annual revenues of $20 million to $100 million. The firm is especially interested in companies in the health care, business and industrial services sectors.

The firm’s portfolio includes Garden State Dental, a Paramus, N.J.-based dental practice; Meta Pharmaceutical Services, a Blue Bell, Pa.-based provider of data and analytical services for pharmaceutical marketers; and Nurses 24/7, a Piscataway, N.J.-based provider of nurses for acute care facilities.

Other general partners include Keith Pennell, who joined the firm in 1998 from First Atlantic Capital; Brett Prager, who joined the firm in 2006 from Theo Capital Partners; and Brian Tilley, who joined in 2009 after founding Wenzi Capital Partners LLC.

DeMuth helped establish the firm, then known as DeMuth Folger & Terhune, in 1983 after a 14-year career as an investment banker with Kidder Peabody & Co.

DeMuth Folger & Terhune started as venture capital firm focused on technology and morphed over the years into a control-oriented investor focused on services businesses, DeMuth said. Co-founders Mike Terhune and Tom Folger have since died and retired, respectively.

DeMuth has no plans to slow down anytime soon. “I’m 67 and I’m not going anywhere,” he said.