Typically, when it’s time to fundraise, dealmaking takes a backseat. The Boston-based Audax Group, however, is keeping its deal team in shotgun even as it reportedly navigates the fundraising market in search of capital.
Including add-ons, recaps and exits, Audax is averaging almost a deal and half per month in the last 12 months: Broken down, that comes out to nine new platforms, eight add-ons, four recapitalizations and an exit. And in its free time, Audax has managed to squeeze in some meetings with potential LPs as it approaches the $600 million target on its last fund.
“It’s as busy as I’ve been in my 21 years in this business,” Audax Co-founder and Co-CEO Geoffrey Rehnert tells Buyouts. In the last quarter alone, Audax has acquired business media publisher Questex Media, lighting products retailer Kurt Verson Co., TMP Directional Marketing, and its most recent purchase, API Heat Transfer Technologies Corp.
On top of everything, Audax continues to win deals in an emulous environment that is as competitive as it has been in the past decade. “Every year, I hear that there’s too much money chasing too few deals… The reality is that like any other industry with high returns, it will only get more competitive. The only way today to outperform is to out-execute,” Rehnert said, adding that in the middle market, “it’s about plain old execution. We have to be better at a lot of things.”
Even as many in the middle market have branched out into separate niches-or at least have started to market themselves that way-Audax isn’t ashamed to call itself a generalist firm. In the past three months, Audax has exposed itself to the publishing, marketing, industrial and retail sectors. “There are a couple things consistent in all the businesses we acquire,” Rehnert said. “They’re all proven middle-market companies with fundamentally good businesses, but we have a game plan to make them better. In some cases it’s bolstering the management team, in other cases it may be globalizing the sourcing distribution.”
Rehnert used the firm’s most recent acquisition of API Heat Transfer as an example. The company manufactures and sells industrial heat exchangers and heat transfer systems, which are used in compressors, air dryers, refrigerators, HVAC and other industrial products. The company, according to Rehnert, is a leader in its industry, which he described as fragmented. API has manufacturing facilities in the U.S., Germany and China, and generates more than $100 million in revenues.
Like other companies in the Audax portfolio, the firm will look to grow the business through acquisitions, with further growth coming from the expansion of its product line. More importantly, though, Audax intends to work intimately with the new company. “Once a deal is done, that’s when the work actually begins. Close to 50% of our time is spent working with our portfolio companies. Making a company better, that takes even more time and effort than just getting a deal done,” Rehnert said.
No financial terms of the API deal were disclosed.
While Rehnert would not discuss fundraising, the firm is said to be seeking $600 million for its second fund, the follow-up to the $500 million Audax Private Equity Fund I, LP. The State Retirement and Pension System of Maryland, California State Employees’ Retirement System (CalPERS), and the Pennsylvania State Employees’ Retirement System are three limited partners reported to have committed to the fund.
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