1. We hear that Gryphon Investors has started raising money for its next fund, a bridge fund with a $350 million target that will include 2 portfolio companies that are also in the 2005-vintage predecessor fund. How does the firm look to invest the new fund?
We’re looking to investing in business services, consumer services and products, health care and education, all of which are areas we’ve invested in since the firm’s founding in 1996. We invest mainly in small to middle market companies.
2. Your new fund has a condensed fundraising time frame. What is the main goal of speeding things up?
There are a number of companies we’ve already targeted as potential acquisitions. We’re looking to take advantage of these opportunities in the near term, so we want to minimize the capital raise to about nine months, if we can.
3. What is your firm’s value proposition?
One aspect is Gryphon Investors’s heavy emphasis on operating executives, who are partners that have worked with us since the firm’s early days. We look to these partners for guidance on how to identify good companies, not just by looking at a firm’s financial structure, but also by identifying operating value that we can bring to a company early on. Obviously, we invest mainly in control situations, and focus mainly on enhancing a company’s growth, not turning it around.
4. Gryphon Investors recently announced the sale of a physical therapy company. Why is this exit significant for the firm?
Yes, Accelerated Rehabilitation Centers was just sold to the Ontario Municipal Employees Retirement System. The sale of the firm, which operates in the Midwest, represents a very nice return for the firm. It was a win-win situation for us, in terms of having built that business up over a long period of time It’s one of those situations where our strengths really came together, buying a company and growing it both by acquiring related businesses and also by making sure it had the right management with which to grow going forward.
5. John, your firm, which is based in San Francisco, has an interesting name. Is there a story behind it?
Well, first of all, a Gryphon is a mythical gatekeeper and a protector of hidden treasures. David Andrews and Nick Orum, two of the firm’s founding partners, went to Stanford at the time the university was looking for a new mascot. Gryphon was one of the names that was submitted. Although it didn’t win, Andrews and Orum decided to adopt it as the name for the firm.
Edited for clarity