Fresh Profile: AGI Partners and its buy-and-build strategy

AGI Partners is a lower-middle-market-focused independent sponsor pursuing what Partner David Acharya, calls a “very simple” strategy: buy and build.

“We find a good platform company; we find a good management team. Then we find complementary add-ons, but we also focus on overall value creation,” he told Buyouts.

AGI makes direct investments into TMT, business marketing services and niche manufacturing. The firm gets its capital from family offices and “ultra-high-net-worth individuals” on a deal-by-deal basis, Acharya said.

Founder and Managing Partner Shaun Gordon founded AGI as a platform to invest “across the spectrum, but [he] brought in outside partners in 2012 so we can look at investments as a team,” Acharya said.

The New York firm invests in businesses with Ebitda of $3 million to $15 million and revenue ranging $20 million to $500 million, its website shows.

Within its strategy, the firm added Aura XMOne Inc and Impact XM, an experimental marketing services company, in which Acharya is responsible for sourcing and managing.

“We brought capital to the business; we also brought a lot of professional expertise … and we went from a company that was essentially a boots manufacturer to an overall, national experimenting marketing agency,” said Acharya.

Acharya joined AGI Partners in 2012 after tenures at PE firms including Apprise Media and MTN Capital Partners, his LinkedIn page shows.

He said the independent-sponsor sector has grown a lot in the decade since the 2008 financial crisis, when “people were scared about the future.”

“I think investors really like the [independent sponsor] model because, one, they’re not forced to invest in a blind pool,” Acharya told Buyouts. “Two…, there’s better alignment for the GPs and the LPs.”

And management fees under the independent-sponsor model are more favorable to investors because they start once an investment is made, he said.

LPs have expressed caution about investors pouring money into independent sponsors and warned that they cannot be passive partners with their investments, Buyouts reported in December.

AGI’s approach is to be “active partners, providing management teams with practical management tools, creative problem-solving, strategic, long-term thinking, and the capital necessary to pursue opportunities,” the website says.

AGI Partners has no intention of changing its strategy on how it approaches deals and how it builds its investments, said Acharya.

“I was a leveraged-finance banker. I understand the concept of raising debt, syndicating it; I understand how to structure,” Acharya said. “The future is that we only like to invest in things that we know well.”