NextGen Growth Partners LLC (NGP), a Chicago-based private equity firm that taps top entrepreneurs to acquire and grow businesses, today announced the final close of its inaugural fund, above its original $50 million target.
“We are thrilled with the ultimate investor group in this fund,” said Brian O’Connor, NGP Founder and Managing Partner. “It establishes a network of strategic investors and advisors that will be instrumental in the success of our strategy.”
NGP’s business model is to identify and mentor top talent within Chicago’s world-class entrepreneurial community – particularly business school alumni from the University of Chicago Booth School of Business and the Kellogg School of Management at Northwestern University, to serve as the leaders of growing companies across the country following an investment. NGP has partnered with six such entrepreneurs-in-residence (EIRs) to date.
Alongside the firm’s first EIR, Gabe Barkley, NGP made its first portfolio company investment in mid-2017. The company, MHW, Ltd., provides mission critical compliance, import and distribution services to the growing universe of beverage alcohol producers globally. MHW, in partnership with NGP, is growing rapidly, outperforming initial expectations.
“I am excited to partner with NGP and Gabe, our new CEO, to build the future of MHW,” said John Beaudette, MHW President and shareholder. “We are innovating and investing in the company to deliver the best possible service to our suppliers and clients in ways that weren’t before possible. We see an enormous opportunity ahead of MHW, brought on by the growing and evolving beverage alcohol industry, both domestically and globally. New and exciting brands and categories are coming to market every day and we are fortunate to be their trusted partner in successfully attacking the highly lucrative U.S. market.”
NGP is pursuing plans to partner with additional EIRs during the second half of 2018 and has two undisclosed investments set to close in the coming months. “Despite the frothiness in broader capital markets, we are finding a tremendous amount of value in our universe,” said Josh Dennis, NGP’s Vice President of Investments. “Most business owners appreciate that we bring more to the table than just capital. We believe this approach provides an enduring opportunity to acquire attractive businesses at fair prices.”
“NGP’s approach to investing in fundamentally sound small businesses, augmenting leadership with elite entrepreneurial-operators and surrounding them with seasoned, successful investors and industry veterans is proving to be a unique and successful strategy,” said NGP Investor and MHW Board Member Brad Morehead. “We are encouraged with NGP’s early progress and investment performance.”
NGP targets portfolio companies that generate annual cash flows between $1 million and $5 million. The firm’s EIRs work closely with O’Connor and other NGP principals and advisors to assume leadership positions within portfolio companies post-investment. The model helps owners and operators looking to expand the capabilities of the team or transition out of day-to-day management responsibilities entirely by offering both an operational and financial succession plan. As the majority shareholder, NGP principals and advisors take an active board role and provide mentorship and guidance as the new leadership team takes the company into its next chapter of growth.
“Operationally, we’re flexible,” said O’Connor. “We look to find situations that can benefit from our unique and direct, day-to-day operational approach and partner with those owner-operators to preserve their legacy and accelerate growth.”
NGP attributes its early success to the collaboration of some of Chicago’s most distinguished investment minds. Its many prominent investors, advisors and notable supporters include Mark Agnew, President and CEO of Lou Malnati’s; Dennis Chookaszian, former Chairman and CEO of CNA Insurance Companies; Andy Code, Co-Founder of Promus Holdings and Code Hennessy & Simmons; Steve Kaplan, renowned Professor of Entrepreneurship and Finance at Chicago Booth; Brad Morehead, former CEO of LiveWatch Security and Adjunct Lecturer at the Kellogg School of Management; and Ellen Rudnick, Senior Advisor and Adjunct Professor of Entrepreneurship at Chicago Booth.
About NextGen Growth Partners
Headquartered in the West Loop neighborhood of Chicago, NextGen Growth Partners is a private equity firm that partners with the best and brightest entrepreneurial talent to acquire, operate and grow lower middle market businesses across a variety of industries. The team has a strong track record of creating value through growth and operational improvement in middle market businesses. For more information, please visit nextgengp.com.