NextGen Growth Partners (NGP), a Chicago-based private equity firm that taps Chicago’s top entrepreneurs to acquire and grow lower middle market businesses, today announced the first close of its inaugural fund. The goal of the first close is to create a solid base for the firm’s entrepreneurs-in-residence (EIR) to begin targeting industries, sourcing and acquiring companies in the lower middle market.
Founded in early 2016, NGP pins its early success on the collaboration between some of Chicago’s most distinguished investment minds. NGP’s business model is to identify and mentor top talent within Chicago’s world-class entrepreneurial community to serve as the leaders of growing lower middle market companies across the country post-acquisition.
NGP is founded and led by private equity investor, operator and University of Chicago Booth School of Business adjunct professor, Brian O’Connor. His colleague Mark Agnew, and Northwestern University’s Kellogg School of Management adjunct professors, Brad Morehead and Alex Schneider, also serve as NGP Advisors and Investment Committee members.
“Chicago is an amazing hub for entrepreneurial talent,” commented O’Connor. “I am thrilled to have the chance to work with Chicago’s best and brightest to help them become CEOs and take small businesses to the next level.”
“I’m excited to bring this unique opportunity to fruition,” said Morehead. “We have high expectations for the power we can harness by placing these young entrepreneurs in leadership positions within proven, profitable businesses that are ripe for growth.”
NGP’s target portfolio companies in the lower middle market generate annual cash flows between $1 million and $5 million. The firm’s EIRs work closely with O’Connor, Morehead and other NGP principals and advisors to assume the CEO position within portfolio companies post-acquisition. The model helps owner/operators looking to transition out of day-to-day management responsibilities 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 management team leads the business.
Of the many prominent Chicago-area investors and advisors, notable supporters of NGP include Steve Kaplan, Neubauer Family Distinguished Service Professor of Entrepreneurship and Finance at Chicago Booth and Dennis Chookaszian, former Chairman and CEO of CNA Insurance Companies, a $17 billion multi-line insurer with 20,000 employees.
“NextGen’s talented and hungry business leaders, combined with a strong opportunity for value creation in sound, under-utilized lower middle market companies, positions the firm as a true innovator in Chicago’s investment community,” said Kaplan, who is a member of the NGP Investment Committee.
NGP’s principals have a strong track record of utilizing this model to create meaningful value. In 2010, O’Connor co-founded Fellowship Capital Partners (FCP), through which he acquired and led Chicago-based IT services company, Innflux. As co-CEO and Head of Business Development, O’Connor grew Innflux rapidly, creating many jobs and generating an attractive return for FCP investors. Morehead used a similar model to become the CEO of LiveWatch Security, a provider of professionally monitored wireless security systems. From July 2010 through February 2015, he led the business through a period of rapid growth driven by organic sales efforts and via two acquisitions.
About NextGen Growth Partners
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. Based in Chicago, the team has a strong track record of creating value through growth and operational improvement in lower middle market businesses. For more information, please visit nextgengp.com.