Altas Partners has completed a majority investment in Pye-Barker Fire (“Pye-Barker” or the “Company”), the leading independent fire protection services company in the U.S. 

Founded in 1946, the Company serves more than 80,000 commercial customers through its network of 1,000+ technicians located across 80 branches in 19 states. Service offerings include inspection, testing, maintenance, repair, and installation, with a primary focus on suppression (fire extinguishers and pre-engineered systems) and a secondary focus on sprinklers and alarms.

For more information, please visit www.pyebarkerfire.com

Altas Partners (“Altas”), a long-term oriented private equity investment firm, today announced the appointment of Robin Washington to the firm’s Advisory Board. A seasoned executive with deep leadership and financial experience across the healthcare and technology sectors, Ms. Washington joins a distinguished group of investors and executives who help Altas identify and invest in high-quality businesses across a range of industries.  

“We are excited to welcome Robin to the Altas Advisory Board,” said Andrew Sheiner, Founder and Managing Partner of Altas Partners. “Robin has more than two decades of experience driving the strategic and financial growth of global industry leaders. Her expertise, judgement and insight on a wide array of topics will be immensely valuable for our team and the executives who lead our businesses. "

In addition to her role at Altas as an Advisory Board member, Ms. Washington is currently a member of the Board of Directors of Alphabet, Inc., Honeywell International, Inc., and Salesforce.com. She serves as Chair of the leadership development and compensation committees for Alphabet, Inc. and Chair of the audit committee for Salesforce.com. Previously, Ms. Washington served as Executive Vice President and Chief Financial Officer of Gilead Sciences, Inc., from 2008 to 2019, where she oversaw Global Finance, Facilities and Operations, Investor Relations and the Information Technology organizations. Prior to Gilead, she served as Chief Financial Officer of Hyperion Solutions Inc., which was sold to Oracle Corporation in 2007. For additional background please visit www.altas.com/people. 

“I have great admiration for Altas’ talented team of investment professionals and its experience investing in and thoughtfully building great businesses as a true long-term partner,” said Ms. Washington. “I look forward to supporting the firm and working alongside portfolio company management teams as they develop and execute their most important strategic initiatives.”

Today is International Women’s Day and for the event Buyouts this week published its annual “Women in PE”. Among the 10 women private equity professionals featured in our 2021 line-up is Michelle Lung, a senior principal with Ontario Teachers’ Pension Plan. Lung told Buyouts she appreciates PE for its “highly creative, intellectually curious and talented individuals,” but she also sees the industry as one of the most demanding “when it comes to achieving work-life balance.”

This theme was taken up in an accompanying story by Chris Witkowsky: “Private equity has a stunning lack of women deal leaders”. Featured in the piece was Kathleen Taylor (pictured above), the former CEO of Four Seasons Hotels and since 2019 chair of Canadian long-term PE firm Altas Partners. Asked by Witkowsky what her hardest career decision was, Taylor said it was when she and her husband decided how they were going to raise a young family.

Taylor said this challenge was ultimately overcome by making “the choices that were right for our family and our careers.” Taylor was lucky, Witkowsky writes, because she worked for a company that had a progressive attitude toward work-life balance. This is not the case for many women in the business and financial worlds – above all in private equity, especially when it comes to women deal-makers.

Women make up 9.9% of partners in the PE industry and 6.4% of managing partners, according to Preqin’s 2020 Women in Alternatives report, Witkowsky notes. Women make up 19.7% of all PE employees, which has grown from 18.8% in 2017.

One glaring gap that still exists in private equity, Witkowsky writes, is at the deal partner level, including on investment committees. It is here where there is a dearth of female voices. Even the biggest firms, which have led the way in improving their processes for more inclusive recruiting, continue to have senior deal leadership dominated by men.

Among the few examples of women at the deal partner level are founders of PE firms. This describes Lisa Melchior, founder and managing partner of Canadian tech PE firm Vertu Capital, who was also interviewed by Witkowsky. The experience of Melchior, a former OMERS Private Equity executive, was a whirlwind during the years when she was having children and raising a family and maintaining a high-flying career of frequent global travel and long hours.

The life of a private equity mom is manageable, Melchior said. But it requires sacrifice and support. Add to this challenge the idea that many women feel the need to be twice as productive as their male colleagues: “I’m going to work twice as hard and be twice as good because I really want to be at the table,” Melchior said. “If you’re twice as good, they can’t deny you being at the table.”

Altas Partners is pleased to announce that Lisa Dymond has joined the firm as Head of Talent. In this newly created role, Lisa will lead talent-related matters at Altas and work with our management team partners to drive organizational effectiveness and success at Altas’ portfolio companies.

Lisa joins Altas from the Boston Consulting Group, where she spent 14 years, most recently leading the end-to-end talent strategy and operations for the firm’s Canadian practice. She previously served in a variety of roles at BCG, leading projects across a range of industries, counselling clients globally, and developing thought leadership on issues related to talent and organization. Lisa began her career in public opinion and market research at Pollara Strategic Insights.

Lisa holds a Bachelor of Arts in Political Science from Carleton University (Dean’s List) and a Master of Business Administration from the University of Western Ontario’s Richard Ivey School of Business (Dean’s List, Valedictorian).

Unified Women’s Healthcare (“Unified” or the “Company”), the leading practice management platform in women’s healthcare, today announced that it has entered into a definitive agreement to add Altas Partners (“Altas”) as a strategic partner. Altas, a long-term oriented investment firm, will become Unified’s largest investor, while Ares Management Corporation (“Ares”), in equal partnership with Altas, will continue to be a significant investor in the Company. As part of the transaction, private equity funds managed by Ares will make a significant new investment in the Company. The investments from Altas and Ares, alongside the physicians who are Unified’s partners, will enable the Company to expand the breadth of services it provides to its affiliated practices, provide capital for growth, and allow the Company to further invest in market-leading value-based care capabilities for providers and payers.

Founded in 2009, Unified’s mission is to empower physicians to positively impact and lead the effort to transform women’s healthcare for the benefit of their patients. Its strategic focus remains on the preservation of clinical autonomy and decision-making at the practice level, while advancing the impact of private practice through value-based care transformation. In addition to offering professional management expertise and innovative technology, Unified seeks to grow its affiliated practices through ancillary services and platform acquisitions. Today, Unified supports more than 1,800 providers in 12 states and the District of Columbia, who collectively care for more than 2 million women each year.

“We are thrilled to welcome Altas as our partner, and alongside Ares and our physician-owners, their collective investment is a testament to the strength of our affiliated practices and the national platform we have built,” said Bob LaGalia, President and Chief Executive Officer of Unified. “Altas and Ares both understand and support our core mission, which is to continue to support outstanding physicians as they improve women’s healthcare. This investment will allow Unified to continue to support our affiliated practices as they attract great physicians, provide best-in-class capabilities, and further our investments in value-based care.”

The transaction is expected to close in December 2020, subject to customary closing conditions and regulatory approvals.

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ABOUT UNIFIED WOMEN’S HEALTHCARE

Founded in 2009, Unified Women’s Healthcare is the largest Ob-Gyn physician practice management company supporting more than 1,800 providers across 12 states and the District of Columbia. Unified remains an indispensable source of business knowledge, innovation, and support to empower physicians to make the greatest impact on transforming women’s healthcare for their patients. For more information, visit www.unifiedwomenshealthcare.com.

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ABOUT ALTAS PARTNERS

Founded in 2012, Altas Partners is an investment firm with a long-term orientation focused on acquiring significant interests in high-quality, market-leading businesses in partnership with outstanding management teams. The firm manages approximately US$7 billion on behalf of endowments, foundations, family offices, public pension funds, and other institutional investors. The firm’s past and present portfolio companies include DuBois Chemicals, University of St. Augustine for Health Sciences, Tecta America, Hub International, PADI, Medforth Global Healthcare Education, Capital Vision Services (MyEyeDr.), and NSC Minerals. For more information, please visit www.altas.com.

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ABOUT ARES MANAGEMENT CORPORATION

Ares Management Corporation is a leading global alternative investment manager operating integrated businesses across Credit, Private Equity, Real Estate and Strategic Initiatives. Ares Management’s investment groups collaborate to deliver innovative investment solutions and consistent and attractive investment returns for fund investors throughout market cycles. Ares Management’s global platform had approximately $179 billion of assets under management as of September 30, 2020 with more than 1,400 employees operating across North America, Europe and Asia Pacific. For more information, please visit www.aresmgmt.com.

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Altas Partners is pleased to announce that Akshay Kumar has joined the firm as a Principal.

Akshay joins Altas from Blackstone, where he focused on investment opportunities across a wide variety of industries. Prior to joining Blackstone, Akshay worked at TPG in San Francisco, focusing on investment opportunities in the consumer, retail, and healthcare sectors. Akshay holds a Bachelor of Arts degree in Honours Business Administration from the University of Western Ontario’s Richard Ivey School of Business (Ivey Scholar, Gold Medalist) and a Master of Business Administration from Harvard Business School.

Altas Partners is pleased to announce that Michael Shay has joined the firm as Vice President of Portfolio Solutions. In this newly created role, Michael will focus on providing operational and strategic support to enhance the value of Altas’ businesses.

Prior to joining Altas, Michael worked at Scotiabank, where he supported an enterprise-wide transformation program, and at Bain & Company, where he led projects across private equity due diligence, corporate strategy, and performance improvement.

Michael holds a Bachelor of Arts in Honours Business Administration from the Richard Ivey School of Business (with Distinction, Ivey Scholar), a Bachelor of Engineering Science in Electrical Engineering from the University of Western Ontario (with Distinction), and a Master of Business Administration from Northwestern University (with Distinction).

Andrew Sheiner worked for 17 years at Onex Corporation, a public company in Canada that has several private investment arms. One of those is Onex Partners, a large-cap-focused group he helped establish in 2001.

It was during his time at Onex that Sheiner learned the importance of flexibility in investment hold periods. The traditional private equity hold period – generally from three to five years – was established in the early days of the industry, in the 1970s and 80s. The structure that evolved was a 10-year fund life, with up to five years for deploying capital and five years for selling investments.

But the rigidity of that structure could also be frustrating, and Sheiner said he often heard concerns from limited partners about the quick investment/exit cycle of traditional private equity.

“An astute investor said to me, ‘This business is crazy; we invest in your funds, we buy businesses through those funds, you then sell them to another fund – we’re then invested in that fund.’ There’s a lot of friction in that transaction. And that would seem suboptimal and not ideal for management teams either,” Sheiner says in an interview.

Sheiner had the benefit of flexibility at Onex and decided, on formulating a strategy for his own shop, that he would apply those lessons to the new venture.

His firm, called Altas Partners, was founded in 2012 on three principles: the firm would be extremely discerning about its acquisitions; it would focus on high-quality businesses; and it would apply time flexibility to its investments, rather than abiding by a strict deadline.

Altas is happy to buy only one or two businesses a year, and hold those investments, if appropriate, for a decade or longer. It can also sell investments earlier if that makes better financial sense, Sheiner says. “We understand that those businesses are precious and hard to come by and if we have the good fortune to own one, we and our partners would feel it’s unfortunate if we had to sell prematurely,” Sheiner says.

The firm closed its debut fund in 2016 on $1 billion, and its second fund on $3 billion last year. Altas acquired eight businesses so far, investing about $4 billion of equity, and sold two of them. “That’s consistent with what we established with our investors and the strategy we set out to pursue, which is not to be rigid. Rigidity in time horizon is not helpful as an owner and investor,” he says.

Altas is an example of a growing desire on the part of GPs to break out of the confines of the traditional private equity fund structure.

For certain companies, GPs would like more time to see their plans through; to make sure they are not getting out of the company while there is still more growth to capture; and to avoid the pressure of selling at the wrong time just for the sake of delivering liquidity back to investors.

“We’re hearing with some consistency GPs saying, ‘We’re sick of selling our best assets to other private equity firms for them to hold it for the next five years and double or triple their money, when we could have held it,” says an LP who has seen this trend. “The challenge is balancing the need for liquidity.”

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LONG DEPLOYMENTS

There’s another factor at play as well: GPs are taking much longer to deploy capital into new investments in the high-priced environment. The total number of deals done over the past five years is down 25 percent from 2014, according to Bain & Co. The calculation becomes: rather than make a bet on something new and uncertain, why not stick with an asset you know intimately, that you’ve grown and improved, with a future path to prosperity that you helped design?

These are the sorts of considerations GPs must contemplate, and LPs appear to be on board. Investors play a vital role in the evolution of this longer-hold strategy, whether it involves raising funds with long-hold attributes, or investing in existing portfolio companies across funds that require investor approval. Without the approval of the investor community this longer-hold trend would not likely be growing as quickly as it is today.

“Over time LPs have seen that, ‘Wow, you’re selling this good company out of your portfolio, and we’re buying it elsewhere in our portfolio, how does that help me? I would have been better off if you had held it another three years,’” says Adam Howarth, managing director and head of portfolio management Americas at Partners Group.

“People would have been delighted 15 or 20 years ago to hold great companies longer if they had the opportunity. But the industry perhaps hadn’t evolved to the point where managers and investors were like-minded around the value of doing that,” Sheiner says.

Buyouts spoke to dozens of sources in the market, including limited partners, investment bankers and GPs, about the growing trend of PE managers holding certain assets longer. The consensus was that the trend is real, but not everyone agreed on the risks and benefits of the strategy.

LPs especially gave mixed reviews: would longer hold periods ultimately lead to stronger returns? Or were they just a way for some larger firms to build revenue and assets under management? What’s clear, though, is that there is a paradigm shift in the industry, where all parties agree that, for some investments, the traditional PE hold period is not appropriate. This will likely help shape private equity as it continues to evolve. “If I still believe in the future of an asset and new deals are scarce, why not stay invested in the asset,” says Hugh MacArthur, partner at Bain & Co.

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MEAT ON THE BONE

Longer investment holds in private equity are not the norm. In fact, hold periods in general are falling. Median hold periods fell to 4.5 years for deals exiting in 2018, compared with 5.9 years for investments sold in 2014, according to Bain & Co’s 2019 Global Private Equity Report.

“The peak in 2014 was driven by many assets invested just ahead of the global financial crisis that ended up being held in portfolios longer than expected/planned,” MacArthur says.

But with certain assets, GPs are getting much more creative than simply shopping them through an auction. This quicker turnaround likely has something to do with the amount of capital flowing into private equity funds, and the prospect of a firm being able to sell a business at a robust price.

North American private equity and mezzanine funds raised $274.9 billion as of November, up from last year’s tally of $178.7 billion around the same time. And purchase price multiples generally remain high, at an average of 11x to 12x across all industries, Buyouts reported in the third quarter.

What’s more, equity checks in deals have increased to 50-60 percent from 20-35 percent, meaning firms are taking even more risk in individual deals, Sumit Rajpal, global co-head of Goldman Sachs’ merchant banking division, told Buyouts in the third quarter.

“If you take this angle or perspective that there’s more uncertainty about where we are in the economy – and if you’re trying to reduce your risk – finding something you know well makes sense,” Ian Fowler, co-head of Barings Global Private Finance Group previously tells Buyouts. “Especially if you think there’s more meat on the bone.”

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BREATHING ROOM

DuBois Chemicals is a nearly 100-year-old company that supplies specialty chemicals to help facility operations in sectors like manufacturing, food and beverage, paper and pulp and water treatment.

Around 11 years ago, DuBois’ owner at the time, JohnsonDiversey, decided to carve it out to raise money. DuBois’ current CEO, Jeff Welsh, was helping JohnsonDiversey package up assets for sale, and worked to bring in potential buyers for DuBois.

Eventually Riverside Co. emerged as the buyer for DuBois, with Welsh moving in as CEO. Riverside held the company until 2012, when it sold to Aurora Capital. Aurora owned it until 2017, when Jordan Co. and repeat investor Riverside acquired DuBois, Welsh says in an interview.

Finally, earlier this year, Altas acquired DuBois, a private equity owner that, for the first time, brought flexibility around the length of its hold period. “It’s important to have that optionality, to be able to hold a business if you go into a situation where it might be better to hold it for a longer period of time,” Welsh says. That means being able to hold through a down cycle, when the business may underperform, and sustain it until it emerges into a better environment.

Welsh adds that the long-holding mindset should not be totally tied to anticipated investment holds. “Potentially there’s the option of investing in things that are going to have a little longer time horizon than they would in sort of a traditional three-to-five year plan,” Welsh says. “You have to be a little cautious as a portfolio company in lulling yourself into thinking this will undoubtedly be a long-term hold.”

While DuBois has grown over its private equity ownership years, it only has around 8 percent market share, Sheiner says.

Outside of a long-hold option built into a fund structure, like Altas or Boston-based Cove Hill Partners, GPs are achieving longevity through traditional M&A processes. Many GPs retain minority stakes in businesses they are selling to be able to continue capturing a company’s growth. Others are taking an even more aggressive approach by re-investing in existing portfolio companies held in older funds.

Late last year, Nordic Capital sold its stake in eResearchTechnology out of an older fund, and at the same time re-invested through its new fund for a smaller interest. Nordic sold down its 70 percent stake in ERT to hold an equivalent stake alongside Paris firm Astorg as part of the investment, announced in October.

GTCR last year re-acquired AssuredPartners less than four years after selling the company to Apax. GTCR owned the company from 2011 to 2015 before exiting for a 4x return, Wall Street Journal reported in February 2019.

Growth investor TA Associates recently launched a unique fund that would give it a way to retain interests in companies it was selling where it saw more room for growth.

The fund targets companies in TA’s portfolio that have achieved certain performance goals. The beauty of the strategy is that while giving the firm more time with growing assets, it also allows TA to deliver proceeds back to investors in older funds.

TA Select Opportunities Fund is targeting $1 billion, a fundraising goal several investors expect the firm to hit.

“[TA’s fund represents] the ability to… continue to play in those assets where they think having longer hold periods is beneficial but at the same time, taking some capital off the table and derisk it,” according to an investor who committed to the fund, who requested anonymity.

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THE LP VIEW

Sources say the trend toward longer-term holds is being driven by limited partners. For LPs, longer hold periods could mean less cost, especially as related to those costs involved in transactions, sources said. Each time a company turns over, there are fees related to the deal, which sources described as “frictional” costs.

“The friction in these things is tremendous,” DuBois’s Welsh says. “Every time we’ve sold this business over the years, there’s a 5, 6, 8 percent friction rate where you’re spending that in transaction costs. I’ve talked to LPs who say, ‘What have I gained? I’ve bought and sold this asset and had 5, 6 or 8 percent come out of it as friction.’”

But LPs also have concerns about how these longer holds are executed, especially when it comes to a GP’s new fund buying companies out of older funds.

Cross-fund investments cause a bit of consternation on the part of LPs because of an inherent conflict: A GP’s new fund wants to pay a low price for the company, while the old fund wants to sell for as much as possible. It’s essential, then, in cross-fund investing, for a GP to get a market value from an external investor, sources said.

“[The GP] has to go through various gymnastics to get that socialized [with investors] and approved through the advisory board and figure out a way to get pricing that’s deemed fair to all parties involved,” according to Scott Reed, co-head of private equity USA at Aberdeen Standard Investments.

One way this could happen is the GP brings in an external minority investor to share control and contribute equity into the deal, Reed says. “This helps provide a third-party external valuation of the pricing in which the transfer occurs,” he said.

Not every LP is enamored with the idea of private equity managers holding investments longer. “There’s something to be said for the discipline you get with traditional fund structure; you know you’ve got five-to-seven years with assets, and then it’s time to move on,” the LP said. “There’s very few businesses that compound at 15 to 20 percent returns forever.”

Risks include a company that is being held longer suddenly encountering a slowdown that cuts into profitability. The GP will have to spend material time and resources on the company rather than working to deploy capital into new investments.

“A large portion of fund LPs would say they don’t want that distraction,” Reed says.

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Altas Partners is pleased to announce that Nick Mancini has joined the firm as a Director.

Prior to joining Altas, Nick worked at TPG in San Francisco, where he evaluated investment opportunities across a variety of sectors. Nick began his career in the Technology Investment Banking group at Morgan Stanley in New York. Nick earned a Bachelor of Science degree with majors in Finance, Accounting, and Economics from Boston College (summa cum laude) and has a Master of Business Administration from Harvard Business School.