Welcome back to PE Value Drivers.
In this latest issue of PE Value Drivers, I talk with Paul Barrett, a Managing Partner at Argosy Healthcare Partners. Prior to AHP, Paul served as a managing director at BelHealth Investment Partners, a $500 million AUM firm in NYC, where he worked for 8 years.
Some highlights from my conversation with Paul – view the video to hear more.
- Argosy Capital was founded in 1990. It is a diversified equity group with teams spanning the private equity, real estate, credit, and secondaries markets. The firm oversees approximately $2.3 billion of assets under management. A little over 18 months ago, in January of 2021, Argosy launched its Healthcare investment group. The group focuses on partnering with U.S.-based founder-owned businesses with $1.0-$3.0 million in EBITDA. ACH's strategy is to execute majority control buyouts. They built their platform for entrepreneurial founders and talented management teams to support their culture, reinvest in their business, create value and accelerate growth. One of the main lenses Paul uses when evaluating the company is the alignment of cultures and principal values.
- Paul shared that despite the past few years' disruptive environment, AHP remained consistent with its investments and deal flow. He attributes it to the firm's investment criteria, that focuses on smaller owner-operated businesses that have been executing their strategies over long periods. Though some individual companies fell under the global tendencies of supply-chain issues, most of the PortCos were able to avoid them.
- AHP has a very personal approach to dealing with the management teams, with a hands-on 2-year program that can be accelerated under the right circumstances. AHP brings its operationally focused team to offer functional support, project management support and fills necessary positions on an interim basis until all systems are built internally. At this stage, bringing on trusted partners and subject-matter experts to add to core functions supported by the Argosy’s lean team is essential. The next stage, a 3–5-year plan, includes strategic board support, management mentorship, an outsourced M&A arm, etc.
- AHP offers small business owners market-competitive multiples and, from the start, prepares the company to be ready to scale by building institutional-grade platforms for mid-back office, establishing the chain of governance, streamlining monthly finances, and later transitioning to go-to-market strategy and customer analyses.
- Paul stresses the importance of personalized communications when dealing with a management team new to the PE environment. The First 100 days require a more intensive hands-on approach with management calls at a minimum once a week; it is the perfect time to build a strong interpersonal connection with the business owners and PortCo teams. After that, as checks and balances are in place, the frequency usually goes to monthly and quarterly calls.
- Paul is attracted to private equity because of how interpersonal it is, especially at the lower end of the middle market in which AHP operates. It allows him to build a tight bond with small business owners and operating teams celebrating their wins and helping them to withstand inevitable headwinds. He finds the positive impact AHP's expertise brings to the PortCos deeply gratifying.
Please view the video for the full discussion with Paul and be sure to check out the whole PE Value Drivers series. If you are interested in being interviewed for the PE Value Drivers series or have any questions, feel free to reach out to me at email@example.com.