Mountain West companies have a new outside investment vehicle one that's a fancier follow-up to a successful private equity fund started in 2004.
Lehi-based Sorenson Capital today announced the closing of its second private equity fund designed to help established companies in Utah and a few other states. The fund, Sorenson Capital Partners II, has attracted about $400 million in capital, making it the largest closing for a Utah-based private equity firm.
The first Sorenson Capital fund had $250 million and invested in 16 companies, with equity of $2.5 million to $20 million going to such well-known firms as Omniture, Mity Enterprises, Provo Craft and Kiddie Kandids.
The new fund will not be much different from the first, except in size, according to Ron Mika, who is founding managing director, along with Fraser Bullock and Tim Layton.
"We may have slightly larger investments per entity," said Mika, a former managing director of Bain Capital. "With the first fund, we had 16 companies and did it over a three-and-a-half-year period. We may take a little longer to invest this fund, because it's 60 percent larger. So we may have slightly more investments, they may be slightly larger, and it may take us slightly longer to invest the fund."
Like the first fund, SCP II will invest primarily in companies with revenues between $30 million and $300 million. The focus will be on Utah companies, but Colorado, Arizona and Nevada are also part of the core, and earlier transactions also were completed in the Northwest and in Texas, Kansas and New Mexico.
Bullock said the company directors want to create job opportunities for people who live in Utah and form partnerships and relationships here.
"We live here. This is our community. We want to see it prosper and grow," he said.
Sorenson and Mika said the fund will focus on companies with histories of strong revenue streams and profitability, with Sorenson Capital buying equity ownership from existing owners. Along with that leveraged buyout, Sorenson Capital would provide the owner and management teams with other assistance, when needed.
"In many cases, these are entrepreneurs who have been building their business for 20 years, operating it and putting all the excess cash into the business to allow it to grow, and in some cases, haven't had a large liquidity event," Bullock said. "Our investment is an opportunity to see that large liquidity event."
Mika said that the company is helping Utah businesses grow revenue and employment. Its investment companies have a total of more than 1,000 employees, he said.
"We're delighted to be able to be a contributor to the robust economy here in Utah," Mika said.
Bullock, former chief operating officer of the 2002 Olympics, said the company wants to remain regional.
"There are a lot of private equity firms that work on a national basis that have larger funds," he said. "We like stay close to our companies and be within regional proximity with them. We like partnering and working with their management teams to see them grow and develop. And we find that this size range really fits with what's available in the Mountain West."Mika said the target companies are "really in our power alley to help them take advantage of opportunities in the marketplace... Anything smaller and we don't have that experience base (to help). For larger companies, it's harder to move the needle with the kind of help that we can provide."