Greybull Stewardship, L.P. closed in January 2014 on its $20 million round two investment fund. Since the fund’s January 2010 inception, annual returns have realized 23 percent after fees. As a result, existing Limited Partners (LPs) increased their commitments and new LPs were added for the second four-year cycle.
This fund is industry agnostic, focusing instead on lower middle market companies with between $1 to $3 million in EPITDA. Other criteria for the investment fund include strong competitive advantages, recurring revenue and management teams that hold significant equity in the businesses and plan to remain in place after an investment.
“According to a Kauffman Foundation study, only 16 percent on the Inc. 500 list of the fastest growing private companies had venture capital backing, indicating there is a capital shortage in this sector,” said Mason Myers, general partner of Greybull Stewardship. “The companies in which we have invested to date have reached a tipping point. Our capital infusion supported by new governance structures gives management the tools to expand into their fast-growing middle markets.”
The fund’s evergreen structure is central to Myers’ strategy of realizing long-term, cash-on-cash returns with maximum flexibility for business owners. Evergreen investment funds have the flexibility to exit investments based on what is best for the business, rather than because of restrictions created by a fund’s limited life or other fund-specific limitations. Greybull Stewardship also focuses on generating returns by harvesting cash from annual profits through tax efficiencies in addition to the sale of investments. Such tax efficiencies are often well aligned with the objectives of portfolio company co-owners and management.
“I want founders and business owners to see Greybull Stewardship as an ideal co-owner of their growing, profitable company, just as Berkshire Hathaway is the buyer of choice for many great businesses that do not want to sell to an acquirer that will change things or a financial buyer that will sell the company a few short years later,” said Myers. “I have been a fan of Berkshire Hathaway philosophies ever since my high school years in Omaha, Nebraska. One of the lessons I took from Warren Buffett is to create a structure for Greybull Stewardship that makes this fund an investor preferred by the very best companies.”
Greybull Stewardship’s growth portfolio includes:
- StormSource Software, the developer of Appointment-Plus, the worldwide leader in mobile and online scheduling software.
- Main Street Gourmet, a custom bakery specializing in custom foods such as cookies, muffins, brownies, granola, loaf cakes, toppings and desserts for grocery store bakeries and restaurants.
- ABC Sports Camps provides registration services for sport camps and events by offering complete online management, marketing and reporting tools.
- Real Estate Institute and Bookmark Education offer continuing education for real estate, mortgage, insurance, and legal professionals.
- Sites for Law Firms provides websites for law firms with built in marketing and self-editable content.
“Over the last three years, the company has grown from just a handful of employees to a current team of over sixty people. In that time we’ve grown revenue at a compound rate of over 35% per year and become the leading appointment scheduling software in a significant market. We look forward to our continued partnership with Mason and his investors as we continue to expand our services globally,” said Bob La Loggia, founder and CEO, Appointment Plus.
Greybull Stewardship exists to provide business owners an ideal co-owner and steward of their business and to earn attractive long-term, compounding, cash-on-cash returns for investors. Greybull’s evergreen fund structure and flexible investment horizon are designed to align with the objectives of portfolio company co-owners and management. The portfolio is comprised of growing, profitable organizations in the lower middle market with between $1 to $3 million in EBITDA.