Back in 2007, Bob Gray, Richard Lawson, Gregory Benson, and Steve Young pooled their resources and expertise in the investment market to set up their own private equity firm. Their desire was to enable middle market companies grow in leaps and bounds to gain a competitive edge over their million dollar compatriots. Thus HGGC saw the light of day.
The founders successfully attracted top talent from the investment world in a bid to achieve the goals they had in mind. As HGGC began its operations, they set out to align their plans and interests with those of their clients. The fact that they joined hands with sponsors and founders of different businesses facilitated the success of their plans. This has been the case ever since and their success has translated to great gains for everyone who counts on them.
The firm’s practices are borrowed heavily from global corporations that have had a lasting impact in the industry. These practices have in turn led to great success for middle market businesses that continue to turn the market on its head. The Advantaged Investing model of HGGC has particularly earned tremendous respect and admiration from different market players.
Among its numerous investments was the acquisition of RPX in June, 2018. HGGC spent a whopping $555 million to acquire the patent risk management provider in a move that demonstrated the willingness of the firm to spend their resources on promising businesses. RPX had been in business for a decade and had gone a long way in improving the efficiency of the patent market.
Speaking at the unveiling of the merger, Steve Leistner, the firm’s principal insisted that HGGC was determined to spur RPX to greater success in the patent risk business. They would make the most of their structures and expertise to make this possible.
HGGC has its headquarters in Palo Alto, California and has capital commitments that are in the excess of $4.3 billion. The firm prefers scalable businesses which they acquire and grow progressively over the years. They have over 60 platform investments under their name and these acquisitions along with liquidity events and recapitalizations amount to over $15 billion in transaction value.
HGGC has distinguished themselves as a middle-market private equity firm that is getting things done. They are leading the way, there is no doubt about it. But how are they going about doing it? What makes them so special? Part of the reason for their success would have to be because of their “Advantaged Investing” model. They use this model to find scalable businesses to invest in, and then they do so through a “multiples” model where they partner with management teams, sponsors and executives. When these individuals along with HGGC, they create a cascade effect where a multitude of interests are aligned. Co-founder Steve Young is a former NFL quarterback, and he realizes that it often takes just as much teamwork to create a successful investment portfolio as it does to win football games.
This principle can be seen readily at work with many of the reason transactions HGGC has made in the past couple of years. First of all, they completed a transaction between them and enterprise Configure Price Quote Solutions leader FPX in late 2017. This merger was originally completed in April of 2016, but the contributed this later investment to help FPX complete a smooth product development transition. HGGC also wants to see this company continue to expand globally and assist them with all of their channel and strategic partnerships. This association will continue to assist FPX with their vision of becoming a market in the Configure Price Quote (CPQ) arena. The success of FPX will also contribute to the success of HGGC because it will continue to showcase their expertise when it comes to investing in the right companies. FPX was also proud of the fact they were able to open a European office in Munich and have an increased presence in London.
The success of FPX also illustrates the success of HGGC. This middle market firm has the ability to make leveraged buyout investments in companies just like this one that have around $100 million to $1 billion in annual revenues. When this company sees a potential market leader, they do not hesitate in investing in them. It is model that has worked flawlessly.