The economic waters may be rough right now, but the managers of an Atlanta private equity fund say it's time to dive in.
Buckhead Investment Partners recently completed a $30 million capital raise, which it plans to invest over the next few years in private companies in the early stages of growth.
The deep recession has made investing in any business more risky, experts say.It's also thinned the ranks of private equity firms willing and able to invest and driven down the valuation of companies, said Mark Buffington, a managing partner at Buckhead Investment Partners.
"For me, this is a perfect storm if you have capital and are willing to put it to work," Buffington said.
The value of some companies has been cut in half or more, he said, making it much cheaper to invest. And with fewer active competitors, Buffington said those able to buy stakes in companies are able to do so on much better terms.
Entrepreneurs who until the downturn had multiple funding options may now have only one, he said, "and that one source of funding can really name their price."
Buckhead Investment Partners, or BIP, is targeting a niche in the private equity market: companies in the early stages of development — not start-ups — that are relatively small. BIP takes an active role in helping the companies grow, advising them on business strategy and taking board seats.
The firm has the capacity to make 15-25 investments, said Buffington. Current investments include stakes in three Atlanta-based companies: Ingenious Med, which sells Internet-based management applications for physicians; 2080 Media, a live sporting even production company founded by executives at Turner Broadcasting; and Vendormate, which offers a service to help companies better manage their suppliers.
Private equity investing has been down during the recession both nationally and in Georgia, experts say. But firms able to raise money could find some bargains, said Michael J. Cochran, an attorney at McKenna Long & Aldridge in Atlanta who specializes in private equity and hedge funds.
"It's a good time to put money to work because of the reduced valuations," Cochran said, though he added a note of caution. "Those valuations reflect the difficult economic times we are in, which makes prospects for young companies somewhat risky."
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