Five years ago, a trio of University of Virginia graduates founded a private equity firm in Chattanooga to "buy and grow companies the right way, with the right people, for the long term."
Named after former University of Virginia President Edwin Alderman who helped transform the school a century ago, Alderman Holdings has made four business acquisitions in the past four years and still owns three of the local companies. Unlike many other new venture capital funds focused on buying and selling successful startups or tech firms or equity firms eager to find quick turnaround opportunities, Alderman focuses on buying and investing in established "old economy" companies in the Chattanooga area that can be successful over the long term.
"A lot of investment firms are chasing high-growth startups and emerging tech firms, but there is still a tremendous opportunity, and often better values, from established, successful businesses that aren't as big as what a lot of equity firms are focused upon but still have a great, long-term opportunity and returns," said Ben Brown, a former CEO of SwiftWing Ventures and chief operating officer for American Exchange who was one of the Alderman founders. "We still see a lot of opportunity in the Chattanooga market, especially with the aging of many Baby Boomer owners."
Brown said Alderman's business approach has proved successful, even though it initially took some time to find the right businesses to acquire. Despite the ongoing challenges of the coronavirus pandemic, Brown sees even more opportunities ahead to add to the company's portfolio.
Alderman, which has worked to grow on the successes of the local industrial supply businesses it has acquired in Chattanooga, has made some changes of its own this year. Two of the original Alderman partners, Andrew Kean and Jay Hildebrand, left the firm and have been replaced by a new partner.
Company at a glance
Name: Alderman Enterprises
Principals: Ben Brown and Chris Wright
Holdings: Southeastern Tool & Design acquired in 2016, Dal Industries bought in 2018, and Edwin Bohr Electronics acquired last year. Alderman also bought Majestic Stone in 2016 but sold that business last year.
Location: Alderman Enterprises operates from the Volunteer Building in downtown Chattanooga and all of its business holdings so far are located in Chattanooga
Chris Wright, who previously worked on mergers and acquisitions at Oaklyn Consulting in Chattanooga and New Capital Partners in Birmingham, Alabama, joined Alderman this fall as the company president. Wright, a Baylor school and Yale University graduate, returned to Chattanooga in 2015 after working for equity firms in Birmingham. He spent the past five years working with more than 70 clients at Oaklyn Consulting helping to buy and sell companies. But Wright said he was always eager to be involved in ongoing businesses.
And while many of his peers are chasing high-tech or startup ventures, Wright sees opportunities in smaller, traditional businesses that still have growth opportunities in manufacturing, distribution and sales.
The 35-year-old businessman grew up working in his father's business, Thurman-Bryant Electric Supply, which Wright helped sell five years ago. Wright said the experience of driving forklifts and working in a warehouse at a young age taught him both the value of hard work and the value of industrial supply and other "old economy" firms.
"We are unique in the size, area and type of businesses that we are targeting," Wright said. "While most equity firms are less interested in these type of businesses, we see real long-term value and stability from these type of companies and being here in Chattanooga we are able to work to help them adapt and grow."
Alderman also moved this year to consolidate its holdings under a single board to oversee each of the separate companies. That unified approach across different businesses should facilitate more synergy among the businesses and also provide greater stability and lesser risk to investors than separate funds for each company in the Alderman portfolio. To reflect that change, the company was recently renamed from Alderman Holdings to Alderman Enterprises.
The strategy has helped the company to raise more capital to make additional acquisitions, Brown said. Thanks to a strong response, Brown said Alderman exceeded its fundraising target.
"Coupled with new investor backing and the distinctive Alderman investment strategy, I can't imagine being in a better position for the years ahead," he said.
Contact Dave Flessner at email@example.com or at 423-757-6340.
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