Grand Rapids, Michigan, is not exactly New York City nor London when it comes to global finance. But its significance in one aspect of global finance – money for family businesses – is growing fast.
With a population of a little more than 200,000, Grand Rapids appears to be developing a nice niche for itself as a financial centre for mid-sized family businesses. Recently, a new investment firm called Consensus Capital Holdings was established in the city, which plans to provide finance to middle-market family-owned businesses. Consensus Capital’s launch follows the debut of Auxo Investment Partners late last year also in the Michigan city. Auxo, a private equity firm, said it wants to appeal to long-term wealth creators, like family businesses, and at the same time align its interests with those of investors.
Here’s what Auxo said back at its launch: “The firm doesn’t set predetermined timeframes for its investments. For certain businesses, the firm will take a perceptual approach – with no timeframe at all for a sale or other event – as it builds a portfolio of long-term holdings.”
Consensus Capital looks like it has a similar commitment to long-term investment holdings. Set up by two investment specialists, here’s how one of them, Jason Byrd, described Consensus in an interview in a local newspaper: “We saw other groups out there in the market attempting to buy these businesses (mid-market family businesses) and we think there is a good middle ground that will provide that capital for the family-owned or generational family businesses to transition out of that business. You legitimately have buyers or investors in that business that will continue to keep all the best attributes of that culture and will continue their legacy.”
And Consensus and Auxo have followed in the footsteps of Tillerman & Co. Grand Rapids-based Tillerman describes itself as a “merchant banking services to middle-market businesses”. And again is targeting family businesses investments. Two family business-orientated investment groups in a small town like Grand Rapids might be a lot, but, three might be bordering on the absurd.
But there is some method in this madness. All these groups are small and they are, for the most part, pitching their business to mid-sized companies within their geographical area. Nevertheless, it begs the question: if a small town like Grand Rapids can generate three groups committed to financing family business and generate enough living for each of them, then isn’t there similar demand for such services across the US and indeed in much of Europe?
And for the bigger family businesses, midwest America can also provide a pretty good stopping off point. On the other side of Lake Michigan, a three-hour car journey from Grand Rapids, Byron Trott has based his specialist pro-family business investment group, BDT Capital Partners, in Chicago. Midwest America might just be leading a revolution in this type of finance for family businesses…