Today thousands of middle-market retail companies are struggling for their business lives as they confront what industry observers call, “The Amazon Effect.” That speaks to the phenomenon of the e-commerce giant’s ever-increasing ability to eat everyone else’s lunch.
Amazon invests billions of dollars regularly on high-tech upgrades geared toward finding more customers, selling them products and handling the advanced logistics of lightning fast delivery. In short, the Amazon.com behemoth seems determined to absorb all retail business in the world – or at least as much as it can.
But this is just the situation in which a Palo Alto private equity firm finds tremendous opportunity. That firm is HGGC, a middle-market PE firm that is on the constant lookout for businesses it can help take on Amazon and beat them at their own game.
HGGC was founded in 2007. It uses a strategy of leveraged buyouts, recapitalization and growth equity investments in middle-market companies that are bogged down by outdated technology and an eroding ability to compete with e-commerce giants and others. The kind of companies HGGC invests in include those in the food and grocery sector, auto dealerships, marketing agencies, insurance providers, software development firms, information technology and more.
To date, HGGC has handled more than 120 portfolio company transactions. It reports $4.3 billion in cumulative commitments. It has $20 billion in total transaction value. More than 62,000 employees represent the portfolio companies HGGC has worked with.
The firm also features a bit of bona fide star power. One of its co-founders is Steve Young, the NFL superstar who gained fame as quarterback for the San Francisco 49ers. He led them to three Super Bowl wins. He was inducted into the NFL Hall of Fame in 2005.
The other principles of are superstars of equal status in the financial realm. They include CEO Richard Lawson and former Bain Capital executive Gregory M. Benson. Other key people are Leslie M. Brown and Neil H. White. Among the original founders of HGGC was Jon M. Huntsman, the legendary architect of Huntsman Chemical Corporation. Richard C. Gay was also a founder.