Jeff Helminski, co-founder and managing partner of Auxo Investment Partners in Grand Rapids, successfully leveraged his atypical experience and path into the world of private equity in multiple deals last year.
Brief business description: Private equity firm that specializes in investing in and growing founder- and family-owned industrial, manufacturing and business services companies
Personal information: Wife, Tammy Helminski, who’s a partner at Barnes & Thornburg LLP; two sons, Ryan, 7, and Dominic, 9
Academic degrees: MBA from the Stanford Graduate School of Business, master’s in Engineering from Purdue University, bachelor’s in mechanical engineering from Michigan Technological University
Community involvement: Board membership in Spectrum Health Hospital Group, Broadway Grand Rapids, St. Thomas Educational Support Services
Helminski has a diverse professional background, including experience in manufacturing engineering, high-volume assembly operations management and real estate development. His firm, Auxo, now specializes in investing in and growing founder- and family-owned industrial, manufacturing and business services companies.
While he has managed dozens of transactions involving hundreds of millions of dollars during his career, Helminski believes last year’s transactions stand out as significant in establishing Auxo’s partnership-based model and the firm’s closely-aligned relationship between investors and fund managers.
With a fully subscribed fund, Helminski had the ability to invest in 10 to 15 companies in the first few years after building Auxo from scratch. Last year, Auxo evaluated hundreds of opportunities and closed on several transactions, including deals for Prestige Stamping Inc. and Andrie LLC.
“Both companies had a strong focus on people and culture with honest, hardworking, down-to-earth people throughout the organization from the shop floor to the C-suite,” said Helminski, the winner of the investor category in the 2019 MiBiz Dealmakers of the Year Awards. “The sellers of the businesses, both families, cared deeply about the legacy of the company, the employees and making sure they found a successor that was going to provide them with not only sustainable employment, but hopefully, greater opportunities going forward.”
The businesses found a perfect fit in values and approaches with Auxo, according to Helminski.
The October 2018 deal for Prestige Stamping was Auxo’s fifth acquisition in 13 months. The Michigan-based niche manufacturer of custom-engineered stampings for the fastener industry selected Auxo as the buyer even though the company was not the highest bidder, according to Helminski.
The reason: The seller was concerned about the future of the company’s employees and younger generations of the founding family that remained in the business, which aligned better with Auxo’s values and longer-term investment approach.
In February, Auxo acquired Andrie, a bulk marine transporter of specialty products including cement, liquid asphalt, light oil petroleum products, and calcium chloride throughout the Great Lakes. Andrie operates a fleet of 19 tugs and barges out of Muskegon, Helminski’s hometown.
The company, a mature industrial business and “market leader in the niche that they serve within their sector,” checked important boxes for Helminski.
The acquisition also followed the firm’s December 2017 deal to buy Metairie, La.-based M/G Transport Services, an operator of inland barges. The two firms now operate as Auxo Marine, a newly formed platform company.
When Helminski launched Auxo with partners Jack Kolodny and Fred Tedori, the team made “a very conscious decision” to be based in Grand Rapids.
“Part of that was because the values of West Michigan align with our values, but also, to put us this close to a large number of the kinds of businesses that we’re interested in connecting with throughout the Great Lakes region,” Helminski said.
Being based in the same community as many family- or founder-owned businesses is important when the firm is communicating with a potential target, he added.
“My background is not the prototypical path to being in the private equity investing world,” Helminski said. “When I’m having a conversation with a family that is thinking about this transition that is often partly emotional and partly financial, I can talk to the family and say ‘here’s my story, here’s my background, this is the way I grew up in West Michigan.’ It makes a difference.”
Even so, specializing in the acquisition of family-owned businesses also comes with its own set of unique challenges and opportunities.
“What’s interesting is when (the businesses) have been so successful and there’s a big enough end market that they could try and grow into that they often just haven’t done yet,” he said. “In knowing that they need to do certain things differently or professionalize certain aspects of the business that haven’t yet been professionalized, or haven’t been developed into a more scalable function within the company, that’s going to take change.”
Stabilizing long-standing, family-owned business cultures while at the same time growing profits is “one of the most difficult things” Auxo does.
“It’s a delicate balancing act between these two seemingly competing interests of stability and maintaining that which is great, with changing enough to accomplish the growth at a higher rate than what they’ve historically done,” Helminski said.
Pre-transaction, the firm researches not only a potential target’s financial viability but also its culture and talent.
“We have a roadmap to be able to see what things are sacred and we want to really protect within the business, and what things can be done better if the company is going to grow and scale up beyond the point that they’ve achieved today,” he said.