Lower Middle Market Private Equity Firm with Unique Merchant Banking Model
American Discovery Capital ("ADC"), a leading merchant bank focused on founder-led and family-owned companies operating in the lower middle market, announced the final closing of American Discovery Fund II ("ADF II") at $190 million, representing a more than 3x increase over ADC's first fund, American Discovery Fund I ("ADF I"). ADF I closed in 2019 and invested $60 million across six portfolio companies and 17 add-on acquisitions. Consistent with its prior fund, ADF II will continue to target majority and significant minority investments as the first institutional capital in leading, founder-led and family-owned companies focused on the business services and software sectors. ADF II has already closed on three investments and is actively seeking new investment opportunities.
ADF II received commitments from a diverse group of limited partners, reflecting significant reinvestments from ADC's existing investor base in ADF I, and a broad array of new investors who share similar entrepreneurial qualities as the companies ADC invests in, including wealth managers, family offices and high net worth individuals. Importantly, over 17% of ADF II's commitments came from the partners and employees of ADC, reflecting the firm's long-term, relationship-driven orientation and commitment to its investors and portfolio companies and a significant alignment of incentives across all constituents.
"We are delighted to announce the successful close of our second fund and are grateful for the support of our limited partners, many of whom have been investing with us since the launch of our first fund over five years ago,"
said Brian Webber, Managing Partner of ADC.
"We chose the name 'American Discovery Capital' to reflect the pride, optimism and enthusiasm we see in the growth potential of U.S. companies, particularly founder-led and family-owned businesses in the lower middle market that drive the majority of job creation in the U.S. We believe the circumstances surrounding these companies and the highly fragmented nature of this market segment have caused it to be overlooked by traditional private equity investors, and that we are well-positioned to source and cultivate differentiated investment opportunities in our sectors of expertise."
ADC believes its merchant banking model is a unique differentiator in the private equity industry, allowing it to generate proprietary, non-competitive investment opportunities from within its relationship network, and providing the firm with a constant source of market intelligence, industry expertise, M&A prospects, and professional relationships that benefit its portfolio companies.
"We founded ADC because we wanted to work with founder-led businesses, which embody the grit, determination and entrepreneurial spirit which are the heart and soul of this country,"
said John Joliet, Managing Partner of ADC.
"Our merchant banking model, and the deep expertise and relationship networks of our senior team which comes from decades of collective professional experience, puts us in constant dialogue with exciting, well-established, growth-oriented companies and the founders and management teams who drive them. We look forward to partnering with these founders and collaborating with them on their next chapter of growth."
Kirkland & Ellis served as legal counsel for ADC.
ADC Partners: Laurent Degryse, Mike Denbeau, Jeff Gelles, John Joliet, Frank McMahon, Peter Shoemaker, Brian Webber.