Utah equity fund, Sorenson Capital looks world-class

Big money, big names and big returns.

Those are the big ideas behind Sorenson Capital’s http://www.sorensoncapital.com/ new $250 million private equity fund, one of the largest of its kind in the state and perhaps in the Intermountain region.

Steve Young, James Lee Sorenson, Ron Mika, Fraser Bullock, Tim Layton and Rich Lawson are launching one of the largest private equity funds in Utah.

By Dave Anderton
Deseret Morning News

http://deseretnews.com/dn/view/0,1249,595060282,00.html

Even larger are the personalties behind the fund, a world-class business team made up of former Boston-based Bain Capital associates and three former chief executive officers, including Fraser Bullock, the chief operating officer of the 2002 Olympic Winter Games, who helped turn the Games from a $400 million deficit to a $100 million profit.

The most visible partner is Steve Young, the former Brigham Young University and San Francisco 49ers quarterback turned venture capitalist. Young’s new full-time job with Sorenson Capital includes weekly flights from his home in Palo Alto, Calif., to Salt Lake City and Phoenix.

Combine those names with a $75 million anchor investment by James Lee Sorenson — a Utah entrepreneur and son of billionaire James LeVoy Sorenson — and it is easy to see this isn’t your ordinary investment group.

"I think for what we consider to be a middle-market buyout and growth firm, they have one of the best teams we’ve seen," said Dennis McCrary, a partner with Chicago-based Adams Street Partners, with offices in London, and one of the largest investors in the Sorenson Capital fund. "These guys are very high integrity and very mature people who we think we fit very well with good management teams."

As a leveraged buyout fund, Sorenson Capital is aiming its tens of millions of dollars at buying small to midsize Western U.S. companies with revenues of $30 million to $300 million. Then it plans to help those companies grow.

"When most people think about venture capital they typically think of early-stage funding for start-up companies. We’re different from that," Bullock said in an exclusive interview with the Deseret Morning News. "We’re looking for more mature companies, and we’re not just technology."

Since completing its fund-raising, Sorenson Capital already has its sights on eight companies in Utah, another 12 in Colorado and Arizona and one in California.

"But in Utah we’ve been pleasantly surprised at the broad array of excellent companies that we’ve found across the state," Bullock said. "And while we can’t talk about any specific company, we’ve looked at companies in technology industries and we’ve also looked at various traditional industries, manufacturing industries here in the state."

It’s Sorenson Capital’s focus on investing in and growing Utah businesses that draws praise from Gov. Olene Walker.

"I’m ecstatic we are increasing capital to grow Utah companies," Walker said in an e-mail to the Deseret Morning News. "This is symbolic of my efforts to grow quality jobs in Utah, and it will benefit citizens immeasurably in this state."

The Sorenson Capital team brings a wealth of experience in management, investment and due-diligence.

"When they go in to a company and work with them it’s not just money," Sorenson said. "It’s all of these other skills that make a company and its future much more dynamic and bright."

Young, a BYU law school graduate, co-founded Found Inc. with Richard Lawson, also a managing partner of Sorenson Capital, who holds a master’s of business administration degree from Harvard Business School and has international banking experience with Morgan Stanley Dean Witter.

After Found Inc., Young went on to become a founding member of Northgate Capital LLC, a fund of funds business with $350 million under management.

"That was great, because we were able to rub shoulders with all the top venture firms in Silicon Valley," Young said. "I learned very quickly being around these kind of people what the business was like, what qualities you you needed to have to be successful. I didn’t get an MBA, but I’m quickly becoming an MBA."

Sorenson Capital’s other managing partners include Ron Mika, a managing director of Bain Capital from 1996 through the founding of Sorenson Capital who also holds an MBA from Harvard Business School, and Tim Layton, former managing director of Alpine Consolidated and co-founder of InStar Services, an insurance restoration firm, and MC2, a tradeshow exhibit manufacturing company.

"They have great networking capabilities, and they are very astute at originating opportunities," McCrary said. "It was a combination of our view of the area, which was underserved and also experiencing high economic growth, that got us interested."

Sorenson Capital joins Salt Lake-based Peterson Partners, another growth and buyout fund, which was a first-round investor in JetBlue Airways. In March, Peterson Partners closed on a third fund at $105 million, bringing the firm’s money under management to $255 million.

What’s remarkable, said Brad Bertoch, president and chief executive officer of the Wayne Brown Institute, a Salt Lake-based company that promotes entrepreneurship, is the growth of Utah’s venture funds, which he said have grown from just a couple funds in 2000 valued at $75 million to 14 funds today at more than $1 billion under management.

"When Salt Lake City becomes a hub for venture capital, that draws here more venture capital and talent," Bertoch said. "I can tell you for a fact that the Sorenson fund could be anywhere. They don’t have to be in Utah. If it’s not a profitable venture to be in Utah they wouldn’t be in Utah."

Bertoch anticipates Sorenson Capital’s investments in Utah companies will make them better run so they can compete, before going public or being acquired.

Buyout funds posted strong returns in 2003, averaging a one-year return of 24.1 percent in 2003, according to the National Venture Capital Association and Thomson Venture Economics.

Bullock anticipates similar returns of about 25 percent.

"What we try to look for is good partnerships with people," Bullock said. "We’ll be very fair and competitive on prices that we pay for businesses. We’re not just looking at it from a financial buyer’s perspective."

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