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“They are the go-to name in this area. If someone is thinking about investing and they hear you’re using PEF, that can be a feather in your cap. PEF is known as a best-in-class partner for this type of fund.”
-Tyson Smith, Partner, Tecum Capital

Client Background

Tecum Capital Partners is a $450 million investment firm, originally licensed as an SBIC in August 2013. Focused on the Midwest, Southeast and Mid-Atlantic regions, the firm provides small and middle market owners, sellers, and managers flexible capital financing solutions through subordinated debt and private equity investments of $3 million to $15 million. By offering access to capital solutions to mature or emerging companies, Tecum Capital fosters growth and builds wealth for its portfolio companies and investors.

Situation

Tecum Capital (formerly F.N.B. Capital) began life as a spin-out from a publicly traded bank. When new financial regulations put limits on the types of investments the investment team could make, the Tecum team worked with its former parent company to spin off into a private entity that would enable them to continue to pursue nontraditional opportunities.

While they had extensive experience and a successful track record in closing deals and generating returns, the Tecum team was then faced with the challenge of ramping up quickly to put in place the infrastructure that could support their investment strategy.

“When we were still part of the bank, we had a whole team behind us that would manage the back office,” explained Tyson Smith, Partner at Tecum Capital. “But we had to be prepared to flip the switch with the official launch of Tecum—and fund administration was part of that process.”

Solution

Even before spinning out, Tecum Capital began talking to many fund administration experts in order to find a back-office partner that could support their investment approach. The firm specialized in non-sponsored deals and often invested in smaller, emerging companies with EBITDA as low as $1.5 million. As a result, they needed a fund administrator capable of working with less sophisticated portfolio companies and handling highly complex accounting, regulatory, and reporting requirements.

Tecum Capital quickly identified PEF as a potential partner capable of rising to the challenge, in particular because of their extensive knowledge of one of the most complicated fund types: SBICs.

“They are the go-to name in this area,” said Smith. “If someone is thinking about investing and they hear you’re using PEF, that can be a feather in your cap. PEF is known as a best-in-class partner for this type of fund.”

Tecum Capital successfully launched their first fund in 2013, with PEF managing their fund administration and SBA reporting.

Results

Having an experienced, knowledgeable back-office partner helped Tecum Capital transition from an in-house investment team to a fully independent entity.

“It’s scary if you’re a new group or a young group that’s just starting out,” admitted Smith. “PEF really sets you up with a team. And from the top of the organization to the bottom, they have all been very professional and very easy to work with.”

PEF helped the firm navigate capital calls, distributions, K-1s, and quarterly reports for the first time, offering guidance and templates that ensured that Tecum Capital’s reporting processes followed best practices.

Working with PEF enabled the firm to deliver excellent service to their investors—a particularly important consideration for a new fund.

“Taking care of your LPs is really important,” he said. “Working with PEF, we know our LPs are getting excellent service and timely information.”

PEF supported Tecum Capital’s growth by allowing its small team of investors to minimize the time they spent on reporting and investor relations.

“Knowing that we have a really trusted partner handling the back office allows us to leverage our core skills, which are finding and executing good investments,” Smith explained.

In a few short years, Tecum Capital has grown significantly. In May 2017, the firm announced the launch of its second and third funds. Tecum Capital Partners II, an SBIC which is fully subscribed at $225 million, will make mezzanine loans and minority equity investments across many industries. Tecum Equity Partners III, a control equity buyout platform, was launched in partnership with a family office. All three of the Tecum Capital funds will be administered by PEF.

“The cost benefit is a no-brainer in my mind,” said Smith. “Partnering with PEF allows us to leverage their expertise and focus on what we do best.”

 

 

 

 

 

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