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Fund’s Initial Investment Involves Backing of CEO
Lynn Graham and Investment in Encore Legal Solutions
SANTA MONICA, CA (December 3, 2003) – Pinnacle CEO Recruiters, Inc. announced
today the formation of Pinnacle Equity Capital I, L.P.,
a private equity fund to make co-investments in business services companies it
places CEOs in, and an initial investment in Encore Legal Solutions, a provider
of information management services to legal firms and legal departments of
Fortune 1000 companies. Pinnacle was part of an investment group
that included Frontenac Company, Baird Capital Partners, and Primus Venture
Partners, which collectively committed $50 million in equity capital to Encore.
Pinnacle Equity Capital is one of the first private equity and venture capital
funds formed by an executive search firm to invest in later stage, management
buyouts. The late 1990s saw a number of executive search firms form
private equity and venture capital funds to invest in early stage dotcom and
Internet companies. Since then, executive search firms have been reluctant
to invest in companies they place CEOs in. Said Pinnacle President Chad
Mollman, “There is a fundamental problem in the executive search industry at the
CEO level right now, in that executive search firms are largely focused on
receiving a one time fee with a CEO placement, with sometimes little
consideration for how the CEO will perform long-term. Forming a private
equity fund to invest in the companies Pinnacle places CEOs in, more closely
aligns our interests with our clients. With this new fund, we benefit if
the CEO and company perform well, but also suffer if the CEO and company do not
perform well.”
Pinnacle’s initial investment for the fund involves the recruitment of CEO Lynn
Graham for Frontenac Company LLC, a Chicago-based private equity group focused
on business services investments. Frontenac and Graham partnered to form
Encore Legal Solutions, which Graham will head as CEO, and subsequently acquired
Lex Solutio, Partners Legal Copy Services, Global Legal Copy and Litigation
Document Services, which combined will have revenue nearing $30 million.
Encore provides a range of information management services to legal firms and
legal departments, including electronic data discovery services; document
preparation and reprographics services; document scanning, coding and editing
services; on-line document repository services; and trial graphics and
multimedia presentation services.
Previously, Graham was the CEO of IKON Document Services, a provider of
information management services and legal support services. Graham grew
IKON from $80 million in revenue to $850 million in revenue, with 15% operating
margins, through a combination of internal growth of over 35% per year and
add-on acquisitions of over 20 companies.
Commenting on Pinnacle’s investment in Encore, Mollman said, “Encore represents
in many ways a prototype investment for Pinnacle Equity Capital. Encore
has a high margin, transaction-based revenue model, and we think we are backing
one of the top CEOs in the legal information management services industry in
Lynn Graham. We think bringing in a high powered CEO like Lynn provides
the opportunity for Encore to grow into one of the leading companies in the
legal information management services industry.”
Pinnacle Equity Capital’s investment strategy is to invest in business services
companies where: (i) a private business service company is under-managed or
“under the radar”, (ii) new management is able to improve the operational
performance and implement a successful growth plan, and (iii) after a business
services company has achieved critical mass and demonstrated strong growth and
margins, a company is attractive to a number of large corporate buyers.
About Pinnacle CEO Recruiters, Inc.
Pinnacle CEO Recruiters is an executive search firm focused exclusively on
recruiting proven business services CEOs for private equity groups with
executive sponsorship programs, where private equity groups partner with a CEO
first, and then work with a CEO to acquire a company. Pinnacle is the only
U.S.-based executive search firm focused exclusively on recruiting CEOs for
executive sponsorship programs with private equity groups, and is the only
executive recruiting firm focused exclusively at the CEO level and on the
business services sector. In order to achieve an alignment of interests with its
clients and to participate in the value creation that top business services CEOs
generate, Pinnacle co-invests in
companies it places CEOs in.
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