Just as manufacturing was once the driving force behind the United States economy, the services sector lies at the heart today. With services representing two-thirds of the GDP it only makes sense that there are massive opportunities for profitability within the sector, making it an appealing area for investors. However, as with any other industry, the services sector has its winners and losers. The sheer scale of it means that it can house companies both profitable and operating at a loss, and market caps can be anywhere from miniscule to blue chip. Additionally, as technological capabilities have risen so too has the services sector seen rapid evolution, meaning that a company in demand today may be obsolete tomorrow. It requires due diligence and shrewd attention to trends to identify when and where one should make investments in the services sector.
In order to see investment success within the services sector, they must be made with intention, creating a strategy that aids in narrowing the pool to those that have the greatest chance for realized gains. For Hauser Private Equity, a Cincinnati-based hybrid private equity fund manager, they have found success by focusing on the lower-middle to middle markets and making co-investments with other funds who have a strong history of using strategic investment models to add operating leadership to the companies in their portfolio. Additionally, their seasoned managers are able to use their varied expertise to target upwardly trending businesses, undertaking due diligence and execution to bring each co-investment to a successful conclusion. As a result, Hauser Private Equity has invested over $300 million in capital in privately-owned businesses across a diverse set of verticals including that of the services sector.
At the heart of each of these deals is founder and co-managing partner Mark Hauser. Hauser has over three decades of investing and operating company experience, including serving as vice president of Reynolds Dewitt Securities during which time he successfully brought about the public offerings of Mid-American Waste Systems, Future Healthcare and Health Images. He has also served on the board of directors for multiple consumer goods and food & beverage brands, as well as on the board for a number of government-contracted security and defense businesses, as well as digital advertising and textile manufacturing. The breadth and scale of Mark Hauser’s experience has given him a uniquely comprehensive view of the markets, and as a result he has spearheaded the growth of Hauser Private Equity’s portfolio.
As healthcare in the United States has evolved, so too has the ways in which the needs of the country can be fulfilled and services for it can be provided. Advancements in technology and supply chains mean that access to pharmaceutical drugs no longer requires a trip to the pharmacy, often a difficult task for those dealing with debilitating injuries or ailments. Recognizing the value a home delivery pharmacy services could add, in 2014 Mark Hauser led a deal for Hauser Private Equity with fund partner ACON Investments to invest in Injured Workers Pharmacy, L.L.C. Additionally, they partnered with two former senior executives of Omnicare, Inc., a Fortune 500 company that is a provider of long-term care and specialty pharmacy services, and Triton Pacific Capital Partners, LLC an experienced private equity healthcare services investor.
A specialty home delivery pharmacy, Injured Workers Pharmacy serves patients injured in accidents covered by Property Casualty insurance, enhancing patient access and alleviating administrative and financial burdens by shipping medications directly to the patients and managing the often complex reimbursement process. At the time, the pharmacy markets for workers’ compensation, automobile personal injury protection and personal industry amounted to $8 billion, and Injured Workers Pharmacy’s patient care advocacy program had proven to result in injured workers experiencing better recovery outcomes, returning to work faster, and creating demonstrated savings. Through partnering with experts within healthcare while leveraging their own expertise, Hauser Private Equity was able to see the successful realization of this services sector investment.
Although Hauser Private Equity has certainly been a strong player in the services vertical, it is by no means the only way Mark Hauser has built the company’s portfolio. Indeed, one of the company’s most recent successful ventures was in the sale of Igloo, the United States’ leading cooler manufacturer. In a landmark sale, the company was purchased by Dometic Group AB, the publicly traded Swedish manufacturer of accessories for campers and RVs, having previously been acquired by the private equity investment firm ACON Investments with co-investment from Hauser Private Equity in 2014. Igloo pioneered the cooler product segment when it launched over 70 years ago, and today is the global leader in the production of passive cooling boxes.
Thanks to capital and expertise provided by Hauser Private equity, alongside advising on strategic operations from ACON Investments, Igloo has seen strong growth, reporting a 24 percent increase in net sales for the most recent 12-month cycle when compared to the previous reporting period. The Dometic-Igloo transaction is mutually beneficial from an operations perspective, creating a stronger combined sales platform for both platforms that is expected to produce $150 million in higher annual sales. ACON Investments served as the deal lead, while Hauser Private Equity and Mark Hauser maintained detailed knowledge of the transactions throughout the process.
Within the services sector, the multitude of options can be overwhelming for any investor. It requires acquisition due diligence and a strong finger on the pulse of trends to successfully parse through the many companies and identify which stand poised for growth. Capital put in the right direction can result in revenue growth, increased margins, and strong exits, and Mark Hauser knows where to look.