Adam Coffey in February published “The Private Equity Playbook,” which advises senior executives how to succeed when leading companies owned by outside investors.
A few weeks later Coffey showed them.
In March he engineered the sale of Brea-based provider of heating and cooling systems Coolsys, owned by Boston’s Audax Private Equity, to Ares Management Corp. in Los Angeles.
Was the sale like the book he wrote?
“It really was,” Coffey told the Business Journal late last month. “Audax held the company for only three years, which gives you an indication that it went well.
“Afterwards, everyone was smiling.”
It’s the latest deal for Coffey, who intends by 2023 to build the company, which installs and maintains refrigeration and heating systems for companies like Costco and Starbucks, to a $2 billion enterprise value with annual sales of $1.1 billion.
After Coolsys was bought in 2016 by Audax, which has $12 billion in assets, Coffey was hired. He installed a new management team and renamed the company, previously Source Refrigeration & HVAC Inc.
He’s subsequently made eight acquisitions, building the company’s presence into more than 40 states. Coffey said annual sales have doubled to more than $400 million.
Will Coolsys join the ranks of Orange County’s largest public companies profiled in this edition any time soon?
Not immediately. It has several more years to build its business before an IPO makes sense, Coffey said.
Audax has “a disciplined formula” of buying firms with predetermined revenue and selling them when sales hit a certain level.
“If we’d waited six months, it’d be outside the Audax sweet spot,” Coffey said. “Coolsys is growing fast.”
Last September he began talking to 27 different private equity groups about a potential sale.
He’d worked with Ares before as chief executive of El Segundo-based Wash Multifamily Laundry.
“Ares was always my lead horse. I love the people and how they operate,” he said.
“Ares has known Coolsys’ CEO and President Adam Coffey for a long time, and we are looking forward to working with him again,” Matt Cwiertnia, partner and co-head of North American Private Equity at Ares, said in a statement announcing the deal.
The size of Ares (NYSE: ARES), which has about $131 billion in assets under management, will give Coolsys an opportunity to make about four to eight acquisitions a year, Coffey said.
He also wants to expand overseas.
Now, “I can do much bigger things.”