Investor group makes initial buy

A Reno-based group that will acquire small and medium-sized companies in the Intermountain region has made its first purchase a Phoenix-based distributor of car-wash equipment.

Organizers of Sierra Nevada Partners LLC say they hope to use the Phoenix company as a platform to acquire other companies in the car-wash equipment business, build a larger company and sell it in five to seven years.

And they're looking to buy and hold companies in a wide range of industries.

Principals of Sierra Nevada Partners LLC include Robb Smith, whose Renobased Nevada Ventures is a high-profile venture capital fund; Tom Millhoff, a venture capitalist from Incline Village and a former executive with CitySearch Inc.; and Ian Rogoff of Incline Village, a venture capitalist and former vice president of Microsoft.

Smith said last week organizers believe the group is poised to take advantage of three factors:

* Although Nevada and neighboring states are growing quickly, the market for sellers of businesses doesn't have much liquidity.

"There's no place for the business owners who are here to sell their businesses," he said.

* A growing number of Baby Boom entrepreneurs are looking to sell their businesses or reduce their responsibilities so they can enjoy a more relaxed lifestyle.

* Equity valuations remain attractive.

The group looks for companies with solid prospects for growth, profitability above their industry peers and skillful management of capital.

It's not an easy search.

Smith said the group talked with close to 50 companies before it made its first acquisition and future purchases are likely to be researched just as painstakingly.

At the same time, Rogoff said Sierra Nevada Partners is at a point where it's ready to look at more possible acquisitions.

"We need deals to come forward," he said.

"And they can't all be distressed."

The group expects most of its acquisitions will be $3 million to $25 million transactions.

Sierra Nevada Partners expects to use a combination of equity it's funded by private investors along with its founders and institutional debt to purchase its portfolio of companies.

Once the group buys a company, it plans to stick around.

"We're not here to flip companies," Rogoff said.

"We're here to build them."

Sierra Nevada Partners focuses on Nevada, Arizona and neighboring mountain states because it believes they have a business-friendly environment and solid economic growth.

Among the industries that the fund has particular interest, Smith said, are light manufacturing, distribution of a brand-name or proprietary product and the service sector.

Basic industries also get a careful look.

The fund isn't interested in restaurants or gaming properties.