From Louisville Business First
Fast-growing Louisville company wraps up big fundraising round — here’s what’s next
Apr 4, 2018, 2:38pm EDT
By David A. Mann Reporter, Louisville Business First
View Article at Business First
New York City. That’s what’s next for Alliance Cost Containment.
The Louisville-based firm, which works with businesses on cost reduction, just wrapped up a fundraising round thanks to an investor in the Big Apple. It now plans to open an office there in order to expand its business with private-equity companies.
The fundraising round, which started late last year and wrapped up in March, brought $1.5 million into the company. It brought in fresh capital from local investors but was primarily led by Todd Benson, managing partner and CEO of private-equity firm Herington LLC.
Alliance helps clients reduce costs with a multi-pronged consulting approach that includes institutional behavioral changes, contract changes, identified areas of savings and best purchasing practices. Getting a significant level of investment from New York is a milestone for the company, said Miles Lee, president and CEO.
“It validates us and gives us access to client channels we otherwise wouldn’t have had access to,” said Lee.
Those channels represent a significant opportunity for the company. The opportunity to drive out costs is especially attractive to private-equity firms, which often buy a business, improve its efficiency and sell it at greater value. And the sale price of a business is based on earnings before interest, taxes, depreciation and amortization — which can be significantly affected by reducing costs, Lee said.
In 2017, Alliance generated tens of millions in value for private-equity firms and was involved in several pre-acquisition due diligence projects for large private-equity firms.
From a private-equity sponsor perspective, the costs reports that Alliance provides “can be strategically invaluable during the due diligence phase of an acquisition,” Benson said in a statement. Those reports are one of the products that he said drew him to the company.
Most of the capital the company raised during this fundraising round will go toward opening a New York office and adding a business development account executive there, Lee said. The company is still deciding on a location in New York City and expects to be open there within the next four to six weeks.
Alliance also has offices in Chicago, Denver, Dallas, Tampa, Indianapolis and Colorado Springs. The business has 33 employees.
The company also will put some of the capital toward investing in a data analytics program that can offer customers information on prices and trends. And it’s investing in an employee benefit program, through which employees of its clients can have access to some of the purchasing discounts it offers businesses. Its clients can offer those discounts to employees as a perk.
We’ve been watching Alliance closely during the last year. It was recognized in our Best Places to Work, Business of the Year and Fast 50 programs last year. It was also in the Inc. 5000, which recognizes the fastest growing companies in the nation. The company’s headquarters is on Timberwood Circle in East Louisville.
Lee said the new capital puts the company in a good position to expand its business in New York.
“It’s harder to do that from 40203 than it is from 10005,” he said.