GGC made the purchase through its new $50 million fund, Generation Growth Capital Fund III LP, of which it has raised about $29.3 million. The company also has purchased Harrell’s Car Wash Systems Inc. and recapitalized Select Food Products Inc. with its third fund.
While it is raising and investing its third fund, GGC has been selling portfolio companies from previous funds so it has capacity to manage its whole portfolio. Portfolio company Atlantic Precision Inc. was sold in October and Midway Industrial Supply was sold in January.
Minnetonka, Minnesota-based BestMark, founded in 1986, assesses and improves customer satisfaction and loyalty for companies in the retail, automotive, hospitality and technology sectors, among others. It offers mystery shopping, customer surveys, compliance audits, customer intercept interviews and employee feedback surveys. BestMark has 140 employees at one location.
John Reinke, managing director at Generation Growth Capital, said the firm plans to make additional investments in BestMark to allow it to grow its customer base.
“We’re actually looking at hiring some additional management around expansion of the operation so that we can capitalize on some additional market opportunities,” Reinke said. “They’ve got a number of requests with the existing customers to execute on some additional platforms that they just need more capacity to handle.”
Former BestMark owner and current chief executive officer Ann Jennings will remain on board with the company for a year to work through the transition, and then will likely continue to work in an advisory role after that, Reinke said.
“As we evaluated alternatives for the transition of our business, we felt that the GGC team was the best fit because they understood our culture and the complexities of investing in small companies,” Jennings said. “Their focus on growth and the further development of our operational platform were in sync with our expectations for a new investment partner.”