By Tom Ballard, Chief Alliance Officer, PYA
Less than a year after relocating from New York City to Knoxville, Christopher Ayala has launched a new venture focused on purchasing a middle market business.
“This is exactly what I wanted to do,” the lawyer and corporate executive turned entrepreneur told us recently. Jim Biggs of the Knoxville Entrepreneur Center introduced us to Ayala about a year ago when he was following his wife to Knoxville after she accepted a position with Scripps Networks Interactive.
After taking time to understand the region and opportunities, Ayala launched Towanda Capital on March 1.
The company is targeting businesses located anywhere in the U.S., although the Southeast is optimal. The ideal target company would have between $10 and $40 million in sales and between $2 and $8 million in EBITDA (earnings before interest, taxes, depreciation and amortization).
“The (Towanda Capital) structure lends itself to several different sectors,” Ayala says, citing healthcare, transportation and logistics, and general business services. “I would like to do it (a purchase) as soon as possible.”
Thus far, he has spoken with more than 50 companies.
Once the deal is done, he plans to run the company and continue the legacy of the previous owner.
“I’ve had great success with mid-stage firms, getting them to the next level for purchase or acquisition by others,” Ayala says. “Our goal will be to provide a return to the investors although that does not necessarily mean a full exit.”
He’s backed by 12 investors who have committed the funding for the start-up’s overhead and deal sourcing costs as he looks for the right acquisition opportunity.
“They have the first right of refusal on equity in the business that I pick,” Ayala says of the dozen investors in Towanda Capital. He’s working to identify businesses with strong profit margins and service-type contracts that allow for very measurable future revenues.
At the time of the interview, he had opened an office in the First Tennessee Building in Downtown Knoxville, hired a University of Tennessee (UT) MBA student, and added three undergraduate UT students and another from Columbia University.
“There’s a lot of research and analysis involved in our model,” Ayala says in explaining the work of the MBA student and interns in identifying potential targets. Once they are identified, he’s focused on the all-important and time-consuming relationship building and cultivation.
“Knoxville and the Southeast are a great environment for this model,” Ayala says, citing easy travel and great resources.
The firm’s name is coincidental. It’s the street where the Ayalas reside.