Key Takeaways

  • Audax Private Equity pairs a 10-person business development team with a 60-person Strategic Resources Group (SRG) to run diligence and operations simultaneously.
  • The firm targets founder-owned companies and corporate carveouts needing institutional infrastructure rather than competing in high-priced auctions for polished assets.
  • Operating specialists in FP&A, ERP rollout, and AI deploy alongside deal teams before signing a Letter of Intent.
  • BD stays active through portfolio exits, using 26 years of buyer data to track bidder behavior across parallel sales processes.

The Industrialized Sourcing Engine

Most middle market private equity firms run business development as a solitary desk. One person manages banker relationships, logs teasers, and hands viable targets over to deal teams. Dave Santoni sees that setup as structurally limited. At Audax, the 10-person BD team operates as a direct wing of the investment committee, backed by a 60-person operating bench.

“The way I think about our business development team and our strategic resources group at ODX is we're really extensions of the deal team,” Santoni says. “We're not what you would see at a lot of middle market firms where there's one person in BD and their job is to source deals.”

That scale alters target selection. High-margin, pristine platforms run through wide auctions command premiums that compress returns. Audax bypasses the crowded top of the market by seeking targets with operational gaps.

“We don't necessarily need to find like the A+ deal that every other private equity firm's bidding on,” Santoni explains. “We can find something that might lead a little bit of tender care and do well with it. So we like carveouts. We love founder owned businesses. We'd like to be the first institutional capital.”

Deploying Operating Bench Strength Pre-LOI

When evaluating a founder-run business, the primary friction point is usually management depth. Founders often lack institutional reporting, dedicated FP&A, modern ERP environments, or structured sales playbooks. Audax addresses that hesitation during diligence by introducing functional specialists from its 60-person group before the deal closes.

“We have very large strategic resources group, you know, 60 plus people that help us with diligence and market mapping,” Santoni says. “And in particular, as we're looking at a deal, what we're trying to figure out early on is we'll supplement management right away.”

Putting operational operators in front of founders de-risks the transaction for both sides. The founder sees an immediate execution team to handle financial systems and technology integrations. The sponsor gains clarity on the exact cost and timeline required to institutionalize the target.

Closing the Loop on Exit Intelligence

The business development function does not disengage once a platform closes. Santoni's team sits on update calls throughout portfolio sales. Tracking strategic buyers and private equity sponsors across dozens of simultaneous processes yields intelligence that standard sponsor coverage models miss.

“While we're in an exit process, we sit in on every update call,” Santoni says. “We know what's going on in the process across the firm because we have a big portfolio. We're always aware of everything that's happening and it's really helpful as people are bidding in on one deal and we can kind of watch behavior and give advice to other deal teams.”

This intelligence loop turns 26 years of proprietary transaction history into tactical leverage. If a strategic bidder drops out of an auction in one sector due to balance sheet constraints, other Audax deal teams adjust their buyer lists in real time.

Why It Matters

Lower middle market dealmaking is shifting away from purely financial engineering toward resource heavy operational integration. Sponsors without in-house functional specialists face severe adverse selection: they either overpay for clean, fully built platforms in competitive auctions or take on messy founder transitions without the execution capacity to fix them. Maintaining full-lifecycle coverage teams across sourcing, diligence, and exits turns transaction data into an active risk management tool.