Clifton Park investment fund administration firm LeverPoint Management has grown from 22 employees to 110 in the last seven years and is pursuing a strategy that will double its size again within the next four or five years.
It is an ambitious plan, said CEO David MacPhee, but one he thinks is achievable, based on LeverPoint’s record to date and its business model. He plans to add satellite offices in major markets around the country along the way.
Aiding in the growth will be the partnership announced last month between LeverPoint and Hamilton Lane, a Philadelphia investment management firm that runs the $200 million New York Credit SBIC Fund. The investment by LeverPoint is the first for the fund, which targets growing upstate New York companies that are creating jobs.
MacPhee said LeverPoint essentially acts as an outsourced chief financial officer for the alternative investment industry. “We’re their back office,” he said.
“Alternative investment” is high-risk/high-reward investing, typically in newer and/or smaller companies with a strong potential for growth. They are a step or two beyond startups, they are companies that have established themselves as profitable and are seeking to grow, but carry some risk that they will fail in the attempt.
Managers of the funds that LeverPoint serves build their expertise and spend their time picking companies that will grow rather than fail.
MacPhee said the other work involved in running these funds — moving money around, keeping up to date on tax filings and doing all the financial reporting — can be time-consuming and expensive to do in-house, and distract a small management team from what they do best, which is why they’d hire a firm like LeverPoint.
Why LeverPoint and not a competitor? Customer service as much as competence, MacPhee said.
“You can’t say ‘I’m a great accountant,’ because we all better be great accountants,” he said. Instead, he said, referrals and word of mouth are what have built LeverPoint.
“We’re trying to create that same relationship as we go forward,” MacPhee said. “As you get bigger it gets harder and harder to keep that culture alive.”
LeverPoint was established in 1995 as a division of The Ayco Company in Saratoga Springs. When Goldman Sachs acquired Ayco it did not have a strong need for Ayco’s Business Management Service division, said MacPhee, who worked briefly at Ayco after a long stint at KB Toys in Pittsfield.
A friend at Ayco reached out to MacPhee, who by then was a partner in an investment group; he and his partners wound up acquiring the division in 2007. Most will recall the turmoil that struck the entire financial industry soon after.
“Pretty much for ’07, ’08 ’09 it kind of sat still,” MacPhee said. “It didn’t go backwards, fortunately,” he continued, but LeverPoint had only grown from 18 to 22 employees by December 2009. It was at that point that a growth plan was drawn up and MacPhee took over as CEO.
Today LeverPoint has 110 employees. It administers funds totaling $30 billion for 350 entities with 60 unique client names.
As it grew, it relocated from a 9,000-square-foot space to 26,000 square feet next door at 5 Maxwell Drive in Clifton Park, which can probably accommodate a maximum of 150 employees. As Leverpoint expands its workforce, MacPhee expects some of its growth to come elsewhere, possibly through acquisition of other firms, either to target specific geographic markets or as a means of bringing employees of those firms to LeverPoint.
“Attracting talent for us is a big issue,” he said, noting that LeverPoint has five or six vacancies at any given point. “The biggest challenge we have is finding, hiring and retaining associates.”
LeverPoint already has a small New York City office, for which it is seeking a business development manager.
MacPhee said LeverPoint’s growth strategy predates the Hamilton Lane investment, but the new partnership will only help the growth, and not just because Hamilton Lane has relationships with hundreds of potential LeverPoint clients.
“What they add for us is a level of strategic involvement,” he said. “This is their business, this is what they do.”
Reach business editor John Cropley at 395-3104, [email protected] or @cropjohn on Twitter.