Jack Helms: A Seller’s Story

Jack Helms: A Seller’s Story

M&A investment banker Jack Helms shares tales of his career—and his love of small business.

Say “investment banker” to people outside of the business world, and in many cases it will conjure up the image of a Gordon Gekko–style master of the universe: slick, greased-back hair, fast-talking, and focused solely on the greatest return on investment and not overly concerned about the morality of the methods used to achieve it.

In Jack Helms, one meets the antithesis of this image, and not only because there’s precious little hair to slick back. The recently retired chairman of Minneapolis investment bank Lazard Middle Market is a thoroughgoing Midwesterner, raised in Iowa, a graduate of Iowa State University, with a law degree from the University of Michigan, and a career spent entirely in Minnesota. He projects an air of courtliness, Midwestern-style, without pretension. He also evinces a strong-willed intelligence. This is a man, after all, who’s been in dozens and dozens of tough business and financial negotiations.

Lazard Middle Market was called Goldsmith Agio Helms until New York investment bank Lazard Ltd. acquired it in 2007. The firm has never underwritten securities, nor has it bought and sold financial instruments. In most cases, it represents a privately held midsize company—that is, one worth between $15 million and $500 million—seeking to be acquired. Sometimes, the seller is retiring and has no successor to tap. Other times, a company’s investors are looking to cash out. Still other times, a company wants to partner with another in order to grow. In short, for most of his career, Helms has been a mergers-and-acquisitions (M&A) specialist in an investment bank.

In March, Helms left Lazard Middle Market as an executive, though he remains a senior advisor to the firm. Most of his time now is focused on Helms Capital, which he calls a merchant bank. This means he’ll be investing in companies and offering them strategic advice. Helms is the bank’s sole “employee.”

Helms recently talked about his 25-year career in mergers and acquisitions in a Lazard Middle Market conference room on the 46th floor of the Capella Tower in downtown Minneapolis, where his firm has had its handsome wood-paneled offices nearly all of its existence. Appropriately, the space offers a high, broad view of its surroundings. Listening to him tell his story in his fluid cadences, you can hear several letimotifs. Most notably, a passion for small businesses—their strategy, their management, their success.


Describing Helms’ work as investment banking may sound confusing. “The distinction between a boutique investment bank that is an M&A advisory and a business broker is very gray,” Helms says. A business broker, he says, is basically a matchmaker. An investment banker, by contrast, “is going to do a lot of research about the marketplace, do a lot of analysis on buyers, contact buyers, talk to them about the industry, assist the client in a sophisticated road show presentation to the prospective buyer, and then lead the negotiations exclusively, not just on price but also working with the lawyers on the business terms that oftentimes involve a lot of sophisticated financial analysis.”

Helms could bring those capabilities to Goldsmith Agio founder Steve Goldsmith. Goldsmith’s background wasn’t in banking but in sales and marketing. Helms had worked in finance; he then spent several years as an attorney with Minneapolis firm Fredrikson & Byron before doing venture capital for a little over a year. In 1987, Goldsmith asked Helms, with whom he’d done business, to help him earn an M&A assignment with Southwest Airlines’ legendary founder, Herb Kelleher.

Why might Kelleher put his chips on an unknown like Goldsmith? “Herb was always a bit of a nonconformist, to say the least,” Helms says. “And the notion of hiring a small boutique firm where the primary selling point was intense focus, loyalty, discretion, and confidentiality, but who was someone that no one’s heard of—that was the kind of thing that Herb would do.” In addition, Goldsmith “had this unique and wonderfully engaging personality, and he and Herb hit it off.“

Helms himself had no experience in the airline business. But he put together a solid analysis for Kelleher. Helms and Goldsmith would end up completing six acquisitions and other assignments for Southwest.

Helms and Goldsmith became full partners in 1990; the following year, the firm became known as Goldsmith Agio Helms, with Helms as president. (There was no partner named “Agio.” It’s an Italian word Goldsmith added to his firm’s name that can approximately be translated as “a premium.”) Goldsmith, Helms says, focused on marketing, raising the firm’s profile, and building business relationships. Helms hired the bankers to do the business, managed them, and developed protocol for executing transactions. “An outside/inside relationship,” Helms says.

But Helms didn’t blend into the scenery. For one thing, he also brought in clients. What’s more, M&A advisory work, he says, requires a person who is an intellectually inclined generalist, and one with “a very outgoing and somewhat aggressive personality, since you’re engaged in negotiations.” Goldsmith Agio Helms’ major hires were mostly “recovering lawyers” like Helms himself. Before its acquisition in 2007, the firm also assisted in private capital placements for its clients—finding investors looking to own a minority stake in those clients’ businesses.

Private Equity Raises Its Public Profile

Private equity firms have become the most prominent buyers of Lazard Middle Market’s clients. That reflects the boom in the industry—though industry stats plummeted during the recession, and are just starting to come back.


Source: Pitchbook

When Goldsmith and Helms started working together, “our niche of boutique investment banking firms providing clients with advice didn’t exist,” Helms says. Instead, “investment banks primarily represented publicly traded companies. They made a market in their stocks, and they assisted them in underwriting securities offerings.” Such banks would help sell private companies, but those were one-off transactions. Building an M&A practice entirely on privately held businesses was a decided risk. Once the sale was completed and the fee collected, “you had no work the next day,” Helms notes. That approach meant, during the first few years, beating the bushes for clients, and for acquirers to buy them. In addition, Helms had his own challenges. The biggest was convincing his network of Twin Cities–area business and legal contacts that he was who he said he was. “I’d call them and say, ‘I’m an investment banker now.’ And they’d say, ‘No, you’re not, you’re a lawyer. I know you!’” Helms found that he couldn’t get business referrals locally for three or four years until he built a track record of deals elsewhere. “I was more effective” meeting with businesspeople and getting clients in Chicago, Dallas, Kansas City, and elsewhere where clients “didn’t know me and didn’t have me in a box.”

For Goldsmith Agio Helms—and for Lazard Middle Market—putting together a sale requires not only a deep dive into a company’s numbers; it includes getting to know, as intimately as possible, a company’s leaders and customers so that “we can really articulate the seller’s story” to a buyer.

While many of the deals that Helms worked on involved companies that traveled below the radar, other clients are very well known. In 1998, legendary entrepreneur Jeno Paulucci asked Helms to broker a deal to sell his frozen-foods company, Michelina’s. Helms found a public company buyer. Suddenly, Paulucci developed cold feet: As he told Helms, “If I sell, I am afraid I will die.” The deal was off. Still, the two men developed a close relationship. Paulucci asked Helms to join his board, where he helped oversee the acquisition of the company’s Budget Gourmet division from Heinz. Ultimately, Helms helped Paulucci sell the company, now called Bellisio, in November 2011. The day after signing the sale documents, Paulucci passed away.

Another seller’s story: In 2000, at age 70, Al McQuinn sold his family’s company, Ag-Chem Equipment, to another farming equipment firm, Georgia-based Agco (NYSE: AGCO). McQuinn terms Helms “a master of what he did. He was always a gentleman to deal with. He orchestrated a very comprehensive and complete analysis and presentation of our company for a very limited set of buyers.”

Lazard Middle Market still makes those kinds of deals. But since the time of the Ag-Chem transaction, the makeup of both buyers and sellers has changed. In the 1980s and 1990s, Helms says, strategic buyers—“fundamentally, the publicly traded businesses and larger businesses”—weren’t overly concerned about how close an acquisition’s business was to their firm’s core business. “If there was a relationship, albeit a loose relationship, it would be considered, if the return on capital was fair,” he adds.

These days, strategic buyers are less casual. They’re under greater pressure “to continually drive earnings growth and their stock price,” Helms says. “And global competition has caused them to be more strategic . . . more focused on add-ons that truly fit.”

For Goldsmith Agio Helms, that meant “strategic buyers needed to be approached as time went on with more research, more thought. And if you went to 50 strategic buyers in 1990, you might get 20 saying, ‘I’d like to look at this.’ In 2010, if you went to the same 50, you might get five. The five would all be seriously interested, because they’re all thoughtful. We no longer go to 50. We now go to 10, because we’ve learned that we have to be much more thoughtful and detailed in our research, and know where the right companies are.”

But the real action has been in private equity. Early in Helms’ career, private equity firms “were generating tremendous returns—much, much better than an investor could realize in the public marketplace buying stocks and bonds,” he says. That lured more and more people to start private equity funds. “The original private equity model was to buy low, sell high, and use leverage. So if you only put in 20 percent equity and you bought a business where revenues grew 5 percent a year for five years, and profits were 10 percent for five years, you could get 20 to 30 percent internal rate of return on your equity if you bought it at five times earnings and sold it at six times earnings.”

In the past decade or so, lenders started demanding that private equity firms have, well, more equity. So private equity firms became more adept “at picking the winners to buy, and they’re better at supporting growth of their portfolio companies,” Helms says.

The growth in the private equity market changed Helms’ business. “In the early days, [our firm was] the trusted advisor to the privately held business owner, and that was 80 percent of the time,” Helms says. “Now that’s a third of the time. And the remaining two-thirds of the time is mostly [as a] private equity advisor and sometimes [doing] strategic divestiture.”

For an entrepreneur selling his or her own business, the mentality is different from that of private equity. They’re selling “a life’s work, maybe two generations’ work,” Helms notes. “The objectives are maximized price, and find the best buyer,” who will not only provide a great price, but maintain much of what the owner had developed—including his or her workforce.

What these businesses consider, Helms says, “is the culture—‘treating my people right, my legacy, I don’t want my company to go bankrupt.’” Most privately held businesses, he says, “place a strong emphasis on mission, culture, and community responsibility.”

For private equity firms selling off a holding, the mentality is different because of the way they’re structured and because of investors’ expectations. “Private equity firms are beholden to their investors to maximize their return on investment.” By and large, those investors don’t want the funds to hold onto a company too long. Once its value is sufficient for a good return, investors want it sold. The recent recession meant that funds that had intended to sell a holding after, say, five years had to keep it in its portfolio for seven or eight. Helms says that in the past two years, with a slowly improving economy, private equity firms “are harvesting their good companies.”

All this isn’t to say, Helms adds, that a private equity firm would “sell to a bad actor for a high price.” But they might think, “‘Let’s not get overly concerned about this cultural nuance.’

“I don’t know that most private equity firms think about community commitment,” he adds. “So you make an add-on acquisition and the main plant is in Holstein, Iowa, and it employs 50 people. That’s important to Holstein. But the company that bought it is headquartered in Minneapolis and has [excess] capacity. So the Holstein plant closes; they integrate and they maximize return, and the Holstein people are devastated. The privately held owner thinks about that and the private equity owner does not, as a general rule.”


In 2007, Lazard approached Goldsmith Agio Helms with a deal—namely, to acquire the Minneapolis firm. Though “we were then the largest boutique privately held market investment bank in the U.S., even the world,” Helms says, he and his partners saw a deal that would open up a wider world—the entire world, in fact—of potential buyers for its clients. They could also tap Lazard’s expertise and its access to public debt and equity markets and other specialized finance products for their clients. “Looking back nearly five years now since the merger, it is clear that each of our three objectives were achieved and in fact exceeded while largely maintaining our independence,” says Helms, who stepped away from the CEO role after the deal, becoming chair and senior advisor.

At the time of the sale, Goldsmith had been away from the firm for several years. Though Goldsmith Agio Helms never has revealed revenues—and as part of Lazard, cannot do so now—in 2007, Helms estimates, the firm was doing between 45 and 55 deals per year, with an average transaction size of just under $100 million. In making the deal, Lazard spun off the part of Goldsmith Agio Helms business focused on deals ranging from $15 million to $50 million. That spinoff is called Quetico Partners, and its headquarters also are in downtown Minneapolis.

During his career, Helms began investing in small companies (none of them Goldsmith/Lazard clients). Through Helms Capital, which currently has a portfolio of four companies, Helms will be making and maintaining investments in businesses with “a successful operating history and a positive cash flow.” Such an investment requires a commitment of “at least 10 years.”

In the past decade, he adds with a touch of wryness, “I made a handful of investments in startups—and I am 0 for 5. I find that my skill set, my judgment, my intuition, which has been honed on analyzing successful companies, doesn’t apply very well to startup ideas . . . . I have tremendous appreciation for the art of venture capital. But it is not what I’m doing.”

One of the companies in which Helms Capital has a stake is Talenti Gelato, a Minneapolis-based frozen dessert maker and retailer. “Jack offers a very clear perspective on high-level strategic issues,” Talenti Chairman Steve Gill says. “He’s very good about where to allocate capital, he is helpful in directions of marketplace priorities, and the overall direction of the company. He thinks strategically about where to focus and where not to focus.”

You could say that Helms is now taking his love and putting it to work in longer relationships.

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