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Apis & Heritage Capital Partners Case Study


Bethesda, MD-based Apis & Heritage Capital Partners (A&H) helps small and mid-sized businesses with large workforces of color transition to employee ownership. A&H is a Black-led firm with founding partners Todd Leverette and Philip Reeves.


A&H is seeking to raise $50M for its Apis & Heritage Legacy Fund I to invest in at least eight employee ownership buyouts over five years. In June 2021, A&H held its first close at $30M for its first fund, including anchor LP the Rockefeller Foundation via the Zero Gap Fund ($3M), Ford Foundation, Skoll Foundation, Capricorn Investments, Gary Community Investments, Ascension Investment Management and others. Co-investment capital for A&H’s portfolio companies will come from a strategic partnership with the Local Initiatives Support Coalition’s New Markets Support Co. (NMSC). NMSC will provide the senior debt tranche of the employee-led buyouts.

A&H expects to hold a final close later in 2022.

A&H Co-Founders & Managing Partners: Todd Leverette (left) and Philip Reeves

Why Employee Ownership?

The founding team at A&H wanted to help close the racial wealth gap for workers of color in the US through employee ownership. For many communities of color in the US, the primary ways to generate wealth — home ownership and entrepreneurship — have historically been blocked. The average white family has nearly 8x the wealth of the average Black family and 5x the wealth of the average Hispanic family. Additionally, roughly 60% of Black workers and 75% of Latinx workers retire with no retirement savings. A&H aims to reduce this wealth gap by financing the conversion of companies with large workforces of color into 100% employee-owned businesses. This innovative capital model helps workers of color build wealth and potentially retire with $70K to $120K in savings, according to A&H.

A&H has been successful in raising LP capital from mission-driven investors such as foundations that have leveraged their PRI programs to back this employee ownership model. However, the team has struggled to secure funding from larger institutions such as endowments and pension funds — those requiring longer track records and larger fund sizes.

Investment Strategy

A&H makes employee ownership investments in small- and mid-sized, essential-service businesses with workforces of color across the US. The team seeks companies with $1-4M EBITDA, healthy gross margins, strong cash flow, and 30+ employees, of which at least one-third of the workforce are BIPOC and 50% low income. The fund will invest in up to 10 companies over its five-year investment period with $3M+ check sizes. A&H is targeting 15% net IRR and 2.0 gross MOIC for the fund.

Their “employee-led buyout” (ELBO) model helps close the racial wealth gap by converting workers of color into owners. It also supports retiring business owners looking for liquidity and an exit by transferring ownership to employees at a fair market price. A&H primarily finances businesses transitioning to the ESOP model. Post-investment, the Oakland-based Democracy at Work Institute (DAWI) will support portfolio companies in building strong ownership cultures and other employee ownership services. These technical assistance services help companies become more resilient, pay higher wages, produce higher profits, and lower turnover.

Track Record

Apis & Heritage Legacy Fund I (2021, $50M target) has closed its first two deals as of June 2022. The two portfolio companies employ a total of 170 workers, who will now own 100% of each company.

Portfolio companies include:

  • Apex Plumbing (Denver) was founded in 1985 and is a sewer and water systems company with roughly 50 employees, 50% of whom are Latinx. As of May 2022, the company became 100% employee-owned.
  • Accent Landscaping Contractors (El Paso, TX) is a commercial landscaping company founded in 1982 with roughly 120 employees, the majority of whom are lower-income Latinx workers, and serves the states of New Mexico, Colorado, and Texas. Founder Cameron Stevens wanted to retire and transfer ownership to his employees at a fair market price. He said, “I could have sold my business to a competitor or private equity, but I know what can happen next — the culture changes and people get laid off. I didn’t want that for my employees.”

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