Marrying culture and corporate goals is key for family businesses. Having the right partner to support future growth is key.

Founded over 40 years ago by Victor Salamanca Sr., international accounting, tax and payroll services specialist Auxadi has remained in the founding family since 1979. CEO Victor Salamanca Jr. recalls a childhood with a clear professional path: “I have known since I was 10 years old that I’d work with my father, and from the age of 14 I’d go to the office with him after playing football on Saturdays.” Eventually, he joined the firm in 1997, when Auxadi employed 13 people. Employing wisdom bestowed to him from a Harvard education, Victor created an advisory board of accountants to work with him and his father to advise on driving the business to the next level.

By 2009 Auxadi had grown to 70 staff and Victor, then aged 34, took the helm, with his father becoming Chairman. Today the firm employs 270 people and generates $30 million in turnover and Victor is clear that today’s business is a consequence of what he and his father have worked towards as partners for 11 years: “All that we’ve achieved in Auxadi is thanks to my father. He is the real Victor Salamanca, while my Mum has always helped and pushed me along the way.”

“My dream has always been to make Auxadi a great brand, which implied not integrating with another firm. Working in a family business and structuring the succession planning is always a challenge. My decision was to find someone that could help me grow the business while providing fund capital structure to assure a fair exit for my father and my family.” And while many family businesses may shun the loss of control that a private equity backer typically entails, Victor had a different perspective: “Back in my Harvard days I learned how a PE firm could provide more than capital; it could help professionalise the business one step further and help support more growth.”

The firm had a lot of options – unsurprising, given its success – and competitors circled in the hopes of an acquisition. But retaining the brand, culture and control of the business the family had meticulously built over four decades was of paramount importance. “We wanted a partner to financially strengthen the business as well as allow my family to realise the benefits of all my father’s hard work.”

Why private equity?

The family wanted a partner that could support the future growth of the business but who also understood and respected the nuanced needs of family businesses. “A private equity fund could help us to avoid problems with succession planning, maintain our heritage, and help us to strengthen our position.” The trick was finding a true minority partner – a real rarity as even the few who provide such backing tend to offer an economic minority but with legal majority rights in the back.

Victor serendipitously met Flor Kassai, a Partner from Inflexion with substantial business services experience, in New York in 2019. A shared mother tongue made conversation easier, and Victor was aware that Inflexion had earned significant kudos for its successful flotation of Sanne a few years prior. Already in discussions with another suitor, Auxadi backed out as they felt the empathy was lacking, and received funding from Inflexion’s dedicated minority fund, Partnership Capital, in August. The deal offered the family a genuine minority investment, and with the father as Chairman and son as CEO, it is clear Auxadi truly remains in the founding family’s control.

“We didn’t feel we could risk the family mentality by undertaking M&A, but now with Inflexion’s backing we can complement our own organic growth with inorganic growth. Inflexion will provide M&A know-how as well as funding. We didn’t know how to do this on our own, so seeing a PE firm with experience in this area was enticing. Lastly, our intention is to enter the US market and help US corporations entering the Latin American and European corridors. Inflexion’s US and Latin American presence is therefore very attractive.”

But beyond the business case, it came down to chemistry – which is often the case in family businesses.

“When you’re trying to enter the share capital of a family-run business, you need to understand the dynamics behind their history. The company is like an additional sibling and you need to make sure you still set the rules in your own house. It’s not just about the money, but about the empathy required for coming into a family business. Ultimately Inflexion allowed us to avoid family issues while growing our business and keeping control.”