Andy Unanue left his family business, Goya Foods, in 1998 to go to graduate school and, he hoped, launch a private equity firm.
“My goal was not to come back,” Unanue says.
His private equity plans were put on hold, though, when his brother’s illness and death brought him back to the family business, where he served as COO until 2004.
In 2004, Unanue launched the family office that today is called AUA Capital Management, building a professional team to run it. And in 2012, he realized his long-held dream of starting a private equity firm. Today, he uses his family enterprise expertise as founder and managing partner of AUA Private Equity Partners, in addition to his role leading the family office.
AUA Private Equity is an operationally focused lower middle-market investment firm with expertise in supporting family-owned and demographic-driven businesses. The firm has deployed more than $800 million of capital to date.
The family office has a professional staff of about a dozen people, including a chief investment officer, attorneys and investment professionals. Unanue, whose full-time job is with AUA Private Equity, gets involved only in larger decisions.
In addition to managing investments, the family office provides some services for family members: helping NextGen members with tasks like financing homes and opening bank accounts, and handling bill paying for the homes that the family office manages. It also handles the family’s trusts, a task that is less complex now that the family has simplified what had been an elaborate trust structure.
Evolution of family office investing
AUA Capital Management is a family office and alternatives-oriented investment firm that focuses on managing assets for Unanue and some of his nieces and nephews. It also served his parents during their lifetimes.
The launch of AUA Private Equity Partners changed the investment strategy for the family office.
“The larger deals that we would have done are all now done through the private equity fund,” Unanue says. “The family office is an investor in the private equity fund, and a lot of the deals that we do, especially in the food and beverage space — which is the focus of the private equity fund — are done through being an investor in the fund.”
The family office has also shifted its investments away from individual stocks, with more of the liquid portfolio in ETFs.
“We were picking a lot more individual stocks in the beginning, and investing in hedge funds and things like that,” Unanue says. “We’ve evolved into more of a broad-based beta player, and then find alpha through private deals, either through the fund, or through other private deals, whether it be in real estate or things of that nature.”
Helping family businesses
AUA Private Equity Partners’ areas of focus reflect Unanue’s deep experience with family enterprise. The firm works primarily with family businesses and counts family offices among its investors.
“The economy is run by family businesses, especially in our size of the market, so there are plenty of firms that invest in family businesses. We find ourselves differentiated by my background and my partner’s background of working exclusively with family businesses,” Unanue says. “We understand what they’re going through — whether it’s generational transition or an inflection point in the business. Having sat on their side of the table gives us a little bit of a differentiator.”
The owners of the businesses they work with are looking for an exit, and they understand that the PE fund will also plan to exit within three to five years.
“We’re working with the families as much as we can, learning from them as much as they learn from us and trying to respect their family and corporate culture to extract as much value as possible for the next generation,” Unanue says. “We understand how to perpetuate and foment the family business culture.”
Unanue says he is proud that the families whose businesses they have sold have invested in subsequent funds.
“That is a strong vote of confidence for us as doing what we say: treating them with respect and still achieving large gains and exit multiples for them when we finally exit,” he says.
Tying structure to long-term goals
For Unanue, a primary goal when building his family office was to set up a structure and a team that would allow the office to run without him.
“For me, it was important to build out a fully professionalized infrastructure, because I didn’t grow up a banker or an investor. I grew up selling beans and managing a food company,” he says. “I also had lost a brother, so I was worried about making sure my nieces were taken care of.”
He describes his vision as “building perpetual wealth for the family and the heirs, and making sure it was built properly, so that if anything happened to me, it could take care of the family because of the team we built.”
The longer-term vision was creating a structure that would allow the next generation to participate if they wanted to.
“But the goal was always to have the family guide the office, not be involved in the day-to-day of running the entire thing,” he says.
This structure includes planning for succession and establishing ground rules for family participation — which should be put in place early on.
“As the tree grows, it’s a lot harder to make those rules,” he says.
Unanue plans for the family office to continue under professional management, though his nieces and nephews who will eventually become owners could become more involved — perhaps as members of the investment committee.
“I don’t have kids myself, so the nieces and nephews will be taking the family office over and deciding the destiny of what it’ll be,” Unanue says. “The goal is to make it a strong enough institution that they want to continue it running the way it is.”
He hopes the structures he has put in place will allow this to happen.
“Everybody has different plans, different goals, different needs,” he says. “The thing that’s most important to me is make sure you’re building it right, so that if anything happens to the person building it, there’s a succession plan — and all that work you put in doesn’t go away.”