SOLANA BEACH – As the presence of AI rapidly increases across industries, Solana Beach-based unlevered buyout firm Tide Rock takes a contrarian approach to its acquisitions. The company has vowed not to acquire any businesses that plan on replacing their employees with AI or automation.
“We believe growth comes from great people, not from replacing them,” CEO of Tide Rock Ryan Peddycord said. “We use AI to make great people more effective.”
Companies in Tide Rock’s portfolio have a business-to-business focus and target the lower middle market. Industries that Tide Rock focuses on include the manufacturing, distribution and services industries.
The firm’s investors are primarily family offices, high-net-worth individuals and institutional investors.
Tide Rock aims to implement AI technology in a way that complements the existing human capital at a company.
“When we acquire a company, we first think about growth and then the infrastructure we need to support that growth,” Peddycord said. “That includes a CRM and an ERP in applicable businesses. We do invest in AI, but focus our use on identifying growth opportunities, not cutting costs.”
Tide Rock currently owns 18 companies and is still growing. Acquisitions from last year include LogiTech, Global Electronic Recycling, Glenn Wayne Wholesale Bakery, Premier Packaging Inc., CABLENET Aerospace, Central Midlands Cleaning, and Brite Solutions.
In their work, Tide Rock has developed AI tools for the purpose of sourcing acquisitions and identifying new prospects for its portfolio companies.
“For us, AI is a growth tool, not the strategy,” Peddycord said. “It helps us accelerate growth, but growth itself still comes from strong leadership, smart business decisions and teams that know how to win.”
According to Peddycord, Tide Rock’s approach swims against the current in private equity.
“Many private equity firms cut headcount and implement automation to increase margins quickly,” Peddycord said. “Our approach is different. We invest in leadership and focus on execution. That creates stronger businesses with higher, and more consistent, long-term returns.”
An example of this approach in action is Tide Rock’s acquisition of San Diego-based Airsupply Jeyco in February of this year. Airsupply – now renamed Airsupply Tools LLC – is a local aerospace toolkitting company that specializes in maintenance, repair and operations products. The company serves defense, aerospace and industrial customers and is led by founder and President Sean Hutchens.
“We don’t need to or want to replace [Airsupply’s] people with AI or automation,” Peddycord said. “Instead, we are focused on optimizing sales and marketing alongside Sean, the founder. We use a little AI to support the sales efforts, but otherwise, we are putting fuel on the fire that Sean has already built with the great products and value propositions he and his team have developed. The result is real, sustainable growth.”
Airsupply has developed AI technology to identify the absence or presence of tools in their various cabinets. The misplacement of certain tools in their cabinets could have detrimental effects in industries like aerospace or medicine.
“Tide Rock’s experience helping small to medium-sized businesses grow effectively has enabled us to focus on what matters most – growing together so we can do the most good for the industry,” Hutchens said.
Tide Rock
FOUNDED: 2013
CEO: Ryan Peddycord
HEADQUARTERS: Solana Beach
BUSINESS: Unlevered buyout firm
EMPLOYEES: 50+
WEBSITE: https://tiderock.com
CONTACT: (858) 367-0502
NOTABLE: Tide Rock is an unlevered buyout firm that acquires US-based lower midmarket businesses with strong free cash flow and grows them to scale, while distributing high quarterly yield to its investors.
Source: San Diego Business Journal
