The Value of Management
No matter the company, we believe management makes all the difference.
Our primary motivation in investing is to create value. For us, the key to creating value with our investments is a strong management team with industry-specific operating experience. However, we will consider working with start-ups, management buyouts, and various other entities in situations where we can see such management is already in place.
We also consider investing in businesses in need of a turnaround, and we are often willing to provide “sweat equity” to promising management teams in special situations.
Our Ideal Opportunity
Variety in investment opens the door to growth.
We are primarily interested in businesses that allow us to invest $3 – $25 million in capital, effectively providing us with a majority stake in the business. We can and do invest more funds when the situation is warranted. We are also willing to finance transactions with some amount of debt. And, unlike traditional venture capital groups and private equity funds, we are not constrained by specific time frames or exit strategies. In fact, we are more than happy to buy and hold indefinitely if the business continues to perform well.
We seek to partner with management teams to make investments in growth-oriented businesses that have established track records of success. Additionally, we generally look for the following characteristics:
- Established business model;
- Robust and defensible franchise;
- Strong return on invested capital;
- Strong free cash flow generation with opportunities for capital reinvestment;
- Ability to add value operationally or via add-on acquisition;
- Alignment of incentives with the Management Team.
As investment generalists, we are especially interested in the following industry opportunities:
- Distribution, both wholesale and value-added or niche;
- Industrial and specialty business services;
- Health care;
- Maintenance and repair businesses;
- Business franchises.
We generally do not invest in the following industries:
- Real estate;
- Information technology;
- Speculative technology, biotech, or anything with uncertainty regarding proof of concept or regulatory approval.