Investment Approach

Revenue & EBITDA

• Revenue:  $5 to $30 million.
• EBITDA: 1.5 million to 3 million, though we will consider EBITDA outside of range if there is a compelling growth story or if EBITDA margin as a percent of revenue is above average.  Where there are logical for add-on acquisitions, we have no EBITDA minimums.

 Financial Trends

• Prefer trend over 2-3 years or more of positive revenue and EBITDA growth but not required; if there are not positive trends then evidence of associated expense control to sustain EBITDA margin as % of revenue is required.
• Like to see company created financial projections for next 3-5 years (income statement; balance sheet and cash flow if possible).
• Stable collection history on accounts receivable with no or very little exposure to accounts 90 days or more past due; same for accounts payable with no accounts past due payment.
• Stable working capital relationship with no out-of-cycle spikes.

Management Team

• Strongly prefer management team to remain in place.
• In considering compensation, seller should adjust management salaries to reflect market compensation.

Ownership Characteristics
and
Transaction Types

• 1st or 2nd generation owner seeking full or partial transition.
• Demonstrate sustainable, competitive advantages and strong customer relationships.
• Private companies undergoing an ownership transition, management buyouts, recapitalization, debt purchases, family transitions or companies requiring growth capital.
• Corporate divestitures.
• Select financial restructurings or turnarounds.

Industry Segments

• MANUFACTURING: niche manufacturing companies that make customized products with short order and production lead times and generate gross margins in excess of 25%.
• DISTRIBUTION: companies with defensible market positions, value-added branding, products & services, or unique processing with gross margins in excess of 20%.
• BUSINESS SERVICES: Select service providers with a unique and value-added service offering, deep customer relationships, high switching costs and a scalable business platform.
• We do not directly invest in real estate, natural resource companies, highly regulated businesses such as banks, insurance companies and utilities, retail businesses, restaurant chains, early stage companies, or technology, telecommunications and internet companies.

Control

•  Control (alone or with a compatible co-investor) preferred though non-control investments will be considered.