Our strategic focus is to invest in operating companies that have been identified by principals operating within the search fund business model. We take a proactive role with search fund entrepreneurs in all phases of the investment process, including business screening, due diligence, negotiation of deal structure, operating oversight, and exploration of exit strategies.
Our investment strategy is based on the following components:
Differentiated Investment Approach based on Proprietary Sourcing
We employ a differentiated investment approach, focusing specifically on the search fund asset class. We leverage over 20 years of operating and investing experience within the search fund structure to generate proprietary deal flow, working with both search fund entrepreneurs and other search fund investors to identify unique investment opportunities.
Industry Neutral with Focus on Business Characteristics
We seek to acquire fundamentally attractive businesses that are able to generate superior returns over a long time horizon, employing a prudent capital structure, without requiring an expansion of the purchase price multiple upon exit. We believe that such businesses share quantifiable financial and operating characteristics, including predictable internal revenue growth, high returns on tangible capital, and industry fragmentation based on geography or product. With this set of criteria, our screening process does not employ any specific industry focus or constraints. Rather, businesses are evaluated based on their ability to match the general characteristics/criteria that we employ.
Development of a Broad-Based Portfolio of Investments
Our primary focus is to invest capital for long-term appreciation. Accordingly, we are patient investors. It is our belief that the best way to ensure superior returns is to develop a broad-based portfolio of investments.
Comprehensive Analysis and Due Diligence
We evaluate opportunities and conduct due diligence in four phases:
- Search fund principals are screened for their match with the challenges associated with managing a newly acquired operating business
- Prospective investments are rigorously screened based upon specific economic criteria
- If the desired characteristics are met, we conduct extensive analysis and due diligence on the company
- If due diligence confirms a quality investment opportunity, we assist search fund principals in the negotiation of the terms of an acquisition with sellers, as well as assisting other investors in the negotiation of the terms of the capital investment in the acquired company.
Active Participation in Portfolio Companies
We provide ongoing support to all of our portfolio companies throughout their operating life. We participate actively on the board of directors for a portion of our portfolio companies. Through board representation we assist search fund principals as they navigate the opportunities and challenges associated with managing acquired entities. The decades of operating experience that our principals bring to the table are a valuable asset to both portfolio companies and our limited partners. In addition, we maintain a strong, pro-active relationship with management in those investments where we aren't represented on the board of directors. In addition to monitoring the ongoing progress and performance of portfolio companies, our investment approach requires analysis and consideration of the most favorable exit options for each entity throughout the life of the investment.