Our Approach

Invest in great businesses... We consider “great” businesses as those with some or all of the following features:

  • They compete in industries that are growing faster than GDP;

  • They have strong market positions within their niche, usually a result of a superior product, expetise, and superior customer service. They are (or could be) taking market share;

  • A meaningful portion of their revenue is recurring in nature;

  • They generate high margins and returns on capital, such that additional investment in the business (R&D, capex, additional salespeople, etc.) yields a high return.

…that we proactively seek. We are "thematically oriented," which means we supplement our own experience with deep sub-sector research. We develop investment themes in the most attractive of these sub-sectors, and proactively pursue the best opportunities within them. We believe this helps us to identify promising investments, as well as use our domain knowledge to help grow the company post-transaction.

Conduct deep due diligence. Focusing on the issues that matter most, we structure our diligence process around an investment hypothesis. We are transparent with sellers about this hypothesis so they know why we’re asking. We share our findings so that we can prioritize post-close initiatives with our new partners. Our process helps us understand the risks and opportunities inherent in an investment, and ultimately serve as constructive, engaged partners to management, financing sources, and other stakeholders. We take pride in our ability to remain objective and balanced.

Align interests. We seek to align interests in several ways, beginning with the initial transaction structure. We typically prefer an ongoing investment by sellers into the recapitalized business (a “rollover investment”). We invest significant personal capital in every deal. We work with management to refine incentive structures, enabling those employees that help the company meet its objectives to share in the upside.

Pay fair prices. Great businesses are rarely sold at bargain prices. We are willing to pay a premium for special businesses and do not consider ourselves bargain hunters.

Take a long-term perspective. We consider ourselves business builders, preferring opportunities in which we can reinvest capital at high rates of return (both organically and through acquisitions) and grow long-term cash flow. We do not pursue short-term quick wins to the detriment of long-term earnings growth.

Serve as a resource. We are a resource to our partner company management teams, supporting them in any way that we can. Our involvement is typically at the board of directors level. Our goal is to empower the leaders of the business to perform the day-to-day execution.

Use leverage conservatively. We believe that debt can be a double-edged sword, amplifying both positive and negative results. We use leverage to enhance equity returns, but do so conservatively to avoid financial difficulties in the event of unforeseen challenges.