Investment Criteria
The table below outlines the numerous criteria that we use when evaluating a business. These criteria are a general guide that we use for evaluating businesses and not a set of absolute requirements for our investments.
Company
- Recurring revenue with durable competitive advantages
- Minimum three-year history of profitable growth
- Loyal and diverse customer base with high retention rates
- Strong middle management team and culture that values quality and teamwork
- Readily identifiable growth opportunities
Financial
- Revenues ranging from $5 to $50 million
- Stable and recurring cash flows of at least $1.5 million
- Minimum operating margins (EBITDA) of at least 15%
- Limited capital expenditures and working capital requirements
Industry
- Fragmented niche industries
- Growing markets
- Low external risk factors
- Low cyclicality
- Representative industries include:
- Healthcare services
- Light manufacturing
- Energy services
Context
- Owner/operator seeking to retire without clear successor
- Company in need of additional management and/or board expertise to capture long-term growth opportunities
- Owner/operator in need of liquidity and wishing to diversify personal net worth