Investment Strategy

Remain Focused

We are focused on one type of business — manufacturing. Specifically, we target low volume/high mix manufacturing operations located in the Southeast and Midwest that serve as suppliers to OEMs and end users. We have found that these businesses have the ability to maintain better margins and are at a lower risk for off-shoring. We believe that we can add value to these organizations through our collective expertise in manufacturing and management, and that they can benefit by sharing with each other the expertise related to short run, custom manufacturing. These businesses are also appealing because they do not have heavy investment in R&D, marketing or distribution, and their revenues are typically spread around a variety of industries.

Partner with Proven Management

Above all things we believe in people. From the bottom of the organization to the top, we believe that there is no factor of greater importance. During due diligence, we spend time with people at every level of the company, from the shop floor to the manager, to get a feel for the organization’s culture. We strive to understand the key aspects of how the leadership will manage the organization, from the treatment of their people to their ability to develop and execute a long term growth plan.

Invest in Fair Valuations

We look for a history of cash generation and earnings. While projections and the assumptions which support them are an important part of the valuation process, we believe in making conservative assumptions about forward looking financials. If a valuation can only be justified by aggressive growth projections and margin improvements, it is not a fit.

Capitalize with a Healthy Balance Sheet

We invest in a business with the intention of creating value. While some portion of the value creation may come from financial engineering, our focus is to create value through the development of a clearly defined growth plan and the implementation of superior governance, management and operational practices. With a more conservative capital structure and prudent levels of debt, we preserve the ability to fund growth, manage business cycles, and return excess capital to investors. The lower debt levels serve to reduce the risk of the investment. This structure also enables us to make add on acquisitions if there is an opportunity that is a strategic fit.

Create Value by Improving the Business

Companies in our targeted segment often lack significant depth in their management teams. Frequently, existing management is so preoccupied with “running the business” that limited time and resources are devoted to developing and executing focused growth strategies. We believe that our team’s combined experience is a powerful supplement to our portfolio companies’ management teams, and we work along side them in developing growth strategies and improving operations. We will actively assist our teams in the following critical areas:

Understanding market dynamics and assessing growth potential
Developing systems and structure where needed to drive growth, particularly with regard to market-facing activities
Outlining top operational priorities and providing the expertise required to create a Lean enterprise
Developing appropriate business metrics to track and drive progress
Developing key personnel and their leadership capabilities and capacities, and recruiting and retaining the right talent
When necessary, providing access to key external resources to assist in growing the business