Compelling industry characteristics

We start by conducting industry research by drawing on the resources of our Special Partners, our own substantial experience or industry experts in order to identify fundamental macro trends. Other characteristics we seek through diligence include evidence of durable demand, high barriers to entry and market fragmentation.

Low-risk business models with upside potential

One of the most productive ways to minimize business model risk is to invest behind a proven management team which can successfully execute growth and efficiency programs. We seek companies which have exhibited the ability to generate stable cash flows over long periods of time. We strive to place conservative capital structures on acquired businesses in order to mitigate incremental risk associated with over-levered balance sheets. Finally, we identify a clear path to upside potential through operating improvements, growth initiatives, multiple expansion and increasing strategic value.

Maintaining strong valuation discipline

We believe that correctly identifying key industry macro trends, targeting asset-rich companies with proven management teams and adopting a longer-term investment horizon are critical components to our valuation decisions. We do not acquire companies based on peak profitability, but rather on sustainable profitability. We will not maximize leverage in order to enhance returns. Instead we develop prudent capital structures which can be supported by sustainable earnings.