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We seek investments that offer superior equity returns relative to the risk we take for our investors. To achieve this, we aim to invest in market-leading companies that generate high returns on invested capital and that have strong, defensible competitive positions, good growth prospects and outstanding management.
Our approach is to apply to middle-market businesses the experience and skills our principals have developed over many years of investing in, advising and managing large companies. Our experience has shown that initiatives based on this large-company expertise can have a meaningful positive impact.
We are flexible investors, comfortable in both control and minority situations. We have produced strong investment results from traditional leveraged buyouts, startup capital to support strong management teams, PIPE’s, convertible debt securities, deleveraging investments and occasional common stock investments in public companies. We seek attractive investments rather than particular deal structures. Although we are flexible with regard to transaction type, we are not passive investors: we seek board influence (but do not need board control) at companies in which we invest. Our flexibility and creativity with respect to structuring investments have afforded us access to investment opportunities less competitive than conventional auctioned buyout transactions.
While we capitalize our portfolio companies efficiently and take advantage of cheaper sources of debt financing, we do not drive our investment returns by maximizing leverage. Instead, we focus on business improvement and growth to drive returns and on incremental investment at high returns on capital.
We spend significant time supporting, advising and consulting with our management partners on strategy and board-level issues, but we give them ample room to execute on their strategies. Accordingly, during diligence we ensure that we are choosing strong management partners whose compensation and equity incentive structures align with our investors’ interests.
By patiently employing this flexible investment strategy and focusing on those investments that offer attractive returns for the risk assumed, we have achieved strong returns on our investments, while avoiding many of the pitfalls that have plagued our peers.
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