DEAL CRITERIA

Lower middle market deals come in all shapes and sizes. The pretty ones are too expensive. And the ugly ones are tough to look at.

For most transactions we encounter, however, there is potential.

We work with the sponsor to explain the blemishes, craft the story and investment thesis, and find the right capital provider(s) and best structure to mitigate the risks.

The following provides some details for opportunities we'd like to represent.

CHARACTERISTICS

  • STRATEGIC

    Defensible business model

    Historical track record

    US-based

    Experienced, motivated management team

  • FINANCIAL

    $10+ MM enterprise value

    $1.5+ MM EBITDA

    30% + gross margins

    Attractive cash flow profile

  • STRUCTURE

    Compelling investment thesis

    Passionate, dedicated sponsor

    Valuation and leverage that reflects the risk profile

* We are NOT afraid of cyclicality, customer concentration, or key person risk. Those risks just need to be well-mitigated with valuation, capital structure and a post-closing plan.

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INDUSTRIES OF INTEREST

Our favorites are boring, profitable businesses that are easy to understand and have a reason to exist. These are the businesses that define the lower middle market. Some examples of those include:

INDUSTRIALS

Niche manufacturing

Aerospace and defense

Automotive

Plastics and packaging

Building products

DISTRIBUTION

Value-add distribution

Warehouse and fulfillment

Wholesale distribution

Transportation and logistics

SERVICES

B2B or Consumer

Business Services

Facility Services

Professional or IT services

Software as a Service (SaaS)

CONSUMER, FOOD AND AG

Branded consumer products or services

Retail, e-commerce or omni-channel

Contract manufacturing, processing and distribution

Durables or staples

HEALTHCARE

Tools, equipment and consumables

Home healthcare

Hospital-based or outpatient

Lab-based or diagnostic services

Revenue cycle and outsourced services

NOT FOR US

It's not you, it's me.

Better put, our capital provider network doesn't pursue deals with these attributes, so neither do we:

  • Real estate
  • Financial institutions
  • Technology
  • Oil & gas exploration
  • Start-ups
  • International
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