STRATEGY
Our funds invest in lower middle market companies with operational or capital structure complexity that causes many investors to shy away. These situations are often undervalued in the marketplace and present highly attractive investment opportunities.
The catalyst for the investment opportunity can be financial or operational distress, a complicated capital structure involving difficult-to-value securities or a dysfunctional ownership group.
Our goal in each situation is to establish the downside protection of a debt investment while creating the potential for an equity-type return.
We view management as critical to the success of each of our investments. When we have a successful outcome, we seek to have management win alongside us.
The recent economic crisis and the resulting changes to the financial industry have significantly restricted the capital that is available to lower middle market companies that have complexity. We believe this dynamic will continue to create numerous opportunities for our strategy.
PROCESS
Our funds make two types of investments:
We purchase debt and illiquid equity interests in the secondary market; and
We invest directly in companies that are unable to access capital from traditional sourceWe typically structure our investments to benefit from a combination of seniority, collateral protection and current income, and we search for situations in which we can invest at a discount to intrinsic value.
Our team conducts a thorough due diligence process which typically involves input from 3rd-party industry experts that are independent of the company which we are evaluating.
We employ an activist approach to restructuring situations, and we have substantial operational resources that we are prepared to commit to our portfolio companies.
Our funds usually invest $8 - $15 million in each situation, and we target companies in the business services, consumer, healthcare and manufacturing sectors.
SUCCESS
Our funds have been making special situations investments in companies since 2008.
We have made 24 investments since inception in sectors including packaging, oilfield equipment, staffing, consumer products, food, construction equipment rental, logistics and composite materials.
Our investors include high net worth families, foundations, endowments, insurance companies and public pension funds.