Character
Doing the right thing
Management
Management charts the course, good management knows the right course, how to instill a culture of execution, and keep business on track
Innovation
Innovation is a powerful force for good, however you can't outrun long-term trends when you fail to innovate. Therefore we do not invest in businesses in dying industries
We are not "deep value" or "special situation" in our investment philosophy, rather we focus on evaluating the fundamentals and how business decisions inside the company are made from a governance perspective. In our view, having trust in the people driving the business to act in an ethical way is a non-negotiable. We believe there is no substitute for good management, and often effective management is reinforced or held accountable by actual Board governance. Irrespective of whether we have a control vote, we require a seat on the Board as part of our investment.
NEED FOR CREATIVE, PATIENT, AND FLEXIBLE CAPITAL:
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There is a considerable liquidity gap for lower-middle market businesses beyond bank debt but isn't selling your company
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Traditional funds are restricted to specific investment types, style, and time horizon - yet strategy and situations should determine investment type, not the other way around...
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Entrepreneurs and sponsors need access to capital that enables business success without meaningful dilution or tight covenants
CORONAVIRUS DISRUPTION CREATES OPPORTUNITY
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Strong companies face disruption however are adapting in real-time, bolstered by additional liquidity it enables them to seize new opportunities
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Quality companies may find themselves in the situation of needing additional working-capital, room to navigate with their lenders, or generally are running tight on cash, however most traditional capital providers are in retreat
SECTOR/INDUSTRY PERSPECTIVES - INVESTMENT CONSIDERATIONS
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"On-shoring" - Businesses of all types and sizes experienced disruption when supply-chains ground to a halt in March 2020. The conventional model of 'just-in-time' inventory at a global scale was challenged in an unprecedented way, causing businesses to reevaluate redundancy in their operations. Over the long-term we expect an increased economic and social rationale for many businesses to increase their purchasing volume from North American suppliers.
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Acceleration of Enterprise Technology - We believe distributed workforce and remote work is no longer an experiment, it's here to stay. This paradigm shift increases the importance of technology as companies rationalize fixed overhead, improve reporting, manage processes and employees, and optimize workflow.
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Infrastructure - Aging infrastructure in America is a core long-term economic issue that policymakers will inevitably address. Politically it is supported on both sides of the aisle and is viewed as a key economic priority both from stimulus and national security perspectives. We see tremendous opportunity for value creation by businesses that are primed to improve infrastructure.