The process where we assess opportunities is as follows:
- We analyze and assess prospects who meet the characteristics we find most appealing, where the opportunities are large and have long runways.
- Prospects are generally under the radar of large brand name financial entities.
- We do not typically get involved in operations, we do seek to be “friends of the operators” where our opportunity and success is directly tied to theirs. This contrasts with traditional finance companies that generally get their fees and returns regardless of success of the companies they advise.
- We help clients assess viable, alternative ways to access liquid capital markets and listings on national exchanges, both in US and in Europe. We have a wealth of experience here, though we historically only do it as principal owners in companies where we have an ownership stake. As such, we act as co-principal owners, not bankers, albeit with a financial core competency.
- We have, as owners, been involved with traditional IPO’s in both the US and overseas. We often recommend that companies consider using nontraditional and alternative paths to the public listed markets. We find they are more efficient, certain and less susceptible, if not immune, than the binary nature of traditional IPO’s.
- We show client’s other paths to more attractive valuations whereby they, as the key operators, can continue with the development and advancement of their companies with better access to capital. Traditional prospects are often convinced that the only avenue for liquidity to their shares involves having to sell their companies to small Private Equity groups — regardless of whether they really want to sell, and at essentially quite low, often vulture-like valuations.
- We focus on the long-term and must believe our partner operator/owners share that focus. Ideally, combined with positive cash flow to fund the internal needs of the company, you can outlast the vagaries of short-term oriented capital markets.
- We generally advise clients not to go public if they plan on accessing equity capital in the short-term, aside from the initial listing where they may choose to do so. The biggest reason for our long-term focus here is that capital markets can be heartless in their valuations and structure if equity capital is needed. The safeguard is to live within organically generated cash flow for internal growth. Markets will reward that, if not in short-term, then they will over time as the fundamentals continue to improve. Capital markets can more effectively be accessed whereby dilution is minimized due to higher valuations. In addition, the company can then use its shares as consideration in M&A’s and grow at a faster pace, and with an efficient usage of capital markets.
- We advise clients to only do M&A’s when properly positioned, and to be quite selective. They should focus on accretive acquisitions, and only in exceptional situations should they consider straying from that ideal, as the dilution would not be worth it otherwise.