INVESTMENT CRITERIA
We invest in many types of businesses in a variety of industries and have had successful partnerships with the owner/managers that run them. In an effort to make the process simple, our investment criteria is summarized below:
- Strong owner-manager with a significant stake in the company
- The owner-manager is seeking a new partner
- Enterprise value of $5-$25 million and sales of $10-$50 million
- The business is in the manufacturing, distribution or service sectors
- The business is profitable and has been operating for at least three years
- The company can either self-finance or, in the opinion of the General Partner, obtain third party financing
MOMENTUM VALUE
In addition to our general investment criteria, we also look at the standard business characteristics that have proven to be successful through our experience in many industries. We call these characteristics Momentum Value. They are as follows:
- High performance owner-manager
- Business scalability
- Culture of continuous innovation
- A strong balance sheet
- Good margins in its industry
- Conservative accounting policies
- Significant market share position
- Brand recognition
- Diversified customer base
- Strong customer loyalty
- Healthy competition
- Culture of profitability
HOW WE ALIGN INTERESTS
The Shotgun Fund works differently than other private equity funds. We don’t just invest in your company – we partner with you. Because of this philosophy it is imperative that all of our interests are aligned in order to create value throughout the life of the partnership. That is why we sign an Alignment Agreement with you upon completion of our investment. Here are the main points of our alignment agreement:
- The joint preparation of a strategic plan. The first step of which will be to develop a 100 day action plan.
- We agree to work as a team to prioritize ideas and bring structure and discipline to the strategic plan.
- We work together with the investee operator to build a team that will grow value.
- Our shared objective is the building of a great business that can be sold within a time frame agreeable to both partners for a winning return.
TRANSACTIONS WE DON’T DO
- Companies looking for short term financing
- Companies looking for a quick fix to a long term problem
- Companies that don’t have free cash flow
- Owner managers that do not want a new partner
- Owner managers that are not interested in selling the business in a 5-10 year timeframe.
Have a shotgun situation?
