One of Wraith’s investment strategies is to make direct equity investments into established privately owned growth companies.
Our Direct Equity approach can be summarised as follows:
- Investment Focus – invest in high quality businesses to support growth and shareholder transition.
- Company Size – target established businesses typically making between $1.5m-$20m EBITDA.
- Partnership Approach – partner with owners and management teams to support their strategic aspirations.
- Structure – not a Private Equity Fund – an aligned patient and flexible investor with funding provided on a deal by deal basis.
- Flexibility – each opportunity is tailored for the owners and management’s objectives with flexibility around investment horizon and shareholding levels.
- Alignment – critical that there is buy-in form management and shareholders around the strategic direction and future liquidity options.
- Investment Style – private and non-interfering. We leave management to ‘manage’ and provide focus and support on initiatives where we can add significant value.
- Value Add – look to leverage our M&A expertise, strategic insights, governance experience and extensive networks to support the company’s strategy.
The following are some of the features we look for:
- Strong market position or successful niche.
- Solid track record of profitability;
- Clear on achievable growth prospects;
- Mission critical offering or necessary service or product;
- Medium to high barrieres of entry;
- Robust management team that can be strengthened/augemented;
- Repeat or recurring revenues;
- Diversified earnings (by geography, customer, product / service offering);
- High EBITDA to cash conversion;
- Opportunity to ‘corporatise’, ability to remove owner dependence and install strategic clarity;
- Clear exit opportunities and understanding of what business needs to look like to maximise value;
- Ability to expand into other regions / countries.
Target company size:
- Minimum EBITDA of $1.5m or clear pathway via agreed acquisition(s) to take it above this level;
- EV likely to be $10m to $300m;
- Larger companies will require co-investing with institutional partners.