Direct Equity

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Direct Equity

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.