The Succession Fund seeks out high-quality businesses that meet the following criteria:
- Manufacturing, distribution or service sectors;
- Annual revenue greater than $15 million with identified growth prospects and annual EBIT greater than $2 million, with a history of consistent profitability;
- Continuing owner-manager partners with a significant equity stake and the majority of their net worth still invested in the business;
- Executives with the demonstrated ability to manage through positive and negative transitional periods, such as recessions, new product development cycles, capital expenditure programs, key employee changes, and acquisitions;
- Ability to self-finance expansion and sustain capital expenditures with a strong balance sheet; and
- Proprietary technology, products, niche or brands that entrench a position of market leadership, protect gross profit margins, and serve as a barrier to entry to competitors.
The Succession Fund will complete investments of $3 - 8 million to acquire a 35 - 50% equity ownership position alongside continuing owner-managers. Shareholder agreements will be entered into that set out comprehensive ground rules for governance and liquidity. The Fund will require Board seats at each portfolio company, and will add value by improving capital allocation discipline and strategic planning priorities.
