Investment Criteria

Types of Investments:

Austin Capital seeks the following types of investments:

  • Consolidating or build-up industries.
  • Growth companies needing capital and management expertise.
  • Privately owned businesses with unrealized growth opportunities.
  • Profitable, under-performing businesses seeking to restructure.
  • Corporate divestitures of non-strategic businesses.
  • Orphaned portfolio companies of larger private equity groups.

Attractive Characteristics of Target Companies:

  • Strong management teams;
  • Proprietary technology, products or manufacturing methods;
  • Stable and attractive aftermarket businesses;
  • Recognized brand names;
  • Strong and sustainable niche market positions.

Undesirable Investments:

Austin Capital will not invest in:

  • Real estate, oil and gas properties, high technology or regulated industries;
  • Early stage situations, such as start-ups seeking venture capital;
  • Businesses that are profitable, but lack growth potential in earnings or an appropriate exit strategy.

Geographic Criteria:

Austin Capital’s primary acquisition focus is in the midwest and North Central region, although Austin Capital will consider investing in companies throughout the United States and Canada. The fund may invest outside of the United States for an add-on acquisition to a platform company.

Transaction Size:

Austin Capital will seek to invest in companies with revenues typically between $8 - $30 million for initial platform acquisitions. No minimum revenue size will be required for add-on acquisitions.

Industry Preferences:

  • Low to medium-technology, product-based manufacturing businesses;
  • Select specialty chemical companies;
  • Select wholesale distribution;
  • Select service companies.

Financial Performance:

Austin Capital will invest in businesses with stable cash flow and earnings before interest, taxes, depreciation, amortization, and reasonable add-backs (“Adjusted EBITDA”) of at least One Million Dollars ($1,000,000) for initial platform investments. Companies that are less profitable or unprofitable will not be considered, unless management has a tangible business plan for profit improvement or the business is an add-on acquisition candidate for an existing portfolio company.

Control:

Austin Capital will seek to invest in companies where it has a controlling interest, but will also invest in minority positions with compatible co-investment partners. Where Austin Capital invests in a minority control position, it will require Board representation with appropriate corporate governance provisions, as well as a structured exit strategy.

Exit Strategy:

Austin Capital's targeted holding period for investments is four to six years, but we have the flexibility to structure alternative strategies with different time horizons. Anticipated exit strategies are:

  • Sale to a strategic buyer.
  • Sale to a larger financial buyer.
  • Recapitalization of business, which will allow significant cash distributions to the investors while still maintaining ownership of the Portfolio Company.
  • Sale to the Portfolio Company’s management.