INVESTMENT APPROACH

Market Opportunity and Investment Approach

Supply chain disruptions and dependence on China have led to two trends --
Continued strong growth can be predicted, relatively immune to recession --
Many U.S. firms operating in “Critical Industry” sectors in the lower middle market --
  • Firms reshoring supply chains
  • Congressional enactments of 2021 and 2022 -
    • The Infrastructure and Investment Act ($1.2 trillion)
    • The CHIPs and Science Act ($52 billion)
    • The climate and energy provisions of the Inflation Reduction Act ($379 billion).
  • The reshoring trend is strengthening in the face of the war in Ukraine and Chinese saber rattling over Taiwan
  • Congress will make the expenditures contained in these and other bills in critical industries regardless of economic conditions.
  • Are positioned to capitalize on these trends
  • But are in need of growth capital to build additional capacity to address this new demand
  • Making critical components in the supply chain,
  • Operating in the Lower Middle Market, a segment with more firms and less PE competition.

 The Lower Middle Market

The Firm's investment thesis leads us to believe the greatest prospects for success lie with the Lower Middle Market:

 Critical Industries

The Firm will seek to invest in lower middle market firms that are operating in industries identified by the federal government as critical to national defense, health, and economic security.  These include:

Illustrative Deals/Use Cases

Investment scenarios for such firms include the following:

2nd/3rd Gen, Next Gen Not Interested

Immediate Sale Desired; or

Owner Exiting in 3 – 5 Years

Buyout, perhaps with leverage

2nd/3rd Gen, Management Staying

Growth Capital Needed

Welcome Operational Improvements

Majority or Minority Stake


New Firm, Venture to Growth

Growth Capital Needed

Welcome Operational Improvements

Majority or Minority Stake

Roll-up

Fragmented Industry

Welcome Liquidity Event

Welcome Operational Improvements



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