Investment Strategy 2018-01-14T17:24:05+00:00

Investment Strategy

Financial

EBITDA:

$2 – $10m

(will consider larger)

Revenue:

$10 – $200m

Margins:

Preference for higher margins

Industry

Consumer:

  • Personal Care
  • Food (incl. food distribution)
  • Sporting Goods

Services:

  • Business Information
  • Aerospace
  • Government

Transaction Profile

Under-Managed Company

-or-

Traditional Growth Situation

Company Characteristics

  • Independent family company or (orphaned) division of larger parent company
  • Recurring revenue
  • Minimal or no customer concentration
  • Defensible niche with sustainable competitive advantages
  • Little technological obsolescence or fashion risk

Strategy SJ Partners seeks to acquire consumer and services companies where its sector and operating expertise can add value, generating growth and shareholder value.

Critical to SJ Partners is the perspective, expertise, and skills of its operating partners. SJP operating partners generally have either run an independent company or a Fortune 500 division. These individuals possess great knowledge of their industry and enjoy acting as entrepreneurs in a smaller, middle market setting.

SJP acquires either traditional growing companies or under-managed companies. For traditional growers, SJP can provide strategic insight and help drive a growth through acquisition process where it has a good track record. Its portfolio company Spectrio has grown more than twelve-fold, driven by fifteen add-on acquisitions.

SJP likes under-managed situations where it can particularly leverage its operating partners.

Below are some investment principles that we strive to adhere to. We hope you enjoy them.

Analysis:

Stick to your knitting and know when you don’t know. Analysis: Avoid the Treadmill. Non recurring revenue businesses are like treadmills, you run a lot but don’t get very far. While contractual recurring revenue models are the most explicitly recurring ones, many consumer entities, primarily those selling consumables, have a recurring nature to them too.

Industry Analysis:

Moderate tailwinds are nice but watch out for tailwinds that shear to headwinds. If just betting on the overall industry, why bother with private companies? Isn’t it easier to just buy the public stocks? We believe it’s best to be in control of one’s destiny by controlling and improving internal elements as opposed to needing the industry — which is out of your control — to behave correctly.

Management:

PE is the team owner, not the coach and certainly not the player.

Management:

The stakeholders, especially management, should think of the investment as theirs. It’s critical that management thinks and acts just like owners.

Management:

Be passionate but not emotional. Passion drives implementation but investment decisions need to be made without emotion, be particularly careful about the escalation of commitment clouding good judgment. Exit: Pigs get slaughtered. Strive to exit when all is well and upside continues to exist.