Our creative approach often breathes new momentum into growing
businesses - we are quick, flexible and creative. In addition to our own
funds, USGF is a limited partner in several funds which invest $2-10
million tranches in equity and subordinated debt securities of middle
market businesses.
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Industry Types: Non-Cyclical
businesses with solid sales drivers that persist through down-markets.
Businesses with strong cash flow performance in
out-of-favor/under-appreciated industries are desirable. We have particular interest in
branded consumer products and consumer services companies that compete in
markets that are well-established and not typically subject to the risks
associated with economic cycles and technological obsolescence. We prefer established consumer
product brands, including the following categories: natural and organic food space,
ethnic and regional foods, functional foods and beverages. We also seek to acquire orphan
brands in the food sector, personal care and household sectors, and in the
super-premium, personal care products sector.
We avoid investing in industries approaching cyclical peaks. We
currently do not invest in defense, auto, real estate, housing or related
sectors;
Stage: Proven market demand evidenced by three years of audited financial
statements with positive trending revenues, gross profit and EBITDA (i.e.
no start-up or turnaround situations). Will consider companies with un-audited financial statements in the
specialty food industry where we have a strong expertise;
Company Size: Run Rate Revenues of $10 million to $75 million and EBITDA of $1 million to
$5 million;
Geography: Domestic
U.S.
Business
Value Creation
Thesis: Clearly articulated sales drivers and strategy for
building enterprise value;
Management
Excellence: CEO & CFO experienced in similar plan executions
and who share Our
Values;
Corporate
Governance: Culture that embraces budget discipline,
scaleable operating processes, executive incentive compensation aligned
with shareholder interests and Board independence;
Preferred
Situations: Historical revenue and EBITDA growth of 10% per
annum. Availability of public company comparables showing positive
financial trends and stock performance. Fragmented industries with multiple
participants undergoing consolidations. Preferred industries include
premium branded-food products, consumer product businesses, and Going
Private Transactions;
Preferred
Structure: USGF's preferred approach to the private equity
business is through common equity, preferred equity, both control and
minority equity positions and subordinated debt with warrants and
convertible Notes/Preferred shares.
In the event of a subordinate debt investment, the typical debt
structures include 3-5 year maturities with no principal due until
maturity, monthly interest payments and financial covenants mirroring
senior debt covenants;
USGF is very comfortable as a lead financial backer of experienced
management teams in management buy-outs. We are also comfortable with the
non-control, minority position behind experienced equity sponsors in deals
where equity investors are separate and distinct from operation management;
Disqualifying Factors:
- Dependence on the Development of New or
Unproven Markets
- Cyclical Industries (Defense, Real Estate,
Housing and Auto sector related businesses currently avoided)
- Hostile or Unsolicited Acquisitions
- Turnarounds dependent on sales acceleration
- Investment real estate businesses
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