Investment Criteria

Detailed investment criteria and what we look for in businesses and vendors.

BIG PICTURE

The vendor is as important as the business

The business is a reflection of the vendor. We only deal with ethical and trustworthy management and vendors.

Small businesses that are 'small for a good reason'

Some businesses are small due to poor economics or industry dynamics. Some businesses are small because the product or service is niche. We shy away from the former and favour the latter.

Long-standing businesses well tested by time

We shy away from new, albeit high growth, businesses. We favor old 'boring', but well tested, businesses.

Businesses with low vendor involvement

Many successful businesses are an 'extension' of the vendor's personality and relationship. We have yet to find a way to transfer that success.

'Genuine' vendors seeking retirement

Our philosophy sits well with vendors seeking retirement. Vendors who wish to leave the business in 'good safe hands', look after employees and preserve existing culture.

BUSINESS ECONOMICS

What We Look For

We favour niche businesses with stable and predictable economics. We look for:

Stable and diversified customer base

Recurring revenue, typically low dollar-denominated

Some pricing power (within reason)

Unique product or service delivered locally

M&A or roll-up opportunity

Mature businesses and industries (we don't need high growth)

Not overly cyclical (we shy away from construction and oil & gas businesses)

Not relationship-based business (we cannot transfer or buy 'relationship')

Not 'high touch' service-oriented business (no restaurants, cafes, etc.)