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Partnering with industry leaders in the lower middle market

 

Our Approach

We are top-down, thesis-driven investors.  At Compass, we analyze broad macroeconomic trends in order to identify attractive industries.  Through careful analysis and in-depth research we develop theses that drive our investment strategy and decisions. 


 
 

Industry Sectors

We like niche markets with $100M+ potential that are highly fragmented with no clear leader or category disruption. Attractive industries include:

  • Manufacturing
  • Value-added distribution
  • Business services

We do not invest in retail, hi-tech, bio-tech, restaurants, financial services, real estate, and consumer products.

Transaction Types

  • Growth Equity
    To finance growth opportunities which allow a business to capitalize on new markets, favorable competitive scenarios, geographic expansion, or acquisition.
     
  • Industry Focus
    Targeted acquisitions in industries where we can have an impact based on areas of expertise resident in the firm or its investors.
     
  • Management Buyouts
    In partnership with experienced management to acquire a business whether an existing operation or another in the same industry.
     
  • Ownership Exit 
    Either via an ESOP or control transaction, we can work with sellers looking to exit their business.

We like exposure to the following industry verticals:

 
 

Broadly, we seek to partner with industry leaders in niche markets that have $100M+ potential.  We focus on lower-middle market companies with EBITDA between $2-10 million and $10-100 million in revenue.  

Company Characteristics

  • Defensible market position (e.g., unique business model, IP, technology, etc.)
  • Favorable growth prospects and stable competitive dynamics
  • Positive historical cash flows with room for improvement
  • Business-to-business and product-centric
  • Diversified customer base
  • Based in North America

Financial Characteristics

  • Enterprise values of $10-100 million
  • $2-$10 million of adjusted TTM EBITDA for platforms
  • Equity investment of $2-20 million

We consider all sizes and situations for add-on acquisitions