Partnering with industry leaders in the lower middle market
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.
We like niche markets with $100M+ potential that are highly fragmented with no clear leader or category disruption. Attractive industries include:
- Value-added distribution
- Business services
We do not invest in retail, hi-tech, bio-tech, restaurants, financial services, real estate, and consumer products.
- 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.
- 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
- 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