Investment Criteria
What We Invest In.
Profitable lower middle-market businesses with real cash flow, real customers, and real people behind them. We hold for the long term and bring patient capital to every deal.
Our Philosophy
We only make investments that…
Simple to understand
We invest in businesses we can fully understand; industries where we have genuine expertise and conviction, not where we are learning on the job.
Durable competitive advantage
The business should have a reason to win that persists over time, backed by a stable, diverse client base that doesn't depend on any single relationship.
Management with integrity
A healthy layer of non-owner management must exist with both the capability to operate the business and the character we want running it.
Attractive price with margin of safety
We are disciplined buyers. We require an attractive entry price and a meaningful cushion against things going wrong.
The Numbers
Our target parameters
Enterprise Value
$15M – $80M
Free Cash Flow
$3M – $25M
Revenue
$5M+
Holding Period
Long term. No clock.
Geography
Texas & Sun Belt preferred
Ownership
Founder- or family-owned
These are guidelines, not hard gates. We look at every situation on its merits. A business just outside these ranges with the right characteristics is always worth a conversation.
Beyond the Numbers
What we look for in a business
Durable competitive position
The business should have a reason to exist that isn’t just price. Customer relationships, proprietary process, geographic advantage, regulatory know-how; something that makes it hard for a new entrant to take share.
A team worth keeping
We look for businesses where the people doing the work are invested in the outcome. Long-tenured employees, low turnover, and management below the owner that could run the company if they had to.
Clean financials and honest sellers
We don’t need perfection. We need consistency. Financials that tell the real story, add-backs that are defensible, and owners who don’t surprise us in diligence.
A business that doesn’t need reinventing
We aren’t turnaround investors. We look for businesses that are working; and where patient capital, operating support, and thoughtful ownership can help them work better.
What We Look For
Criteria in detail
Industry
- Large and growing sector
- Low operational complexity
- Historically profitable and attractive to lenders
- A large number of firms provides both acquisition targets and exit opportunities
- Fragmented; lacks dominant competitors or customers
Company
- Attractive valuation
- Stable, contractual customer relationships
- Motivated seller for non-business reasons
- Strong middle management willing to remain
- Product or service differentiation exists or can be created
- Growth potential via organic sales, geographic expansion, and follow-on acquisitions
- Long product/service life cycles, not subject to rapid technological change or obsolescence
Financials
- Strong net profit margins; ideally 15%+
- Realistic recapitalization or liquidity options in 3–6 years
- Predictable, stable, and recurring revenue base
- History of profitability; at least $3M in owner earnings
- Not a business in decline
- Low to moderate capital intensity enabling high returns on tangible capital
- Cash flow and assets sufficient to service an acquisition capital structure
- $5M+ in revenues
Industries
Where we have conviction
Business Services
Recurring-revenue service businesses with defensible customer relationships; staffing, outsourced services, facilities management, and similar.
Specialty Manufacturing
Niche manufacturers with proprietary processes, long customer tenures, and products that are painful for customers to source elsewhere.
Distribution & Logistics
Value-add distributors embedded in their supply chains; businesses where relationships and logistics expertise create real switching costs.
Industrial & Infrastructure Services
Companies that service essential infrastructure; maintenance, inspection, repair, and specialty installation in energy, utilities, and construction.
Healthcare Services
Non-clinical healthcare businesses including home health, therapy services, medical billing, and practice management.
Consumer & Specialty Retail
Category-dominant local or regional businesses with loyal customer bases and operational complexity that creates natural barriers to entry.
Not a Fit
What we don’t invest in
Being clear about what we won’t do saves everyone time.
Our Hold Period
No fund clock. No forced exit
Most private equity funds have a defined life; typically seven to ten years; after which they must return capital to investors. That clock creates pressure to sell, regardless of whether the business is ready.
We don’t operate that way. Our capital is permanent. We sell when the business and its stakeholders are best served by a transition; not when a fund document requires it.
In practice, that means we hold companies for many years, often decades. Our incentive is to make each business better over time, not to engineer a quick exit.
Deal Structure
Flexible on structure. Clear on terms
Full acquisitions
We buy 100% of businesses in most cases, providing sellers with full liquidity and a clean exit.
Majority recaps
If a seller wants to retain upside and stay involved, we can structure a majority recapitalization that gives them liquidity today and participation in future growth.
Management rollover
We encourage management teams to roll equity. Alignment matters more to us than deal elegance.
Seller financing
We are comfortable with seller notes where they make sense; not as a requirement, but as a tool when it benefits both sides.
Have a business that fits?
We respond to every inbound inquiry. Send us a teaser or reach out directly; no banker required.
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