Aldrich Investment Criteria
Investment Criteria

INVESTMENT CRITERIA

  • Revenues $10 million to $500 million
  • EBITDA $2 million to $25 million (Underling profitability not a requirement)
  • Sustainable, recurring revenues
  • Mission-critical
  • Control equity investments
  • Industry-agnostic
  • Scalable, growing businesses
  • Located in the U.S., Canada and Europe
  • Fragmented industry suitable for consolidation
  • Established customer base
  • Corporate divesture or private company

INVESTMENT CRITERIA (Restructuring)

  • Stagnant or declining revenue
  • Undermanaged or undercapitalized
  • Revenues $10 million to $500 million
  • Control equity investments
  • Margins lagging
  • Industry-agnostic
  • Sustainable, recurring revenues
  • Located in the U.S., Canada and Europe
  • Fragmented industry suitable for consolidation
  • Underling profitability not a requirement
  • Corporate divesture or private company

Transaction Structures

Aldrich Capital provides financial and operational support to middle market and lower middle market companies to facilitate the transition to a more appropriately capitalized, more profitable and strategically competitive enterprise.

Aldrich Capital looks to identify companies that possess strong positions in attractive niche markets, but whose current financial performance or growth potential are being impacted by the need to implement operational improvements, re-structure the capital base and/or augment their management team.

Specifically, Aldrich Capital is interested in partnering with companies and management teams in the following transitional situations:

Management Buyout of a Private Company

Aldrich will partner with existing management to lead an acquisition of a business or buyout existing shareholder positions. We facilitate transactions for business owners who are already retired, want to retire upon closing or want to transition to retirement over a period of years. We can provide owners with complete or partial liquidity while ensuring that current management will continue to run the business.

Companies Pursuing Strategic Initiatives

Companies that could benefit from a financial partner as they pursue strategic acquisitions, expand operations or otherwise capitalize on new market opportunities.

Corporate Spin-Off

Regardless of the economic environment, corporations regularly label independent businesses as “non-core.” Orphaned divisions are often ignored strategically, redirecting strong cash flows to poor performing corporate affiliates. We partner with existing management to acquire such divisions, assist in establishing stand-alone corporate services where needed and, if necessary, locate a seasoned CEO. Once separated from corporate bureaucracies, these businesses can thrive as independent entities when provided with appropriate capital resources.

Under-Performing Companies

Companies requiring capital and/or additional management expertise to address operating and strategic issues relating to the dynamics of a growing consolidating, mature or otherwise changing industry.

Recapitalization of a Private Company

We understand that most successful entrepreneurs will accumulate an increasing percentage of their personal net worth in their business. Access to such wealth can often be limited by annual distributions subject to unpredictable economic climates, regulatory guidelines and commitment of personal assets to provide the business with credit support. In making a decision to recapitalize their business, owners balance the desire for liquidity in estate planning against the loss of operational control. We can structure a transaction, which allows a business owner to achieve personal liquidity and retain operational autonomy-getting the best of both worlds.

Family Succession Transaction

We will partner with family members to purchase ownership positions held by other active or inactive family members or outside shareholders.

Financial Restructuring

Companies burdened by financial issues such as insufficient liquidity, excessive debt, or operating in default of obligations to creditors.

Industry Buy & Build

Aldrich Capital provides both companies and management teams with the necessary growth capital and resources to successfully execute market consolidation strategies. We seek to acquire or recapitalize businesses that serve as the foundation for such strategies. Thereafter, we assist management in acquiring industry participants in order to capitalize on the economic value created by resolving market inefficiencies common in fragmented supply chains. At least one senior partner from our team will actively work with the platform’s CEO in identifying, negotiating and structuring a series of transactions and credit facilities to execute corporate development initiatives.

In all cases, transactions are structured so that management retains responsibility for day-to-day operations and has the opportunity to receive significant equity incentives.

Value Investing

Value-focused investing has been and will remain an important dimension of Aldrich’s overall investment strategy. Aldrich’s strategy is to acquire platform companies in the firm’s primary areas of expertise and subsequently use these companies to transform itself from a financial investor to a strategic investor. The firm’s principals work closely with the management teams of its portfolio companies to execute restructurings, design and implement programs to reduce costs and increase productivity and quality, and to consolidate companies within the same market sectors so as to take advantage of economies of scale, cross-selling, and similar value creation opportunities.

Aldrich’s investment philosophy allows it to effectively target undervalued divisions of public companies and financially constrained companies with one or more of the following characteristics:

  • Achievable and sustainable cash flow
  • Strong brands
  • Powerful intellectual property
  • Highly skilled work forces
  • Proven management teams with equity interests in their companies
  • Well-developed business strategies
  • Significant market share or a defensible niche with meaningful growth potential

We seek defensible businesses faced with operational, financial or ownership problems that we can identify and solve. Typically, these businesses maintain a strong underlying brand, franchise or market position or they provide value-added products or services to a blue chip customer base. We are particularly attracted to companies that offer significant opportunities to improve operating costs and markets that face substantial business change, foreign competition or industry consolidation.

We work closely with management to develop and implement a robust program to improve cash flow and profitability before consummating an Aldrich acquisition. These programs often include one or more of the following initiatives:

  • Building trade credit and improving working capital management
  • Consolidating sales, purchasing and office functions
  • Consolidating suppliers and improving purchasing terms
  • Consolidating operations, production facilities or product lines
  • Evaluating and upgrading management and supervisory resources
  • Renegotiating labor agreements to reduce labor costs
  • Implementing cost accounting tools to revise pricing and product mix
  • Executing high-return capital expenditure or expansion projects
  • Implementing employee success sharing programs
  • Upgrading employee safety and quality control systems
  • Implementing new sourcing, manufacturing and sales strategies

We will own portfolio companies as long as we can add value through business improvement or strategic acquisitions – a period that can range from two to ten years.