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Buyouts
Traditional
buyouts involve the acquisition of a privately held company, a division
or subsidiary of a public company or, occasionally, a public company.
An attractive buyout candidate should offer the opportunity for
earnings enhancement through improved operations and follow on acquisitions.
Typically, targets have strong cash flows and market position, although
Saugatuck will consider investments in troubled companies due to
excessive leverage, ineffective management, or misdirected business
strategy. Buyouts range from $15 million to $200 million in purchase
price.
Consolidations
Saugatuck has successfully deployed a "core company" strategy in
the past to take advantage of fragmented industries in which the
consolidation of smaller companies into a larger company can provide
an attractive return on capital. In this process, we form a holding
company in conjunction with a management team and look to find a
suitable initial acquisition. Subsequently, additional businesses
are purchased which increase revenues, provide operating and financial
leverage, and add value to the investment. Typically a "core
company" takes advantage of a better technology, proprietary
process, or low-cost position.
Growth Equity Investments
Many
middle market companies have difficulty in tapping the public equity
markets or gaining access to bank debt which constrains their growth.
Saugatuck identifies companies in this position that meet our investment
criteria and makes growth equity investments. Although usually Saugatuck
is a minority investor, we are frequently the largest institutional
investor and exercise significant influence over the direction of
the company. In addition to capital, Saugatuck provides these portfolio
companies with access to resources and expertise often unavailable
to small middle market companies.
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