We have three overriding objectives when investing in a company:

  • To provide ample capital, intellectual resources, as well as time for the investment to reach its full potential;
  • To assist the management team in growing the business and making it as valuable as possible and
  • To prepare and conduct the exit in a value and liquidity maximizing way

 

Our initial investments occur through secondary purchases – when some shareholders seek an “early” exit. These so-called direct secondaries – in short “Directs” – transactions have taken off since early 2000 as exit markets remained closed for all but the finest portfolio companies. Today, Directs are commonplace as investors seek to proactively manage their holdings and reallocate resources, in part also forced by decreasing funds and tax and regulatory regime changes. The downside of these early departures for the portfolio companies, in terms of business, financial and reputational damage, if left unmanaged, can be significant.

Our funds are among the preeminent investors in Directs transactions worldwide. By providing a customized, timely and confidential solution to replacing a selling shareholder, we bring liquidity to an illiquid market and fill a key place in the value-chain.

For portfolio companies, our investment has multiple benefits:

  • Most fundamentally, we fill a funding gap left by the seller – and can even lead future rounds with above pro-rata commitments, especially in the not unlikely event that the remaining syndicate will pull back eventually.
  • We often solve deeper issues inside a syndicate, e.g. by removing a dissident shareholder that has impeded growth but, for various reasons, was off limits for the remaining syndicate.
  • We nearly always serve as a catalyst for renewed growth, value creation and exit focus.
  • We are an experienced and resourceful investor and board member and add a set of skills that are complementary.
  • We always partner with management and syndicate to streamline decision-making and focus on raising the value of the underlying business.

 

Our reputation is all about being straightforward and trustworthy, and our track record and references prove it.

The companies we invest in typically have the following attributes:

  • High-quality businesses in late-stage, growth equity or the lower-end of the middle-market.
  • Meaningful business size and maturity, with solid revenue momentum (> €10m revenue) and a strong market position.
  • Profitability or at least clear path to profitability.
  • Clear potential exit routes.
  • Operating in growth markets with scale, e.g. TMT (IT, Semiconductors, Communication, Digital & Media) as well as Cleantech and Medical Technology.
  • Strong management teams with the vision and skill-set to create value.
  • Headquarters in Europe, Israel or North America.

 

Our typical investment is:

  • €2-6m per company – and more if the business allows it.
  • Focused on significant minority stakes between 10-35% ownership.  Smaller stakes in strong assets are also possible.
  • Through secondary purchases but also in new-money, often “stapled” transaction structures.
  • Expressly also in special situations that may require a rapid commitment.

 

Once invested, we expressly support primary fundings as well as recapitalizations as the business matures. We may further serve as a buyer, over time, of shares from founders, angels and others as these early investors may seek liquidity in the absence of a final exit.

Directs have become commonplace but, despite their obvious benefits, many deals still suffer from failure, causing management distraction and oftentimes loss of company-privileged information. Portfolio companies can avoid this by coordinating seller efforts and scrutinizing prospective buyers for their transactional know-how and likely contribution post-investment.

We engage management teams in potential transactions early on to ensure the least disruptive due diligence effort. We are experts at doing Directs worldwide and have often helped companies and sellers alike achieve better, more favorable deals – well beyond a seller’s goal of a timely exit and a portfolio company’s desire for replacement capital.

Our multinational team speaks, quite literally, the language of our portfolio companies and can execute a due diligence program that yields timely decisions and firm commitments in the shortest possible time-frame.

Post-investment, aside from ample capital, we are uniquely experienced in working with management to attract further talent, set incentive programs or plan and execute corporate development initiatives. We also often serve as senior advisor when it is time to prepare or execute financing or M&A transactions, an area of expertise that is much sought after by most management teams and boards.

In doing all this, as a matter of principle, we always partner with management and work with – not against – our fellow stakeholders.