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We are data and operationally focused investors. Our acquisition playbook enables us to quickly determine if a target can be realistically scaled to achieved the desired cashflow and profitability. If a company passes the initial screening, we move to a formal diligence phase which includes tapping our talent bench to identify the right CEO who partners with us to formulate and stress test a growth thesis. This ensures that the new CEO is ready to hit the ground running post close.
We believe that private equity is a people business first and foremost. Human capital is the single most important driver of company performance. When credit environments are tight and multiples are shrinking, diverse A-talent can be a competitive advantage. Data shows that companies with ethnically diverse leadership team have 36% higher EBIT than those without. In the same manner, companies with gender-diverse leadership team see a 25% bump in EBIT. 514 Equity Group maintains a proprietary pipeline of diverse talent.
Long term investor and growth pioneer Philip Fisher has been quoted as saying that the best time to sell an asset is ‘almost never’. While we don’t say that we will never sell a portfolio company, we do believe that holding a company for longer than the 4 – 5 years of a traditional PE firm promotes maximum compounding impact.
We make buyout investments in lower middle to middle market companies in Business/Government/Education services, Consumer/Business Staples, Embedded Technology, and Transportation/Logistics. We use our analytics platform and market research to stress test what would have to be true for a company to generate a minimum 15% - 20% IRR over 10 – 12 years.
Our history and data show that profitable growth hinges on focusing on 5 critical attributes:
• People—A-Talent in critical positions and a company culture where growth thrives.
• Strategy—a plan for growing the company and dominating the market.
• Processes—to help execute and align the entire company.
• Cash—to continue growing and scaling the business.
• Analytics—for broad visibility to and management of all the above.
Collectively, these constitute the 514 Way â„¢ for growing a business.