As an operationally-focused private equity firm with over 70 years of cumulative investing experience, The Anderson Group has successfully deployed its unique investment style across a wide variety of transactions spanning numerous industries. The Anderson Group seeks to leverage its extensive operational experience to partner with management to build long-term value.
Because we are investing a pool of our own committed equity capital and are not an institutional fund, we are able to consider many transactions that other firms may not. The hallmark of The Anderson Group is flexibility. We often are able to get comfortable with business risks that other firms may not such as customer concentration, diminishing industries and a lack of visibility on an exit sale.
Below are several general criteria for all of The Anderson Group’s investments.
- Revenues from $10M to $100M for platform investments (no limitation for add-ons).
- EBITDA between $1M to $8M for platform investments (no limitation for add-ons).
- No minimum EBITDA in restructuring situations where we can effect improvements in profitability.
- We require voting control of our portfolio businesses.
- Do not need management in place, but have a strong willingness to partner with incumbent management if possible.
- Industry agnostic; however, there are some industries we tend to avoid (see “Transactions We Tend To Avoid” below).
- Headquartered in the United States for new platform investments, although our businesses can have significant operations internationally. For example, we have extensive experience operating in and sourcing from Asia, South America and Eastern Europe. We will entertain add-on investment opportunities that are headquartered outside of the United States.
The Anderson Group invests in a wide variety of situations where companies can leverage our extensive operating and transaction experience to effect profitability improvement in our portfolio companies. Although we tend to be opportunistic, only investing in situations where we can add true value, our new platform investments generally fall into one of the following situations:
The Anderson Group will invest in performing businesses, but only those where we feel that a target company can partner with us to leverage our operational and strategic resources to significantly expand their business. For performing businesses we are only attracted to those situations where current ownership or management is interested in partnering with The Anderson Group and retaining a significant equity stake in the business going forward (excess of 30%). These companies, although performing well, typically are in need of operational or strategic assistance in one form or another. We are not interested in optimized businesses where profitability has expanded significantly over the past few years or where current ownership or management is primarily interested in cashing out. Generally, our investments in performing businesses take one of the following forms:
- Recapitalizations – Often ownership of a well-run business at the lower end of the middle market have a substantial portion of their net worth tied up in the business. These owners often seek to gain liquidity and asset diversification for their personal portfolios while simultaneously retaining a significant equity stake in the companies they have built. In these situations, The Anderson Group is typically able to structure a transaction where the selling shareholders/ management can retain a larger ownership percentage than what other private equity firms can offer.
- Generational Sales – Family-owned businesses where the existing generation of ownership desires to sell a portion of their business for liquidity or estate reasons but would like to preserve family continuity in management and/ or ownership of the business post transaction.
- Cash Flow Transactions – Transactions where ownership either does not want to enter the private equity cycle whereby their business will have to be re-sold every 3-5 years or where the company, either by its nature or its industry, does not have a definable exit sale strategy. In this type of transaction, The Anderson Group’s unique position as an investor of its own private capital enables us to invest in partnership with management for the long-term. In these situations, we rely on the cash flow of the business, not exit sales, to support our investment.
Due to our extensive operating experience and our business model, The Anderson Group has been highly successful investing in turnaround situations at the lower end of the middle market. Whether the transaction is an out of court restructuring, a 363 sale, the sponsorship of a reorganization plan or simply an investment in an underperforming company, The Anderson Group is committed to working with the business to restore profitability and create value for the debt and equity holders, employees, customers and other stakeholders of the business. In addition to those criteria listed above, The Anderson Group generally seeks the following characteristics in turnaround investments.
- Demonstrable explanation for corporate underperformance. Examples include failed acquisitions, poor business decisions, industry cyclicality, an over-leveraged balance sheet and excessive legacy costs.
- Compelling path to profitability.
- Revenues in excess of $20M.
Add-on investments to existing portfolio companies need not fit into one of the above categories, rather add-on investments need only be compelling strategic fits with existing portfolio investments.
Special Situation Investments
The Anderson Group seeks to leverage our unique business model whereby we invest our own capital and are committed to add operational value to our portfolio companies by investing in the following situations which many other financial or strategic acquirers may avoid:
- Corporate Orphans – Smaller divisions of larger companies that have suffered from a lack of attention and resources.
- Companies with Customer Concentration – Companies where other potential acquirers may shy away from investing due to concentration with one customer or a single, non-desirous customer type. So long as we believe that a company is marketing a compelling product or maintains a specific market niche, we are interested investors.
- Out-of-Favor Industries – Many investors avoid some industries due to timing in an economic cycle, headline risk or unfavorable industry dynamics. So long as we believe that a company is marketing a compelling product or maintains a specific market niche, we are interested investors.
- Companies with Unique Environmental, Union or Other Problems – The Anderson Group is very experienced with investing in situations where a company is suffering from unfavorable union dynamics, environmental concerns or other unique issues. So long as we can quantify these problems and ascertain a methodology to mitigate their risk, we are open to investing in these situations.
Transactions We Tend To Avoid
The Anderson Group does not generally invest in businesses that do not possess a significant operating history. Thus, we tend to avoid start-up, venture capital or “re-start” transactions and do not generally invest in technology, natural resources, healthcare, restaurants or retail businesses. Given our investment strategy, we also tend to avoid companies with ”hockey stick” financial performance leading up to a proposed sale. Finally, The Anderson Group does not consider transactions whereby we do not have voting control or where the business is headquartered outside of the United States.