Philosophy

Buyouts & Recapitalizations

Traditional buyouts and recapitalizations involve the acquisition of a privately held company, a division or subsidiary of a public company or, occasionally, a public company. An attractive buyout or recapitalization 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.