Our selection process centers on the following issues:

Strong, Growing Cash Flow

We will consider IT, manufacturing, service or distribution businesses in most industries. Generally, we will not pursue retailers or companies in the biotech, construction or construction-related, real estate, or insurance and banking industries. The most attractive candidates will have identifiable growth prospects and clear competitive advantages. The competitive edge may be based on product, cost, market, service or management strengths. We look for situations where manager owners are looking to partially reduce their risk profile, but believe in the future of the business. In our typically proposal manager owners will own a 25% to 49% interest in the post transaction company. We believe this allows committed manager owners to achieve partial liquidity while having a second-bite of the apple. We are seeking a true partnership with manager owners. The business should have a track record of relative earnings stability. If the existing owner leaves, an existing employee should be capable of managing the business on a day-to-day basis.

Clear Business Model

We look for long-term goals that are based on well-defined business models and quantifiable revenue streams. In addition, we consider the management team's ability to set long term business targets. We do not frown on companies that have a clear objective of eventually arranging a trade sale in their industry, rather than an initial public offering, because we know that a public offering is not likely for every company.

Strong Business Fundamentals

The opportunity should be in a large market characterized by rapid, high-growth. A company's products or services should be proprietary, providing early competitive barriers to entry.

Management Team

No company can succeed without a committed and cooperative management team. We expect each of our portfolio companies to have a core group of managers with operational experience and detailed knowledge of their market opportunity - including a thorough understanding of their competitors. We also know that good teams need to grow, which is why we put considerable effort into helping companies recruit new talent.

Barriers to Entry

Successful companies need to identify the unique elements that give them a sustainable advantage over existing and potential competitors. We consider the barriers to entry that will prevent rival companies from offering something similar.

Market Size

We expect our portfolio companies to target a large potential market, giving us the opportunity to estimate the market share required for the company to achieve its goals. A company's management must understand the market deeply enough to know the market trends that may help or hinder their plans.

Customer Benefits

With every investment, we look for a clear value proposition that outlines how the company will offer its customers a product or service that is unavailable elsewhere. There needs to be an identifiable customer benefit that competitors do not address in the same way.

No Negative Surprises

We want to know a company's weaknesses as well as its strengths. When the time comes to consider an investment, we look through every detail of a company's operations and its history. Our portfolio companies have to let us know about any previous failings, to ensure we can work to surmount any problems.

Teamwork

In the end, we can only succeed if we build effective relationships with the entrepreneurs and managers who lead our portfolio companies. We support individuals that can work with us over many years, in a spirit of respect and dedication.

Capital Requirements

All potential investments should be based upon reasonable projections of financial performance. Additional capital requirements, both from equity and debt, or through generation of internal positive cash flow, are analyzed to contemplate and plan an orderly capital formation process.

Exit Strategy

Private companies, which expect to show rapid growth in sales and earnings, demonstrate superior management capability and possess the opportunity for above-average profitability.

We welcome complex transactions and turnarounds. We are not dissuaded by difficulty - rather we see it as an opportunity. Our contribution is that we are prepared to make the necessary effort to evaluate a proposed transaction using our wide skill base and industrial experience. A motivated management team makes a vital difference in these more challenging situations - we can help assemble the team when necessary. We like to back excellent managers.

For investments overseas, we carefully consider the underlying economic and political stability of the relevant countries, preferring countries with sound and freely traded currency, access to global capital markets, an established system of laws and contracts.