Capstone Partners seeks to create substantial enterprise value in its direct portfolio investments by entering into a partnership with very talented management teams. Capstone Partners is a value-added investor to companies with strong management teams where the Capstone Fund provides capital resources, financial expertise, and strategic advisements to assist management in the execution of its corporate strategy.
Management:
Capstone Partners seeks to invest in companies with experienced, promising, bright and energetic management teams who have displayed sound business decisions in the past and possess the leadership skills and vision to achieve their objectives in the future. Capstone Partners expects management to have a significant equity stake in the company, and prefers to invest in companies owned by a combination of sophisticated outside investors and management.
Cash Flow:
Capstone Partners seeks to invest in subordinated-debt debentures with detachable warrants and preferred stock with current dividend plus equity participation rights. The company typically possesses double-digit operating margins, and established cash flows and significant potential for high revenue and earnings growth. The company should demonstrate the ability to sustain either interest payments or dividend payments from operations on the securities purchased by the Capstone Fund.
Sustainable Market Strength:
Capstone Partners seeks to invest in companies with sustainable market strength and competitive advantages due to factors such as proprietary products and services, market leadership, strategic positioning, readily identifiable barriers to entry, and operation efficiencies. A company will typically have at least $10 Million in revenues and a minimum of $1 Million in earnings with expected revenue growth in excess of 10-15% per year. We like companies with total enterprise values in a range between $10.0 and $50.0 million.
Exit Strategy:
Capstone Partners expects to exit investments over a 18 to 36 month period through the retirement of principal and repurchase of common stock, repurchase of the investment by the company, the sale of the company, or public offering.
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