We are patient investors, and will invest in companies where we can increase the company’s value and performance through actively applying our skills and capital over a long-term horizon. We will consider underperforming businesses as well as those aiming to achieve rapid profitable expansion.
Our plan is to build a small number of diversified industry groupings over time, spreading investment risk. We will achieve this by progressively developing industry verticals around a platform company, through organic growth and bolt-on acquisitions.
We will generally acquire companies with moderate leverage. Our focus is on earnings growth rather than multiple arbitrage or excess leverage, with our key decision criteria being future value creation for the business.
As our founders have done in the past, Sale Street will create a culture that fosters the values that we believe are key to the success of any business: hard work, common sense, integrity and stewardship.
We are seeking to invest in New Zealand-based businesses with a diversified customer base and tangible, competitive products or services, and where we can add value through capturing growth opportunities or improving performance. These businesses may be privately or publicly owned.
We will consider businesses within an enterprise value range of $10 – $50 million as well as smaller businesses that can be ‘bolted on’ to our portfolio companies.
Our founders have a demonstrated track record in buying well. We conduct rigorous due diligence to ensure our investment criteria are met, to identify future growth and improvement opportunities, and to evaluate risk and future threats. We have a strong track record in business turnarounds, and will actively seek out companies which are not performing to their full potential.
As a rule, Sale Street does not target companies which rely on cyclical commodity prices or high repeat capex investment; traditional (‘bricks and mortar’) retail businesses; unproven technology; infrastructure or property businesses; or venture capital.
We target sectors with a robust industry structure and draw on the extensive cross-sector experience of our founders in determining which sectors we will (and won’t) invest in. Sectors of particular interest include:
- building materials
- consumer products and services
- industrial services
- niche manufacturing
- value-added distribution
We create value by investing in businesses we can grow and improve, then working with those businesses to enable expansion and achieve their potential.
- Planning and strategy execution;
- Investing to enable organic growth;
- Further acquisitions to build scale;
- Leadership and talent development;
- Driving operational improvement and margin expansion; and/or
- Restructuring and/or amalgamation with other businesses in the portfolio.
We think of this as ‘constructive capital’. There are many businesses that operate in attractive sectors but which lack entrepreneurial drive, business development competence, leadership capability, succession options or access to sufficient capital to make a game-changing investment.
We believe our success is ultimately determined by how we allocate capital and talent. With a focus on earnings growth rather than financial engineering, future value creation is the key criteria in our investment decision-making.
We take a long-term investment approach and will work with our portfolio companies to unlock value and achieve their potential over time. The decision to divest will occur when we believe a business has either reached its potential and/or has greater value for another owner.
This will enable capital to be released and better invested elsewhere, generating greater future value for our investors.