Investment Focus
Company Characteristics
Imperial Capital applies rigorous investment criteria to select well-managed, mid-market candidates for acquisition. These companies often serve as platforms for future growth in the target industry. We will consider acquiring private companies outright, management buy-out opportunities, take-private opportunities, leveraged recapitalizations and other structures that meet the goals of our stakeholders.
Our preferred criteria for potential acquisitions include:
| Company Attribute | Target Characteristics | Comment |
| Profitability | Above average | Excellent historical financial performance with EBITDA margins greater than 10%, and ability to consistently generate strong free cash flow |
| Sustainable Competitive Advantage | Clearly identifiable and defensible |
Examples include intellectual property, proprietary technology, processes and/or service expertise, strong relationships with customers, low cost production, protected markets due to regulation or geographic concentration, strong brands/trade names, excellent distribution capability, strong sales network and/or superior marketing expertise |
| Product/Service Quality | Higher | Proven ability to deliver relatively higher quality products/services versus its competitors |
| Management | Proven track record | Experienced management team with a proven track record and interests aligned with ICG. If required, ICG will arrange for the participation of a senior executive with an excellent track record in the industry from outside the company. |
| Size | Sufficient scale | Company with revenue greater than $50 million and EBITDA greater than $5 million in order to be a platform for growth within its industry |
| Market Share | Reasonable market share | High market share in specific geographic or product/service markets |
| Growth | Reasonable growth prospects | Reasonable organic growth (i.e. 5% +) |
| Cost of Growth | Good operating leverage | Reasonable investment in working capital and capital expenditures per dollar of new revenue (and/or available capacity), with low deferred capital expenditures |
| Customer Relationship & Concentration | Diversified, strong relationships | Diversified customer base with history of strong customer relationships, high retention, and recurring demand |
| Pricing Power | Moderate to strong | Business should be able to pass along input price increases and protect margins |
| Business Practices | Professional | Professional, ethical, with low levels of litigation |
| Liquidity Options | Multiple options for liquidity | Company must be potentially attractive to public markets, a strategic buyer and/or private equity firms |
