Investment philosophy:

Oakstone’s philosophy is to create long-term, collaborative relationships with owners and management teams of profitable, privately-held lower middle market companies. These relationships are built on a foundation of experience, trust and integrity. As entrepreneurs ourselves, we appreciate the challenges of growing a small business. We seek to understand the fundamentals of a business, identify opportunities for value creation, then work hand-in-glove with management on the implementation and execution of a mutually-agreed upon growth plan, providing ongoing support and guidance during the value-creation process.  Unlike most private equity investors, Oakstone’s process is not dictated by a Fund model where capital is provided by outside investors expecting an exit in a pre-determined timeframe.  There are no time constraints on our hold periods and we prefer to own a solidly performing, growing company rather than sell it.  We are largely investing our own capital but will opportunistically consider inviting a like-minded co-investor to participate in a transaction when appropriate.

Investment Criteria

We seek established, lower middle market companies with strong market positions and/or historical financial performance. We look for companies with revenues up to $25 million, EBITDA between $1 and $5 million and enterprise values typically between $5 and $25 million.

Company Attributes

In reviewing potential investment opportunities, we focus on companies with some combination of the following attributes:

  • Lower middle market companies with strong operating margins and solid market share in their specific industry
  • Predictable earnings, limited seasonality and resiliency throughout the business cycle
  • Potential for achieving significant annual earnings growth through a combination of revenue growth (product and channel expansion) and improvement of sub-optimal processes (production, sales and systems)
  • While we have concentrated our current holdings in manufacturing and distribution, we are open to reviewing opportunities in other sectors to see how they may fit into our organization

Integration Strategy

As a lead, majority investor, Oakstone’s primary objectives are:

  • To keep proven, competent management in place or add key people as needed to assist the company with growth objectives
  • To provide the necessary resources to grow company value
  • To be unconstrained by overly specific investment parameters or a lengthy approval process

Oakstone has the flexibility and size to make decisions and structure transactions quickly and efficiently.