Buyouts
Our Criteria
In our buyout portfolio, we invest in two types of opportunities:
- Category leaders, preferably vertical SaaS, that we own and operate
- Search funds that have identified a target acquisition with recent MBA graduates
Financial Profile
- At least $2M in recurring revenue (majority subscription based)
- History of profitability (at least 10% operating margins)
- Preference for high gross margins (70%+)
- Revenue growth rate at least flat
- U.S. based Fortune 500 customers
- At least 95% gross retention and 110% net retention
Business Profile
- Generally founder run
- Preference for 5+ years operating history
- Operate in large, growing markets
- Have a cost advantage vs. peers
- Founders have a special approach to the market and are able to recruit others
- Disciplined unit economics
Search Fund Criteria
- Invest at time of transaction
- Geographically flexible, preference for Harvard, Wharton, and Stanford grads
- Preferably technology companies
Preferred Verticals
Payroll software, accounting/tax software, CRM, healthcare insurance, tax collection or lien sale software, HCM (learning, talent management, recruiting), sales tax software, workflow automation, CAD/CAM design, procurement software, financial planning software, rating agencies (credit or otherwise), utility management software
Financial Attributes We Look For
- Negative working capital
- Majority subscription revenue
- 95%+ gross retention
- LTV/CAC of 4x+
- 70%+ gross margin
- History of $500k+ EBITDA profitability
- Survival through downturns
- Diversified customer base