Principal Investments
LHV invests in small and middle market companies with growth potential. We select our investments carefully because we know we are making a long-term commitment. We focus on equity returns through patient ownership opportunities and have a somewhat different approach to our equity returns—we are primarily interested in predictable, cash yields on our invested capital.
We concentrate heavily on the management team—their talent, values, energy and integrity—and make certain they share our “operate and hold” approach. We believe this approach creates long-term financial alignment between proven operators and patient owners and it removes the constraints and conflicts of interest which are often associated with an institutional fund.
We invest in select companies in partnership with an existing management team to finance the growth or expansion of an interesting business—either organically or through acquisition. Acquisitions are sometimes family-owned or closely held businesses where an owner is seeking partial liquidity—sometimes as part of a management succession plan, generational transition or for estate planning purposes.
Our investment interests are broad and we have considerable flexibility in how we structure our investments and recognize that each partnership has unique requirements. We are a proven resource to management teams, providing strategic, operational and financial insights, as well as solutions to challenges as businesses naturally transition to different stages of development. Our sole focus has always remained the same: we help management teams grow and improve their businesses over time.
We review investment opportunities in many different industries, but we are attracted to stable businesses in growing markets which can be grown by responsible management teams.
We are primarily interested in situations which have the following characteristics:
- Management teams with successful industry operating experience;
- Management teams who have a desire to grow their business;
- Industries or companies which are perceived to be out of favor;
- A business model with an established product or service;
- Recurring revenues or loyal customer bases;
- Low capital intensity;
- $1 to $5 million of historical EBITDA; and
- Operations primarily in the Pacific Northwest
Our capital comes from trusted relationships we have developed over the years and, most importantly, ourselves. We typically invest in our selected companies and are believers in “aligned” financial interests. Our management teams and owners all share in the future cash flows we create together.
In addition to our ability to assess people and analyze companies carefully, our success is in large part due to our ability to understand the personal, emotional, strategic and financial needs of all parties in a transaction and to structure investments so all parties are appropriately aligned and incented from the outset.