The Fund's investment focus is on providing private equity capital to profitable lower-middle-market manufacturing, distribution and, in some cases, service companies in the Southwest. Typically the Fund finances change of control, recapitalization and later-stage growth transactions of low or non-technology businesses having unusual growth and value creation opportunities. This focus allows the Fund to better address factors unique to "basic businesses", as opposed to high technology businesses with perceived hyper-growth opportunities preferred by most venture capitalists.
The Fund prefers to operate as either lead or sole investor, but will also co-invest with other private equity firms.



Types of Transactions Financed

IBCF is interested in financing change of control, recapitalization and later-stage growth transactions for established and successful lower-middle-market businesses. Change of control transactions entail the acquisition of an existing business, usually as a spin-off of a division or business unit from a parent organization, or, a family-owned business being sold for liquidity or estate planning reasons. Recapitalization transactions can involve the raising of debt and equity in order to provide partial liquidity to business owners or further strengthen a company's balance sheet. Later-stage financings provide equity capital to continue, or accelerate, growth, including the facilitation of "add-on" business or product acquisitions.


Management

The most important aspect of successful private equity investing is the quality of the operating management team. We, therefore, seek to partner with mature, experienced and competent management teams with dedication, integrity, substantial accomplishments and proven records of success.

Financial Parameters

Generally, the Fund seeks to invest in companies reporting revenues of $10 to $50 million and adjusted free cash flow greater than $1 million per annum. There should be a history of consistent, non-cyclical earnings and sufficient tangible assets to support reasonable amounts of senior debt. Transaction values, generally, will not exceed $25 million with equity requirements of $10 million or less. In the case of later-stage growth financings, revenues may be as low as $5 million and operating results at breakeven.

The Fund's investment limit is $4.6 million per company although initial investments of $1.5 to $3 million are preferred. In rare situations, smaller investments may be considered. For larger equity requirements, the Fund will arrange other equity investors.

Products & Industry

The Fund seeks to invest in profitable manufacturing, distribution, or in some cases, service businesses. There is no interest in "high tech", "turnaround" or "project" financings. Products need to be innovative, if not proprietary, address niche markets, and not be subject to rapid technological obsolescence nor require substantial R&D expenditures. Industries and markets should not be cyclical in nature and should afford reasonable prospects for modest steady growth.

Equity Ownership

The Fund will work to negotiate an equity position that is fair to all parties based upon company value, management's financial commitment, and the Fund's investment, return on investment goals and perceived risk in the transaction. It is necessary that management own a meaningful amount of equity, preferably through invested capital. In most cases, performance-based stock options will also be appropriate.







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