Investment Strategy

Our Focus

SNH Capital Partners focuses on making investments in companies that have up to $75 million of annual EBITDA. Our strategy focuses on the following investment criteria:

  • High-quality, predictable revenue with low customer concentration
  • Strong business criticality
  • Control of key success factors to deliver greater margin efficiencies
  • Considerations made for investments in organic and inorganic growth
  • Operate in proven industries less vulnerable to disruption risk

Our investment strategy rests on two principles. First, invest in high-quality, top-performing businesses. Second, rely on the expertise of the founders of those businesses. A majority of SNH investments come from partnering directly with founders and executive teams that have run and owned their businesses for decades, many of whom choose to stay on and provide continuity of leadership for the company.

As a buyer of choice, SNH reviews hundreds of companies annually for potential investment. The combined quality and quantity of investment opportunities examined by SNH professionals has been the cornerstone of our proprietary sourcing approach and is attributable to:

  • Ongoing industry participation and current delivery of strong proprietary deals
  • Extensive investment network – SNH enjoys extensive industry contacts through our network of portfolio companies and the comprehensive experience of our investment professionals
  • Reputation for integrity and excellence – Because of our longstanding reputation within the business community, potential partners often approach SNH directly presenting proprietary investment opportunities.

SNH uses a conservative capital structure that it expects to allow the company to invest for growth long-term and to provide the company safety when difficult economic conditions arrive. By contrast, private equity firms often place considerable debt on a company during a transaction, which increases the risk of bankruptcy or restructuring. For our partners who continue to maintain equity in the companies they have built, this is often their most valuable asset. By partnering with SNH, our founders and executives enjoy increased protection on their most valuable asset.

The focus at SNH is long-term value creation. We prefer to hold our companies indefinitely. In contrast, many investors have a three to five year exit horizon, forcing a focus on short-term gains. Investments that may take a little more time but have great value creation simply don’t fit in that model.  At SNH, we make purely rational investment decisions and support our founders to do the same.

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SNH’s UNIQUE SOURCE OF CAPITAL

Long-Term Capital Advantages

  • Ability to compound returns with long-dated hold strategy
  • A conservative approach to debt usage, ensuring a low-risk approach to the enterprise
  • Freedom from artificial exit horizons
  • Patient capital approach paired with long-term thinking and strategy
  • Long-dated investments allowing true partnership with best-in-class management
  • Supplement resources with high-powered in-house strategy and transformation team to develop, enhance and implement our rigorous operating model
  • Focus on EBITDA growth through operational excellence and reinvestment strategy

AN ATTRACTIVE MODEL FOR LONG-TERM PARTNERSHIP

OUR MODEL ALLOWS US TO PARTNER WITH THE BEST EXECUTIVE MANAGEMENT TEAMS OVER THE LONG-TERM

Traditional Private Equity Model

  • Closed-end, fixed-life fund structure
  • Requires owners to sell excellent businesses while they still have upside and growth potential
  • Tremendous churn generated as companies must be sold to return capital; a new fund must be raised and capital invested again
  • Prioritizes initiatives that offer the promise of immediate impact
  • Sell quickly to generate returns
  • Risk of overleverage can limit growth opportunities

SNH Capital Partners’ Approach

  • Identify near-and long-term initiatives to grow companies and platforms
  • Low risk with a conservative approach to leverage
  • Deliberate investing – ability to select the best, solidly-performing companies
  • Freedom to take advantage of all upside and growth potential in a given investment
  • Keep and add on to strong businesses to generate cash flow
  • Principal preservation enhanced
  • Achieve returns through compounding free cash flow
  • Support executive management teams to continue running their businesses

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