Types of Businesses
Family or Individually-Owned Companies in Transition
Businesses whose growth may have slowed as successful owners became risk-averse over time or slowly withdrew from the day-to-day operations of the company. After years of experience, senior principals may seek retirement, a transition to the younger generation may have failed, key executives may become ill or emotional discord between family members may be dwarfing returns or resulting in stagnancy or deadlock.
Businesses held by large corporations that typically lack focus and direction from corporate headquarters.
Stranded Public Companies
Businesses whose market capitalization is less than $1 billion with their stock trading in a narrow range and with little correlation to earnings. Compounded by low trading volume and no analyst coverage, there is little liquidity for shareholders. The expense of compliance with SEC regulations often disproportionately burdens smaller public companies. A “going-private” transaction provides the shareholders with the liquidity they desire and frees management to concentrate on long-term growth rather than short-term stock market fluctuations.
Non-Optimized Private Equity Owned Companies
Often the result of takeovers by buyout firms that have little operating experience. Due to this lack of oversight experience, these portfolio companies may not be optimized in good times and they may be beset with significant valuation write-downs in bad economic times.
Companies with Misperceived Imperfections
Companies that are many times overlooked by most private equity firms who have moved towards what they perceive as safer, cleaner and easier deals. If a company has a perceived imperfection or cannot be easily understood from its financial statements, larger equity firms with limited investment criteria will quickly reject it and move on. Red Pine has the flexibility and expertise to look underneath the surface and take on the challenge.
Businesses undergoing recapitalizations inside or outside of the bankruptcy provide an opportunity for Red Pine to work with the company’s board of directors or creditors’ committee in order to have maximum influence over the restructuring process and secure corporate ownership and control for Red Pine’s investors.
Companies with first rate human capital that do not have the access or ability to raise funds necessary to advance the overarching goals of the company and its principals.
Once a company has been acquired, in order to add value and to help transition the business into a more efficient and professionally managed structure, Red Pine typically augments the management team with Red Pine representatives during the critical transition period. In almost all instances, Red Pine places one or more experienced operating executives with relevant industry or functional experience on the board of each portfolio company. One or more of these individuals may have been involved in sourcing the transaction or assisting Red Pine in conducting due diligence prior to making the acquisition. These individuals provide strategic oversight, technical support and detailed reporting during Red Pine’s hold period.