Investment Criteria Overview

Kestrel-Capital-Group-Investment-Criteria-ImageWith an intended period of involvement that is most often indefinite, fit amongst the people with us, our approach, and our stakeholders is the most important component of what we look for in an opportunity. Simply put, we strive to work with people and teams we like and trust, and who like and trust us.

Types of Transactions & Ongoing Management Involvement

Most of our transactions result in a change of control, with former owners securing full or at least significant liquidity. We ensure additional capital is available to support the growth of the business while also maintaining ample access to day-to-day operating liquidity.

Whether the transaction is a full or partial sale, we seek to partner with ongoing management, and believe it is critical that they have a meaningful equity stake in the business. We seek management teams that:

• Are committed to growth
• Have experience in their sector
• Trust one another and us, and communicate effectively
• Find long term value creation to be energizing

Alignment among all stakeholders – in every facet of the business – is a core tenet of our approach.

End Market & Business Attributes

We subscribe to the following Warren Buffett philosophy:

When a management team with a reputation for brilliance tackles a business with a reputation for bad economics, it is usually the reputation of the business that remains intact.

This maxim, corroborated over five decades of experience of both successes and failures, has led us to focus on a company’s business model and end market first. We look at, and have invested in, many different types of businesses. The majority of our focus tends to be:

• Niche manufacturing
• Distribution
• Business and consumer services

We will selectively review opportunities in other areas where we have experience including technology companies in software, software-as-a-service and online media. We do not invest in real estate and real estate development, restaurants, retail outlets and oil and gas exploration.

Fundamentally, we seek businesses which exhibit a history of profitable growth and defensible market positions. We prefer enterprises with an established or emerging leadership position whose products and services target growing end markets.

Specifically, we prefer businesses which either have, or are capable of, the following attributes:

Business Attributes
  • Replicable, disciplined sales model
  • Potential for organic growth and perhaps
    acquisition / consolidation opportunities
  • Defensible market position –
    through brand, high switching costs, or
    difficulty in replicating (due to factors like
    technology, design, operations, IP, suppliers, etc.)
  • Flexible operational platforms that can be scaled
Financial Attributes
  • Revenue of $10.0 million or greater
  • EBITDA of $1.0 million or greater
  • Strong cash flow generation; 20%+ gross margins,
    10%+ free cash flow margins
  • Favorable working capital cycle; manageable
    capital expenditure requirements
  • Minimal commodity pricing inputs


We will respond quickly to any inquiry. We value your time and our own.