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We'll Listen ...

 

Call us or refer a friend to us with an idea, a design, a plan, and opportunity, and inspiration, a brain storm, an initiative, a proposal, or even just a thought that you're passionate about that might require partners and capital and we'll listen. 


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              Our Approach



We'll engage in a particular business venture and put all of our resources, energy, and experience to work after determining that a particular opportunity matches our investment criteria.  The evaluation process takes some time and is usually evolutionary -- meaning our practice is to engage in defining and refining the idea as we vet it -- that's how we originate all of our investment opportunities.  We'll challenge you and with you define and refine the plan and focus on the essentials.  

Investment Essentials

Qualified Talent and Passion—The number one essential is qualified management talent – nothing good happens without it.   For opportunities we identify or those that find us, we must have an individual to get behind and lead the business.   If it’s a former CEO, or business owner that aspires to build something new with us, we’ll evaluate them vigorously and review their background carefully.   While a record of past performance is critical and industry contacts and relationships important, we’re looking for a leader who has recognized operational expertise in their respective industry.  We don’t need deal guys! We want a passionate, energetic, people person, who knows the science of operations and can execute a growth strategy to scale a business – and we’ll work along side the leader in support of the balance sheet and handle all the transactional distractions.

 

Compelling  Business Thesis—A compelling business thesis is also an essential to success – one that clearly articulates an unfulfilled need in the marketplace, defines a unique, niche solution, and offers a tangible, quantifiable value proposition that is easily understood by customers.  The business thesis should identify a market condition favorable to the business and a product or process innovation that presents an immediate or near term opportunity.  Clear competitive advantages that differentiate the company are essential, and barriers to entry for other competitors is critical.  Ideally, while we prefer our portfolio companies to be a sole source for a particular product or service, we at least need to see the opportunity to achieve a market leading position, based upon management’s track record or a dearth of qualified competitors.

 

Leverageable Cash Flow—Since we employ debt to enhance our equity returns, another essential is leverageable cash flow (or the prospect for it in the near-team).  In most cases, cash flow is the basis of for formulating our valuations.  Meaningful cash flow is necessary to service bank and seller debt, to finance corporate development activity (legal fees, travel to strategic partners, customers and acquisition targets, due diligence, accounting audits, and broker fees) and to provide management with an adequate cushion for unforeseen circumstances.  We generally always use senior credit facilities and/or mezzanine debt as components of the capital structure, depending upon the situation and economic conditions. The challenge we face when implementing our leverage strategy is to utilize the proper mix of debt and equity to balance an adequate cushion for debt service with maximum returns for investors and management.  JRC’s  capital sources are not early stage, pre-revenue venture oriented - - our capital, when deployed, must be used to fund businesses that generate EBITDA.  In transactions where a platform is acquired as a starting point for a consolidation of businesses, we like to focus on businesses with EBITDA in excess of $2.5 million, with low customer concentration, and a five year operating history.  While audited and/or reviewed financials are helpful, they are not required for us to complete a deal.
 
Favorable Industry/Market Attributes—Where we decide to focus is an essential consideration too!  We like large industries (>$1 billion), lots of fragmentation,  with attractive addressable market growth rates.  While we prefer “B to B” service businesses, especially those that offer a technology solution, we also like manufacturing businesses,  and those in logistics and distribution.  We’ll always consider real estate opportunities in our backyard, but we likely pass on retail - although we did purchase a car wash business!!!  It is also important for us to understand industry economic cycle sensitivity, workforce availability, regulatory complexity, governmental oversight, liability exposure, and technology dependence. While it is not always easy to qualify each of the elements, it is important that they are reasonably predictable and that external risk is manageable.