The core Investment Strategy of Pivot Point Capital is to seek situations where we can create long-term value through operating enhancements. We are sometimes viewed as “old fashioned” in a world dominated by hedge funds, quick flip private equity firms and deals driven mainly by financial engineering. Our investment model is founded on the fundamental notion that real value is created when a company is able to grow sales and profits by delighting customers and flawlessly executing its operating plan.
We seek investment opportunities in two broad areas: (i) established companies with structural issues, including retirement; and, (ii) underperforming or operationally distressed companies, including companies in or near bankruptcy.
Companies with structural issues often find themselves stalled or underperforming due to obstacles or conflicts which have limited growth potential. Examples of such issues include undercapitalization, lack of management depth, intractable shareholder conflict or a desire for a majority owner to retire. In these situations, Pivot Point Capital is well positioned to purchase the entire company from selling shareholders.
In troubled or distressed situations, Pivot Point Capital will acquire a controlling interest by injecting fresh capital in the form of equity or near equity investments, buying existing shares, or a combination of transactions. The new capital will be used to restructure or eliminate debt, pay suppliers and other creditors, and invest in new equipment, systems and training which frequently have been neglected during the period of the company's decline.
In most of our acquisitions, the principals of Pivot Point Capital will assume operating control of the company to implement the specific changes identified as necessary to address the internal or external issues faced by the company. Our team, with extensive financial, legal, sales and marketing, manufacturing and operations experience, will stay in place as long as is necessary to revitalize the company and put in place the required changes. Thereafter, the Pivot Point Capital management team will identify, hire and motivate capable, motivated individuals for the key day-to-day operating positions. Importantly, it is not our desire sell an investment immediately after we have revitalized the company. To the contrary, we seek investments in situations which offer the potential for long-term investment growth.
Notably, Pivot Point Capital is not a "vulture" or distressed securities investor. We do not purchase discounted debt held by senior or subordinated lenders in an attempt to force an advantageous restructuring. Similarly, neither do we seek to invest in companies which are already operating acceptably well, but which are burdened with excessive debt from an overly aggressive leveraged buyout or leveraged recapitalization.