Investment Criteria

Quantum Ventures of Michigan has developed a portfolio of companies that fit into operating platforms co-managed by Quantum and our portfolio teams. Our primary investment objective is to build long-term equity value for our principals and management partners.

Types of Transactions

We consider a broad range of transactions including leveraged buyouts, management buyouts, recapitalizations, expansion capital, and selective turnaround situations.

Size of Investments

We target stand-alone companies or corporate divestitures with revenue between $1 million and $50 million and EBITDA between $.5 million and $5 million. Our preferred enterprise value range is $2 million to $10 million, but we will also consider smaller opportunities as appropriate.

Key Business Characteristics

• Significant growth potential and an expansion strategy that is consistent with prior performance
• Stable and recurring cash flows which are relatively immune to rapid technological change
• A business model with sustainable customer demand which can be replicated across multiple markets
• An entrepreneurial management team with a demonstrated ability to develop and execute a strategic growth plan
• A culture of innovation and quality
• Businesses capable of driving consolidation within a respective industry
• A defendable market position within an industry segment

Industry Preferences

We are currently operating a number of platforms that leverage our team’s operational experience. We are also willing to consider additional platform investments that provide favorable opportunities to generate sustainable earnings growth and shareholder value. Our platforms currently include:

• Automotive parts
  
• Industrial manufacturing
• Industrial distribution
• Industrial equipment
• Financial services
• Sports equipment
• Internet services and media
• Software development and distribution

Capital Structure

• Typically, our transactions are structured to creatively achieve the objectives of all parties and may involve any combination of financial instruments including: senior debt from third party sources, mezzanine debt, seller preferred notes, seller rollover equity, and equity from our principals.
• We seek to enhance the relationship with a company’s existing debt provider or to secure a new, enhanced facility via our existing lending relationships.
• We generally expect to be the controlling investor in any given transaction; however, we will consider select opportunities that don’t provide a majority shareholder position.

Management

We look to partner with managers who have proven track records and are interested in making a meaningful commitment alongside Quantum. Additional incentive-based options for senior managers are an integral part of our investment philosophy.