Investment Process

The team at Quantum has highly relevant and successful experience in acquiring, financing and operating middle market companies. As a result of our collective experience, we have developed a finely-tuned process to position investments for significant return on invested capital.

Target Identification

Our process begins with a rigorous screening of industries that we believe have attractive prospects for growth. We utilize a variety of screening tools to identify opportunities that can be molded into effective investment platforms. While we focus primarily on privately held opportunities or corporate divestitures, we will also consider small cap public companies whose future growth prospects may be more effectively realized with our management capabilities.

Management Excellence

Quantum typically makes investments in companies with solid, results-driven management teams currently in place. However, we recognize that in some instances, additional management talent may be required to drive the growth of the company. In such cases, we will either leverage the operating talent of the Quantum team or utilize our industry contacts to enhance the management team. We also work with management to ensure that incentive structures are put in place to reward operating executives that drive long-term growth and high returns on invested capital.

Operational Enhancement

Frequently, we find that middle market companies lack the controls and efficiency of larger companies. As a result, identifying operational enhancement opportunities is a cornerstone of our approach. This thinking begins early in the due diligence process, as we identify and quantify opportunities to enhance operational performance of a target company. Once the transaction is completed, we leverage our team’s operating experience to ensure that the appropriate infrastructure and controls are in place to support the company’s growth plans. While every transaction is unique, we will typically provide assistance in driving material sourcing savings, evaluating supply chains, improving working capital, implementing financial controls, and supporting the evaluation of capital expenditure decisions. Within 90 days post closing, we expect to put in place the infrastructure, metrics, and tools necessary to create significant improvement in operations.

Nurturing Growth

Although operational improvements are an important component of value creation, Quantum recognizes that long-term returns are directly correlated with growth in revenue and profitability. After we have collaborated with company management to streamline operations, we focus our collective efforts on defining and implementing a growth strategy. We understand that sustainable growth can be created through a variety of strategic initiatives, including brand building, new product development, strategic alliances, and entry into new channels of distribution. Therefore, we work closely with management to establish an annual growth plan that maximizes long-term returns.

Add-On Acquisitions

A significant component of our investment thesis is to continually identify add-on acquisitions. We believe that timely add-on acquisitions can accelerate the growth of a portfolio company by providing new sources of technology, access to customers, and improved distribution, among other advantages. Typically, we have found that portfolio management is challenged by the daily demands of operating the business and needs assistance with acquisitions. Thus, we work closely with management to source, evaluate, finance, and close add-on transactions.

Realizing Value

In many instances, maximizing investment value can be equally dependent upon the timing of the chosen exit strategy and the operating performance of the company. The Quantum team has significant experience optimizing investment exit strategies, strategies that have been developed through our collective experience in private equity, investment banking, and corporate divestitures. While we typically seek an exit strategy within seven years of the initial investment, our goal is to recognize and capitalize on exit points that provide maximum benefits to our principals and associates.