Investment strategy

Trident Private Equity funds focus on established UK businesses operating across a range of sectors. Emphasis is given to situations that are undervalued, neglected by the investor community and perhaps financially under-managed.

Our strategy is to invest primarily in management buyouts (MBOs), expansion capital and consolidation (buy-and-build) opportunities, and public-to-private transactions. We employ low leverage and capitalise on our exclusive relationships in the market to buy businesses at attractive entry multiples. We expect to complete around four transactions per year, investing up to £20 million in each.

By 30 September 2011, Harwood Private Equity had invested a total of £240 million in 37 portfolio companies over a period of twelve years. 28 of these were in the UK, of which fourteen were public-to-private transactions. Nowadays we only concentrate on UK-based investments. We are one of the few teams in UK smaller company private equity that maintains contact with a broad range of managers and investors in the listed sector. Developing close relationships is crucial to identifying, planning and executing public-to-private transactions. We pursue these transactions by dealing directly with the target company's board, management and key investors.

The UK smaller company market is a fertile area for deal origination. Relationships play a key role in initiating transactions with private companies. The team's reputation and network provide an excellent platform for identifying potential investments.

Our listed and un-listed target companies will typically have high quality operational management, stable revenues, good market share and strong growth potential. Yet these companies often lack access to finance, strategic expertise and restructuring opportunities. The team uses its skills in support of management to provide finance and expertise in a range of areas such as improving financial controls, creating mergers and acquisitions (M&A), and developing and executing a growth strategy. This expansion may be organic, as tighter controls and asset management often encourage growth opportunities that were previously stifled. The team uses its network of contacts to strengthen portfolio companies by facilitating new contract wins, accelerating geographical expansion and introducing potential partners.

We are single-minded in generating growth and increasing the profitability of portfolio companies, whether by roll-out, acquisition or buy-and-build. Our efficient execution of change can shorten significantly the J-curve effect.

We identify an exit strategy before making an investment. We have successfully employed a wide range of exit routes, tailored to maximise investor value returns. Of the 28 realisations to date, twelve have been trade sales, six have been initial public offerings (IPOs), six have been secondary private equity sales, two were complete share buybacks and one was a 'reverse take-over' of an AIM-quoted cash shell.