Investment Criteria – Turnaround

Our firms objective is to executive a leveraged buy out, through an infusion of equity and debt financing, utilizing the company’s cash flows and assets as collateral to secure the assets or stock of a target investment. Underperforming investment opportunities require a unique approach to deal structuring as they frequently have negative cash flows and insufficient collateral due to recent continued losses. Definitive agreements are executed, replacing executives and directors in investment opportunities and locking up stock rights for future purchase.This deal structure generally allows existing debt to continue, without triggering a default, while the necessary turnaround actions are implemented.

Stone Fox Ventures primary target investments are turnaround opportunities of underperforming manufacturing, distribution and companies in both mature and growing industries. Investments generally require the replacement of c-level executives and support of capable middle management teams. Often, those executives may be retiring or exiting the business after long tenures in established businesses. Target investments must be able to achieve a substantial and sustainable positive change in their financial performance. Our profile for turnaround companies is generally as follows:

Sales

$1.5 million – $40 million

EBITDA

No Minimum Requirement

Gross Margins

25% – 40% +

Industries

B2B Manufacturing, distribution and service companies with industrial customers in mature and growing industries.

Management

Stable, growth minded management teams or those in need of executive replacements.

Profitability

Operating profitability in one of the last five years with pro forma projections indicating continued financial declines.

Geography

Headquartered in Michigan, Indiana, Ohio, Illinois, Wisconsin or Kentucky.

Additional Key Factors

Industry recognized brand, proprietary / patented or distinct products, niche markets, marketshare or position, competitive advantages