Stonebridge seeks to acquire privately owned companies or divisions of public companies primarily serving the industrial or commercial marketplaces. The Firm’s principal focus is manufacturing companies, where the Partners have substantial experience. Core companies must be based in the continental United States or Canada; add-on acquisition candidates can be located anywhere in the world.

As the Partners evaluate the management of potential core companies, they look for exceptional team quality and culture, as well as a skill set that is aligned with the company’s next stage of growth. Because Stonebridge values the expertise and insight of existing management, the Partners also look for teams driven by retained or performance-based equity compensation.

Acquisition candidates for core companies generally have transaction values ranging from $30 million to $200 million, as well as an industry niche and significant market position, whether product related, technology related or geographical. The Firm particularly seeks companies where manufacturing equipment, processes, technology, patents, brand identity and/or reputation provide sustainable barriers to entry for potential competitors. Stonebridge prefers to invest in industries that are growing, however mature industries where consolidation opportunities and/or well-defined value opportunities exist are also considered.

Over the past three decades, Stonebridge has developed a strong network of buy side intermediaries to identify companies that fit the Firm’s investment profile. Of the 62 transactions the Firm has completed, 50 have been directly sourced and negotiated outside of an auction process. This network is particularly important when embarking on aggressive and well defined acquisition programs, be it for a new core company or an add-on acquisition for an existing portfolio company.

While profitable internal growth is considered the most important factor in a successful Stonebridge investment, add-on acquisitions can be an extremely important component as well. Stonebridge embarks on a proprietary program of identifying, contacting, and visiting all credible add-on acquisition candidates. The Firm will only aggressively pursue those transactions that have a strong synergistic fit with a core company. Add-on acquisition candidates can range in size from several million dollars in revenue to companies larger in size than the core business.

Stonebridge’s strong preference is to back existing management teams and provide them with meaningful equity ownership incentives. In certain circumstances, however, generally based on sellers’ desires to retire or reduce their roles following a sale or recapitalization, Stonebridge has the ability to bring in new management or assist in the development of the existing management group. Each Stonebridge portfolio company is considered extremely important and receives an appropriate allotment of time to meaningfully enhance the business.

 


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