Venture Capital Investment Criteria
Fairmont invests in start-up and emerging companies that are run by entrepreneurs who have vision, expertise and drive. They must be frontiersmen in their technology and market opportunities. They must have a passion that sustains them through the challenges of creating and building a great company.
We seek venture capital opportunities which include:
- Products or services that are unique and defensible.
- Smart and determined, but coachable founders.
- Large market opportunities.
- Strong and sustainable profit margins.
- Multiple options for realizing a return on investment.
Fairmont typically invests in venture capital start-ups which are not yet ready for Series A financing. The company’s pre-money value is usually between $500,000 and $10 million. Our investment can be as low as $50,000 and as high as $1 million.
Acquisition Investment Criteria
Fairmont has a history of acquiring companies that contain hidden values. These hidden values may exist because: (a) the business needs to be strategically transitioned; (b) there is a dislocation or disconnect between the true ability of the business to generate revenue and the reflection of that in the marketplace; or (c) there is a misperceived imperfection in the business which has not been properly analyzed and quantified.
We seek acquisition opportunities which include:
- Family or Individually-Owned Companies whose growth may have slowed as successful owners became risk-averse over time or slowly withdrew from the day-to-day operations of the company.
- Corporate Orphans are businesses held by large corporations that typically lack focus and direction from corporate headquarters.
- Stranded Public Companies are those businesses whose market capitalization is less than $500 million with their stock trading in a narrow range, with little correlation to earnings. Compounded by low trading volume and no analyst coverage, there is little liquidity for shareholders. A “going-private” transaction provides the shareholders with the liquidity they desire and frees management to concentrate on long-term growth rather than short-term stock market fluctuations.
- Non-Optimized Private Equity Owned Companies are the result of buyout firms that have little operating experience. Due to this lack of oversight experience, these portfolio companies may not be optimized in good times and they may be beset with significant valuation write-downs in bad economic times.
- Companies with Misperceived Imperfections which are fundamentally sound, and are great investments with a better strategic direction and management team.
Fairmont’s typical acquisition is a company with an enterprise value as low as $5 million or as high as $300 million. These transactions, when larger, often involve partnering with other private equity firms that are following Fairmont’s lead.