
Providence Group, L.P.
950 Jericho Turnpike
Westbury N.Y. 11590-1527
Telephone: 516-822-9100
Facsimile: 516-942-4330
e-mail: rmm@providencegrouplp.com
INVESTMENT GUIDELINES
INVESTMENT GUIDELINES
The Partnership investment guidelines, subject to General Partner discretion, are as follows:
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“Microcap” companies, as generally described herein;
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Domestic companies located within an approximate radius of 1,000 miles from NYC,near travel centers;
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Generally in basic, well established industries;
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A minimum 10-year operating history;
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A strong asset base, with an asset-to-debt ratio of approximately 3-to-1;
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An owner who is preparing to retire, but who is available for a transition;
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Generally, non-union employees (unless if union employees are necessary to the nature of the business);
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A market niche that makes the company unique or gives it a proprietary advantage;
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A purchase price (excluding real estate) in the general range of 3x earnings (based on a weighted 3-year average);
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An acquisitions structure that generally consists of approximately 1/3 of the purchase price in the form of equity; 1/3 of the purchase price in the form of debt and 1/3 of the purchase price in the form of Seller financing;
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A combined EBITDA of approximately $10,000,000 per year, achieved as follows:
- For the first portfolio company, EBITDA in the range of $1,000,000 + per year
- For the second portfolio company, EBITDA in the range of $3,000,000 + per year
- For the third portfolio company, EBITDA in the range of $5,000,000 + per year
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A performance analysis prior to acquisition to be completed by the General Partner for each targeted portfolio company on an independent “stand-alone” basis to project returns to the Limited Partners in the range of not less than 20% (IRR) and a multiple of capital invested of not less than 2.5x based upon conservative management expectations (generally consisting of 3 years’ historical performance adjusted and carried forward);
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A combined enterprise value in the range of $50,000,000;
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Exit consisting of a sale, liquidation or refinance of the Limited Partner’s Interest at the end of the Commitment Period, or a buyout by the General Partner at Fair Market Value.
The Limited Partners shall vote “yes” or “no” for any Partnership acquisition, with a Majority in Interest prevailing.