Current Osceola Fund’s represent the continuation of an investment strategy that has been successfully employed by its principals over several years and in a number of structures. The Partnership seeks to make individual investments into lower middle market businesses, with an emphasis on business and financial services, as well as niche manufacturing and renewable technology. While, our primary strategy is to take a controlling interest in the businesses that the Partnership invests in, we will also look to make some limited opportunistic minority investments alongside trusted partners. In either case, Osceola is focused exclusively on investing in businesses that have exhibited the capacity to generate strong cash flow across the entire life of the investment.
The principals of Osceola have led over 100 corporate finance transactions ($1B+ in capital) as well as served as the CEO, CFO, or President of over 15 successful organizations in multiple business segments. This extensive experience gives the team a distinct advantage in all facets of the transaction, to include, sourcing, executing, and ultimately exiting with an attractive return. Every acquisition opportunity is unique and dynamic. Some businesses merely require some additional guidance/insight to achieve its goals, while others might require a gradual change in management over time, and still others may need direct hands-on leadership from the day of closing. The Osceola team has the capabilities and skills to create significant value in any one of these situations as they arise.
Over the long-term, Osceola believes that the lower middle market presents the greatest return opportunities for patient, disciplined, and experienced investors because of the following:
- the number of companies in this market segment are more numerous than in larger segments of the market; hence, investors have more investment opportunities to choose from and are able to be more selective in their investments;
- acquisitions and internal growth initiatives for companies in this market segment tend to have a more dramatic impact on profits and job creation opportunities, thereby enabling investors to build value more quickly;
- investors often negotiate directly with the seller and are able to better acquaint themselves with a business, an owner, and the management because there is no investment banking process; and
- valuation multiple arbitrage is significant between lower middle market businesses upon investment and larger businesses upon exit.
Additionally, sourcing attractive minority co-investments will give the Partnership an opportunity to work alongside current management or other trusted partners that desire to utilize the relationships and operational team Osceola brings to the table. While Osceola recognizes that there is additional risk in taking non-controlling positions, the principals believe that much of that risk can be mitigated through the incorporation of preferred interest payments, options, or other convertible features. When structured carefully, minority co-investments can provide enhanced diversification to the Partnership and its investors.
Utilizing both models allows the Partnership to capture strong positions in superior businesses while having the flexibility to work out a deal structure that makes sense for all parties involved. Adherence to this philosophy while focusing on acquisitions that have high quality talent, a strong value proposition, and corporate scalability in diversified industries make up the fundamental underpinnings of the strategy.