Posted: 21 January 2021

Three things I look for in a company

Three things I look for in a company

Peter Barkley heads our Manchester office and is focussed on originating new investments and supporting current portfolio companies in the North of England. Here he outlines three key things he looks for when considering investing in a company.

  1. Ambitious and open managers

    Whilst investing in companies is our bread and butter, working with ambitious individuals and management teams is key to doing this successfully. Whether we are backing an owner manager who wants to de-risk and continue their growth journey or a set of first-time equity holders who are succeeding a founder and want to put their spin on the next stage of the journey, a desire to drive growth and continued development is a key factor.

    We see ourselves as partners and therefore our relationship with our management teams is key. We are often backing some of the highest quality, most experienced teams in their field and we aren’t looking to tell them how to run their business. What we do bring is expertise and support in how to scale a business. Whether it be entering new markets, attracting new staff or customers, implementing new systems or seeking acquisitions, we can leverage our experience and network to help deliver the end goal. Working with managers who are open to development, new ideas and challenging the status quo in order to deliver a great result is always an exciting prospect.

  2. Attractive market dynamics

    The market size and expected growth rate need to match our ambitions for the business. Competitive dynamics are also key – are there sufficient barriers to entry to ensure we can maintain and grow our position in the market or can we easily be replaced or substituted?

    Avoiding markets where the size and strength of the competition is disproportionate to the market opportunity is an important consideration.  We’d think long and hard before entering a market dominated by a handful of large, well-funded, players that has limited room for growth. Conversely, large fragmented markets can provide significant opportunity for growth both organically and through acquisition.

  3. High quality of earnings

    A level of recurring or re-occurring/repeatable income (or the ability to create this over a period of time) is a highly attractive feature in an investment opportunity. This could be created by a SaaS like monthly billable income stream, long term contracts or strong customer relationships resulting in repeat business year-on-year.  As well as providing a robust base from which to grow, it gives a level of downside protection for an investor.

Typically, WestBridge invests between £10m and £20m in established, profitable and fast-growing UK SMEs with enterprise values of up to £50m.  We are always keen to hear from ambitious management teams that require development capital, acquisition funding or support for a management buyout.  To hear more about our investment criteria or discuss the suitability of a company, do
get in touch.

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