Investment Criteria

 

What we look for

The team at AFG Capital and the companies we partner with, share a commitment to integrity, character, and hard work. We look for partnerships where we can add tangible value while extending the success and rewards—personal and financial—of our owner-manager partners and their teams.

 

INVESTMENT CRITERIA

  • Owner-managed or closely-held with shareholders interested in retaining an ownership stake in the business

  • Loan Office in Europe

  • EBITDA of €100 million or greater

  • Strong core management team with a plan for continued growth and desire for an investor partner to help build upon the historical success of the business

  • Diversified customer base


    TYPICAL SCENARIOS

  • Asset Diversification: The shareholder remains passionate about the business and believes strongly in its future. However, the shareholder wants to diversify their net worth while continuing to lead the business, retaining control and a large ownership position.

  • Diversification with a Shift in Responsibilities: The shareholder remains passionate about the business, but is seeking a change in personal responsibilities to dedicate time to other interests. The shareholder wants to diversify their net worth and retain a large equity stake and control.

  • Cash Out Inactive Shareholder: Management shareholders seek to provide inactive or retiring shareholders with liquidity while maintaining control of their Board.

  • Generational Transition: A senior family member seeks to achieve personal liquidity and facilitate estate planning while transitioning leadership (including control of the Board) and a meaningful economic opportunity to the next generation.

Our approach is based upon the following two beliefs:
Markets underestimate the importance of the value proposition

Our understanding of the value proposition and avoiding simple extrapolation of current growth trends, allows us to better model the growth rate of the product/service. This is what allows us to invest in companies where Wall Street is underestimating growth and avoid investing in those where they are overestimating growth.

Markets overestimate certain risks
Markets have a tendency to misprice risk in smaller companies based on the fact that these companies tend to rely on single products for a material percentage of their revenues, are heavily concentrated with a few customers or face large competitors. The market often views these risks in isolation of the value proposition and thereby under or overvalues these companies.