The cohesiveness and experience of our team, our targets, and our proprietary tools and relationships provide a valuable base of knowledge and breadth of resources essential to the successful execution of our investment strategy through buying, operating, and selling as well as identifying and managing risks.
Our approach to doing this is complete, active and disciplined from setting to exceeding key goals that are not only operational, but also financial and competitive.
We are knowledgeable about the types of companies we buy and their growth potential. We focus on buying what we know--not what's for sale. We often source deals on a proprietary basis – before they get to the open market – working through our extensive network of C-suite relationships in our target industries, including many Fortune 100 decision-makers. Inside experience enables us to complete robust due diligence and assess pivotal business drivers better and faster.
Pre-acquisition, we develop a Minus 100-Day Plan for operating and improving a business. The scope of our focus ranges from improving the cost structure and driving organic growth, to evaluating leadership and how to effectively realize synergies with our other portfolio companies.
We're active partners, operationally guiding and supporting portfolio company senior management, always striking a strong balance without micromanaging, and always leveraging our global network of relationships to open doors to new opportunities for our companies.
The engine of operational transformation is our Self-Funded Reinvestment (SFR) methodology which touches each core business function, achieving dramatic cost reductions and efficiencies, and fueling organic (EBITDA) growth and enterprise value by reinvesting freed-up capital. The GenNx360 SFR operating process is a 360-degree loop we keep working around. When fully engaged, it creates enterprise value faster than traditional private equity approaches. Our team also makes certain that the board and senior management have the right vision and skills to lead, grow and scale a business to its full potential. We begin refocusing a company on the right issues and opportunities immediately, on day one, with a Plus 100-Day Plan, a strategic and tactical plan that addresses key business imperatives, tests key assumptions, and resets the operational rhythm and rigor. To further improve the business, we apply leading operating tools like Six Sigma, lean manufacturing, and our own Trotter Matrix that reveals key operational strengths and weaknesses.
Knowing the industrial B2B landscape and its cycles so intimately enables us to identify and evaluate the right exit opportunities, timing and conditions. This process begins pre-acquisition. It also enables us to identify potential buyers, especially through our network of senior managers at leading and emerging global companies who are candidates themselves or that can lead us to them. Knowing what this specific group of buyers is looking for ahead of time is a further competitive advantage.
Being firsthand, experienced operating leaders is important because it assures future buyers they'll get a well-run business. Creating highly focused portfolio companies, including the shedding of non-strategic assets matters because it makes our companies more attractive when it's time to sell. We also strive to leave each portfolio company positioned to achieve upside earning potential for a next buyer/owner to realize, since it potentially provides us the benefit of a higher exit price.
We set exit triggers early on in our buying phase, and assess them continuously against market events, target returns, and evolving portfolio dynamics. We scan our markets continuously to get benchmarks for mark-to-market valuations, and watch for favorable opportunities to exit or add more capital, while we gauge the relative position of each portfolio company among its competitors.
We are responsible investors. Understanding the full impact of environmental, social and governance (ESG) factors is integral to the rigorous review and consideration process that each company undergoes as a new investment opportunity. Our comprehensive process is integral to understanding more about the inner nature of our companies and enables us to avoid or minimize the most critical operational, financial, and compliance risks. We review potential stress scenarios early on, from environmental impact, corporate culture, governance, ethics, and regulatory compliance, to the company’s products, customers, supply chains, rhythm, cycles, capital structures and competitive pressures. We then develop metrics to identify them and strategies to minimize them.
Our risk analysis, management and monitoring begin in the sourcing phase, and continue at all levels throughout our involvement. We de-risk wherever possible, beginning with modestly leveraging the companies we buy. We also require added layers of ongoing strategic and financial reporting from our portfolio companies, supported by a designated GenNx360 analyst who works with each CEO and CFO.
Our entire Firm culture believes in rigorous compliance: always doing the right thing. This and our private equity 3.0 mindset and business model positions us to generate consistently higher investor returns with lower risk.