Most institutional private equity groups elect not to invest in smaller, privately-held companies due to the size of the funds out of which they invest and the active operating attention which is required. But, these smaller Microcap companies do have capital needs that present significant investment opportunities for the disciplined and capable investor.
Westham Capital directly invests in these smaller, profitable companies in select geographic regions. Such companies are typically niche service or manufacturing businesses with a differentiated business model and a reputation for exemplary service and quality. Our investment interests in these Microcap companies allow us to fill the significant buyer gap that exists in the investment industry between individual investors (Main Street companies) and the interests of larger, institutional private equity firms.
Since management is critical to the growth and operation of any company, we require an effective General Manager or CEO to either be in place or be available immediately upon our investment. We are typically "change of control" investors, but are willing to take a minority position in a company if we can maintain control in concert with another like-minded investment group. Often times in smaller companies the full complement of a management team is not in place. Given our industry and sector contacts, we can assist in the identification of other management team members should this be necessary.
We are flexible in our transaction interests, but a few of our favorite types of WCP Microcap investments include:
- Recapitalization of a company where an owner can take partial liquidity but continue to run the company after our investment;
- Management buyout (MBO) of an inactive owner by an experienced day-to-day operator who has been working in the business for some time;
- Management backing of an experienced operator who has identified a company for investment, who is willing to put in some of his/her own capital, but who requires additional financial backing.
