Market Position & Competitive Advantages
We seek companies that are market leaders with sustainable business models. This can be characterized by high barriers to entry, high switching costs, and strong customer relationships.
Multiple Revenue Streams
We like companies that have a diverse growth strategy, so that a company’s success is not completely reliant on one driver - introduction of new products, increasing in the number of locations, new customers, increasing the penetration of current customers (upselling products), and so on.
Cash Flow from Operations
Often investors require companies to have relatively low exposure to seasonal fluctuations in cash flows, as well as low sensitivity to cyclical fluctuations (i.e., relatively immune to economic downturns and/or commodity prices).
Capex
Companies with low maintenance capital expenditure requirements provide management more flexibility in terms of how it can allocate the company’s capital and run its operations.
Market Trends
We are continually searching for companies that are well-positioned to benefit from positive industry trends, since it results in above market growth and provides stronger equity return potential as well as stronger downside protection for the investment.
Management Team
A strong management team is crucial to success as we will provide strategic guidance but will almost exclusively rely on management to execute their operating strategy.
Due Diligence
A crucial part of the investment process is the due diligence performed on the company. It includes understanding the company’s value proposition, market position, historical performance, and industry trends in order to assess the target’s ability to achieve its forecasted projections.
Contact Us
For any questions regarding these Investment Criteria, sent email to info@sparkcap.co.
