Investment Criteria

Company/Deal Attributes

Edgewater is seeking platform acquisitions that meet the following financial criteria:

• Minimum revenue of $10 million;
• Gross margins exceeding 20%; and
• EBITDA exceeding $2 million with EBITDA margins exceeding 10%.
• Add-on acquisitions - no size constraints but must have positive operating cash flow/EBITDA.

Industries of particular interest are:

• Specialty Chemicals - Edgewater has particular expertise with transactions in the specialty chemical industry. Through its investment experience, and dedicated operating partners, Edgewater maintains a strong understanding of specialty chemical opportunities.
• Pharmaceuticals - Edgewater is interested in acquiring companies with proprietary products, superior quality, and proven technologies in the pharmaceutical industry.
• Specialty Materials - Edgewater is looking to acquire companies whose products are purchased for their performance characteristics.
• Industrial Engine Components - Through its portfolio Turbonetics Holdings, Edgewater has strong interest in engine component businesses. These include products serving the aerospace, automotive (primarily aftermarket), mining, construction equipment, etc.

Company/Deal Characteristics

• Tangible, high barriers to competition.
• Proprietary products, formulations, systems and/or processes.
• Leading, defensible market share positions.
• Strong management team with a successful track record.

Types of Transactions

• Corporate spinoffs, divestitures.
• Closely-held, family businesses.
• Management led buyouts.

Typical Deal Structure

We work with sellers to structure a transaction that values both the current and future growth of the business. As a result, Edgewater frequently utilizes a combination of the following forms of consideration in its acquisitions:

• Cash at closing;
• Seller participation in the post-transaction entity; and/or
• Earn-out payments contingent on the future performance of the business.

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