Edgewater has methodically developed our investment program since our founding, into a refined approach of demonstrated success.
Edgewater has invested its two private equity funds following our proven investment strategy.
Our investment strategy has three main pillars:
- Performance Materials;
- Barriers to Competition; and
- Operational Enhancement.
Our portfolio companies typically serve niche marketplaces and have meaningful marketshares. Edgewater focuses on the performance material sector because these companies enjoy:
- Attractive growth rates in excess of GDP.
- High, defensible barriers to competition, often as the result of proprietary formulations, strong technical knowledge, trade secret processes and intellectual property.
- Fragmented set of industries with many niche players. This allows for our portfolio companies to effectively compete and offers a fertile acquisition arena.
Barriers to Competition
Edgewater acquires niche businesses with strong financial performance and tangible barriers to competition inherent in the company's products. These barriers often take the form of sophisticated engineering, proprietary formulations and other types of intellectual property. Our companies manufacture and market products which are purchased for their performance characteristics and quality.
Over the past two decades, Edgewater has refined its investment approach to include the direction, guidance, counsel and validation of industry executives who bring tangible operational experience to our companies. Many private equity firms use operating executives tangentially, but Edgewater relies on the keen industry knowledge these men and women can offer. This is particularly important within the performance material sector, as complex chemistries, formulations, regulations and market dynamics are not easily or readily understood. Edgewater's Operating Partners are an integral part of our underwriting, investment thesis, and portfolio management. A key foundation of our strategy is the use of operational expertise to substantially improve our portfolio companies' business. Post-acquisition, Edgewater utilizes the expertise of its partners and operating partners to improve a portfolio company's business in key sectors, including strategic guidance, supply chain management, capacity utilization, financial systems and controls, operating systems, IT systems, and E,H,S & S. The operational improvement of our portfolio in these sectors has been, and continues to be, a critical component of Edgewater's success. Effectively, we take good companies and make them better, and our investors reap the financial rewards.