Chapter IV seeks to invest in excellent companies in "special situations."
Investments are targeted toward companies that trade at discounts of 25% or more to: (i) their intrinsic value (based on a discounted cash flow model), (ii) their likely value to private equity buyers and/or (iii) their value to strategic acquirors.
Situations of particular interest include:
- Companies in situations that are analytically intensive and difficult for many public investors to understand for certain periods of time
- Less liquid companies that may trade at a discount because of the lack of a desirable float for larger institutional investors
- Companies whose securities trade at a value that has been temporarily "infected" by the herd psychology of the investment marketplace
- Companies whose publicly traded status should be limited in time (e.g., because Sarbanes-Oxley regulation, inadequate research coverage, limited float or other factors make it more sensible for such companies' Boards of Directors to consider a going-private transaction or bids from strategic buyers willing to pay a premium)
We anticipate that public investments will be limited to U.S. based companies.
Private Equity Investment Strategy
Chapter IV seeks to invest between $10-$50 million per transaction.
Chapter IV is comfortable investing as both a majority/lead investor and as a minority investor.
Chapter IV is industry agnostic but does not invest in venture capital or early stage growth investments.
Our private equity strategy focuses on three types of transactions:
- Large buyout (or recapitalization) opportunities (from $200 million to $5 billion) initiated by Chapter IV and co-investors in our Fund
- Small buyout (or recapitalization) opportunities (from $50 million to $200 million) initiated exclusively (or primarily) for our Fund
- Co-investment situations developed by investors in our Fund or other "friends of Chapter IV"
- Management-led buyouts of private companies (or divisions of public companies)
- Recapitalizations of closely-held family businesses
- Private companies that require capital to fund identified growth/acquisition opportunities
- Public-to-private transactions
- Structured equity investments
- Assisting management teams with strategic planning initiatives
- Assisting in the identification and execution of add-on acquisitions
- Improving overall financial management of the enterprises in which we invest