Here's how we evaluate opportunities:
- Growth Prospects – both for the business itself and its industry; we like rising tides
- Profitability – because high margins typically mean differentiated services
- Industry Fragmentation – the less consolidated, the better
- Barriers to Entry – to keep competitors at bay and protect our relationships
- Simplicity of Business – because we aren't rocket scientists on this end
- Mitigants to Macro Risks – because even the best businesses suffer shocks
While we don't expect businesses to meet all of these criteria, we like businesses that possess at least most of these objectives. And management teams that can explain how.