Frequently Asked Questions
We’ve provided answers to common questions about Brass Ring Capital, our investment process, and how we form value-added partnerships.
Investment Strategy & Partnership Fit
Good investment partners fit within our investment criteria, typically U.S.-based businesses with $1-5 million of EBITDA and a proven business model. We prefer business services, diversified industrials, specialty manufacturing, and overlooked niche markets. We seek mutual benefit in transitions and respond quickly.
Our distinction lies in 20 years of exclusive focus on high-growth businesses, a Midwestern style of collaboration and accessibility, and a long-term view fostered by our individual, non-institutional investors.
Valuation & Deal Structure
Companies are generally valued on a multiple of Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA), typically 4-6x for $1-5 million EBITDA businesses. Factors include company size, industry, growth, management, customer diversity, and financial health.
Deals are tailored, combining lower-cost bank debt with equity, subordinated debt, seller debt, or earn-outs. We use a conservative capital structure for growth, ensuring adequate funding for growth initiatives and providing resilience against shortfalls.
Choosing a trusted buyer is critical, impacting transaction terms, employees, and the business’s post-closing legacy. We aim to buy businesses intact with transparent intentions. Since we, along with management, are the owners and decision-makers, you benefit from our transparent interests and intentions upfront.
Management typically owns 10%-45% of completed transactions. Percentages depend on capital contributions, personal resources, transaction dynamics, and projected post-closing financial performance.
Not always. Ownership levels are driven by deal economics. A management buyout may require majority, while a family succession might result in a minority stake with protections.
Partnership & Post-Transaction Engagement
A recapitalization (or “recap”) is a partial sale, restructuring a company’s capital and equity. It allows owner-managers to gain liquidity while retaining substantial ownership and operational control. This contrasts with a full sale where all ownership is transferred.
Selling to a private equity firm offers flexibility and a strategic partner. Firms like Brass Ring Capital provide experience, proven strategies, and resources to accelerate growth and professionalize your business, enhancing its value for the future.
No. At Brass Ring Capital, we firmly believe that building a business for long-term investment takes years of dedicated effort and strategic partnership. Partnering with us gives managers more influence on a future sale, aligning with long-term visions and career opportunities.
Roles vary. Some owners retire; others remain involved for growth. We consider all proposals for post-closing roles, tailoring the partnership to best fit individual aspirations.
Management continuity is preferred, but not strictly required. We recognize that circumstances vary and adapt our strategies to the needs of each transition, supporting incumbent teams or recruiting new leaders.
Our role is to invest and facilitate growth, not day-to-day management. We generally partner with incumbent teams, recruit leaders, serve on boards, and lead acquisitions.
We add value by connecting well-run businesses with resources to achieve full potential. Our growth strategies focus development through professionalizing capital, systems, talent, strategy, and operations.
Culture may evolve with ownership transition. We encourage fostering respect, opportunity, and a growth mindset for a stronger corporate culture.
Transactions typically include equity ownership opportunities and bonus plans for key managers, aligning incentives with company performance.
As seasoned private equity professionals, we address challenges by collaborating with key managers, leveraging our patient capital, and utilizing our professional network to help address specific challenges.
Rarely. While we share best practices amongst our investee companies, managers typically prefer operational autonomy. Our focus supports each company’s unique growth path.
Ask Your Question
If your question wasn’t answered here, or if you have a specific inquiry, we invite you to contact our team directly.