Frequently Asked Questions of the Better Capital Funds
How are you different from other investors?
There are three overriding ingredients; integrity (honesty and no "chipping"), speed (of response, transaction and deliverability) and a bearish attitude to leverage (that's often what caused the problem!)
What is the attitude towards debt within the investments?
There is no bank acquisition finance within the portfolio at present.
The management teams are focused on running the businesses and not reporting to lenders - this shouldn’t be, but is, a novel phenomenon!
What makes a successful turnaround deal?
A clear strategy, the ability to make difficult decisions, appropriate or (more often) no gearing, simplicity of documentation and alignment of goals.
Definable and controllable steps to increased profitability.
Do you back incumbent management teams or bring people in?
The Funds back, and appropriately equity incentivises, high-quality teams; whether they are from within the business or lateral hires.
What sectors are preferred?
The Funds invest as situation specialists and not as sector specialists.
They draw off deep levels of experience and apply operational turnaround expertise across a variety of industries.
What is a typical hold period?
Typically, the highest prices are achieved on exit when the turnaround can be proven (often through the provision of audited accounts) to have been successful.
As such, a 3-5 year period of ownership is most likely.
Are debt instruments traded?
The Funds can invest in debt if this provides a route to ultimate economic ownership.
It is not a debt trader.
What’s the ‘house’ operational management style?
Sit back and applaud when deserved. Supportive when needed. Hands on when required.
What due diligence is needed in advance of investing?
There simply needs to be confidence (based on fact) in the ability of the underlying business to generate profits, post operational restructure.
Due diligence is largely focussed around verification and validation in order to eliminate the risk of fraud and a strong understanding of the existing and prospective profit margins.