High Level Investment Criteria

HWI’s investment criteria guides the search for potential acquisition targets while allowing the flexibility to opportunistically recognize where significant and sustainable shareholder value can be added.

We believe that consumer-oriented industries such as professional services, niche manufacturing and specialty retail products industries hold promise in our search for middle market companies with potential for sustainable above average growth. Our focus is on companies with $10 to $100 million in sales with prospects for rapid earnings growth.

Nature of Deal
Our deals are friendly acquisitions where superior internal rates of return can be achieved and where our partnering helps internal growth prospects. Retiring principals or voluntary equity redistributions create value as HWI can bring its resources to bear in enhancing opportunities already present, as well as take advantage of new opportunities resulting from our market connection synergies.

Industry and Competition
HWI Partners’ acquisitions show an enhanced ability to build sustainable competitive advantages. We look for a number of defensible product position indicators and opportunities to create new product positions to enhance sales.

We look for strong recurring cash flow streams that can be maintained throughout the acquisition transition process, relieving some pressure for immediate change while increasing future enhancement potential. HWI Partners will avoid industries characterized by (1) cyclical cash flows, (2) rapidly changing trends, (3) high governmental involvement, (4) or environmental liabilities.

Acquisition Prospects
We look for businesses with relatively simple operations, limited geographic locations and a manageable number of core products. Strong middle management, unsophisticated technology systems and stable business processes are indicators of strong enhancement opportunities.

A differentiated product with high margins and strong channel power allows for top line revenue growth and better utilization of underlying assets. We look for a strong balance sheet and cash flow positions where performance levels have been maintained for the past three consecutive years.