For an equity firm, selecting a potential investment is both an art and a science. There is no one single factor that attracts an investor to a particular company over another.
Instead, according to Harry Shimp, senior operating partner at lower middle market private equity firm MCM Capital Partners, there are several things that his investors look for, including:
Attractive industries that are going to experience growth without going through a bunch of dips and climbs.
Companies that have something special, such as the design of a product, a unique process, faster delivery, better quality, or a unique connection with their customer base.
Once a decision has been made to make that investment in a company and the deal is done, Shimp says the goal is to protect the company.
“Our founding partner used to say, one of the big mantras is, ‘do no harm,’” he said. “And that’s still true. Don’t screw up what got the company where it is today. Don’t mess with that.”.