At Diamond Rock Capital, we strive to invest in the highest quality lower middle market businesses and management teams. We prefer investing in well established businesses with world-class management teams, sustainable competitive advantages, strong and stable cash flows, moderate capital expenditure needs and industries/sectors that can weather cyclical downturns.
In general, we look to acquire businesses that have as many of the following characteristics as possible:
Stable and dependable cash flow, low indebtedness, a solid asset base that provides risk mitigation, a strong management team interested in remaining and becoming part of something larger, opportunity for strategic redirection, an unrealized market opportunity, and opportunity to improve operational performance.