Our Approach

Making decisions to maximize short-term enterprise value can create perverse incentives and drive operators to make decisions that are not in the best long-term interest of the company when constrained by time and by financial benchmarks. At Alitus, we have removed the incentive to drive short-term results at the expense of long-term value creation by having a 10- to 20-year investment horizon. This allows our partners and operators to make decisions that are in the best interest of all stakeholders and maximize long-term value.

Focus

Alitus Partners

Optimizing operations and sustainable growth

  • Because of our long-term approach, we take the time necessary to solidify the business model and prepare for sustained growth
  • Maintain focused on core business stability through each phase of growth

Private EQuity

Maximizing IRR

  • Private equity investors use IRR as a key performance metric when evaluating which funds to invest in. As such, private equity firms are incentivized to maximize IRR. The easiest ways to do this are to minimize the purchase price, minimize the equity investment by maximizing leverage, and exiting the business quickly and at a higher valuation through a bump in operating performance or growth

Management

Alitus Partners

Partnering with existing owners and management teams (“buy in” approach)

  • We believe that the existing owners and operators are the backbone to each business and as such, they are integral to the story and the continued success of the company
  • We incentivize owners to create additional value for themselves and give them the opportunity to be part of a much larger business over the long-term

Private EQuity

Bring in new management teams (“buy out” approach)

  • Bring in new management teams post-acquisition with the goal of enhancing growth and operations quickly
  • Private equity professionals don’t have operational experience so they must look outside the firm for support
  • Management is incentivized to make short-term decisions

Time Horizon

Alitus Partners

Long time horizon, 10 to 20 years

  • We built our own businesses over several decades and understand that it takes time to maximize equity value
  • We are not obligated to sell any business; if you take the time to build a great company, why sell it?
  • Principal incentives are to maximize long-term value

Private Equity

Short time horizon, 3 to 5 years

  • Most funds have a 10 year life, so investments must be exited quickly
  • Limited flexibility to hold an investment for the long-term
  • Ensure there is value left on the table for the next investor
  • Principal incentives are to maximize short-term value creation

Leverage

Alitus Partners

Select use of leverage

  • We understand the benefits of modest leverage but believe that operating flexibility is more important than maximizing leverage
  • Leverage should be used to help a company grow and using more leverage than necessary impedes cash flow and ultimately strains growth

Private Equity

Use of maximum leverage

  • The dynamic with traditional investors incentivizes the use of more debt and less equity to purchase an asset
  • High leverage tends to mean limited operating flexibility and high interest payments, which burden organic growth and make it more difficult to reinvest

Capital

Alitus Partners

Primarily investing our own capital

  • We have a lot at stake and have real interest in the success of each company

Private EQuity

Primarily investing others’ capital

  • Private equity professionals typically invest 1-2% of a fund’s total equity
  • The rest is raised from large institution investors (e.g., pension funds, endowments, municipalities)

Experience

Alitus Partners

More than 100 years of operating experience

  • Other firms talk about their years of investing experience, we talk about our years of operating experience
  • We have also completed more than 75 acquisitions between us

Private EQuity

Years of investing experience

  • Limited or no operating experience