Value Creation

Charter Oak Equity's General Partners have extensive, hands-on experience in both operating companies and executing financial transactions. Our extended team includes our Advisors, who are a group of senior executives with decades of senior level management experience across a variety of industries. They assist us with due diligence and serve on our Boards of Directors. The General Partners and Advisors work closely with our Management Teams, who best know the company, to build value for our investors.

The first step in this process is the creation of an Investment Thesis that is created during the acquisition phase of our involvement and developed with the Management Team. The Investment Thesis is a road map for growth, value creation and the exit strategy. It sets key measures and goals for the company and defines investment criteria consistent with growth plans, including capital expenditures and capital for acquisitions.

During the initial acquisition phase, we invite the Management Team to invest in equity along side COE and develop a stock option incentive program with them to ensure that our interests are properly aligned and enabling them to participate in the success of their company.

Once COE invests in a company, the focus immediately shifts to building value. The first step in this process is to form the Board of Directors, whose members will have been identified during the due diligence process. The Board of Directors addresses strategic issues, monitors and checks progress, and reviews major opportunities that develop.

COE relies on the Management Team to manage day-to-day operations. The General Partners, along with Board members, work with the Management Team to quickly optimize business performance. Often small companies have great potential for rapid cost reduction and working capital improvement by implementing sophisticated management techniques. Best practices in purchasing, manufacturing, quality, customer service and logistics introduced by the COE team may significantly reduce costs without risk to the business. Programs such as these are easier to implement in small companies where there are fewer employees, operations, facilities, vendors and customers impacted. Utilizing these best practices can deliver big payoffs as cash generated reduces outstanding debt and/or provides borrowing capacity for capital expenditures and other cash needs.

A key element of our value build strategy is to further grow our companies through add-on investments. We work to identify optimal acquisition targets and assist in the merger integration process.

With a refined business strategy and efficient cost structure in place, incremental revenue generates a substantially higher contribution margin and the bottom line grows faster, on a percentage basis, than the top line. As a result, company enterprise value is greatly enhanced through higher profitability and accelerated paydown of debt.