INVESTMENT FOCUS & CRITERIA
We invest significant time and resources researching attractive industry segments. As a result, we can quickly assess whether we are interested in investigating a business further. This often takes place within 72 hours. If we are interested, we are able to leverage our research and move quickly to complete a transaction.
Serent invests in great businesses with exciting growth prospects. Our investment approach is to identify sectors with robust growth, and then to invest significant time and resources researching those sectors to identify attractive business models. We focus predominantly on services businesses, particularly ones with moderate to light capital intensity, requiring limited capital expenditures. We also look for companies at key inflection points, where they can benefit from our experience and expertise in business building.
We like businesses that operate in sectors that are undergoing significant change, with dynamics that create or expand a market opportunity beyond what has been available historically. Examples include sectors that are benefiting from strong demographic trends, from shifting distribution, sourcing, or staffing models, or from technology enablement.
SCALABLE BUSINESS MODELS
We like emerging new businesses that have developed a “secret sauce” in the form of capabilities, resources, proprietary content/information, or other types of intellectual property. Typically, this secret sauce is delivered in the form of a service and has subscription or recurring revenue. These services benefit from increasing scale, which helps establish a sustainable and defensible market position.
OPPORTUNITY TO BUILD BUSINESSES
We prefer to invest in companies that will benefit from the experience and expertise of Serent’s principals in business building. We believe that by partnering together, we can build great companies and earn great returns.
We are open to buying businesses where an owner may not want an active role going forward, and we are very comfortable working with those owners and companies to ensure a smooth and successful transition for all parties.
Serent Capital typically invests from $20 million to $200 million in B2B software companies with a strong product market fit and 30%+ Net Promoter Score (NPS).
In general, the companies in which we invest have the following characteristics:
We are comfortable with a range of annual recurring revenues, from $5 million (or a path to $5 million) to $100 million
We focus on growing businesses and look for annual growth from 20-1000%
We look for businesses that are profitable or have a path to profitability
We make investments of the following types:
We provide liquidity for entrepreneurs looking to sell a majority or minority stake in their businesses, while allowing them either to retain operational control or to bring in a new management team.
Through a highly collaborative process, we are able to develop thoughtful and successful exit strategies for business owners. Our versatile approach allows us to partner with existing management teams or to engage new management if needed.
We bring our business building experience and financial capital to bear to make significant investments that accelerate growth. This is typically done in conjunction with a recapitalization.
In our investments, we look for a meaningful ownership stake and always look for a role for Serent to work actively with management in building the business.