If We Remain a Business Development Company, We Will Look For Promising Companies That Need Our Strategic Assistance as Well as Our Capital. 

As noted under ‘Operating Company Strategy‘, we intend to transform Equus into an operating company instead of closed-end fund. To the extend that we continue to make investments as an investment fund, Equus will often serve as the lead and co-investor for transactions, seeking to build shareholder value by making yielding, equity and other investments in middle-market companies across various industries. We utilize the strong network of our professionals to generate proprietary deal flow to invest in businesses that have an opportunity to capitalize on favorable industry dynamics and market opportunities.

Our strategy and advisory teams are customized to fit the industry sector and stage of development of our investee companies.  We work with each group and company according to its specific financial, strategic and growth needs to facilitate investment, operational flexibility, sustainable growth and full valuation.  This more nuanced approach enables us to work alongside each group or company to achieve certain core objectives:

• Provide required capital;
• Create a clear strategic roadmap to achieve growth, sustainability and full valuation;
• Help realize each investee company’s vision by adding management and strategic services; and
• Avoid unplanned or unwanted loss of value and company or project control.

Smaller and mid-market growth companies have been known to produce innovative technologies and proprietary business methods to power products and services, but rarely have the resources and know-how to commercialize them.  We specialize in financing and then helping execute the sales and business development ramp for innovative firms to grow their operating businesses – with the objective of creating superior equity returns for the benefit of our stockholders.

If we Remain a ‘Business Development Company’, We Will Not Be a Passive Investor. 

Our hands-on investment approach not only makes business sense, it is required by statute.  Equus is presently classified by the SEC as a ‘business development company’, which means that we are obligated to provide ‘significant managerial assistance’ to our portfolio companies.  The strategic advice and operational support we provide can consist of any or all of the following:

• Corporate finance strategy and advice;
• Operational and industry review and strategy;
• Business development assistance and services;
• Board and board committee participation;
• Industry positioning and networking advisory;
• Non-legal regulatory and compliance advice;
• Introductions to banks, lenders, and commercial sources of trade financing; and
• Assistance in the recruitment of key personnel and non-executive directors.
  

 OUR PROCESS:

A Rigorous Process Focused on Results 

Our proprietary methodology is based upon our view of best practices gained from decades of experience in private equity and operational expertise accrued by our management team.  Our intensive process affords us a high level of intelligence and control over our investment opportunities and in turn can shape the business plans and exit strategies for our portfolio companies. At its core, we adhere to strategic and confirmatory due diligence with deep, objective analytics that allow us to effectively establish valuation and investment terms.  Our thorough process is the foundation of the companies we build.  Below is an outline of this process:

1. Source Proprietary Deals
   1. Build an active investment opportunity pipeline
   2. Evaluate specific industries
   3. Understand growth potential
   4. Analyze industry structure
   5. Identify opportunities
   6. Provide financing to financial sponsors/small and mid-size companies
2. Seek to Identify Undervalued Assets
   1. Operational/Financial
   2. Restructuring
   3. Strategic repositioning
   4. Consolidations
   5. Identify cross-industry trends
   6. Globalization/regulation, etc..
3. Engage in Robust Due Diligence
   1. Industry analysis
   2. Operational, finance, and cash flow analysis
   3. Management and key personnel interviews
   4. Evaluate management capabilities
   5. Benchmark operations
   6. Interview customers and suppliers
   7. Validate business model and projections
   8. Legal, accounting, tax, regulatory, and environmental
   9. Identify impediments to growth
4. Establish Investment Structure and Terms
   1. Sensitivity analysis
   2. Identify cash flow drivers
   3. Quantify revenue growth and cost reduction potential
   4. Design loan/shareholder/management covenants
   5. Confirmatory due diligence
   6. Board, management, and visibility rights
5. Management and Oversight
   1. Informed and incentivized operating and financial executives 
   2. Active portfolio compliance monitoring 
   3. Internal Compliance Officer 
   4. Focused on increasing revenue/controlling costs 
   5. Effective cost controls
6. Adding Value Through Strategic, Operational and Management Assistance
   1. Identifying growth opportunities
   2. Sales and marketing advice and assistance 
   3. Supply chain 
   4. Inventory management 
   5. Alter/refine strategies 
   6. Technology innovation 
   7. Portfolio company management support 
   8. Develop key personnel 
   9. Help design inclusive incentive plans
7. Seek to Monetize Investments
   1. Exit options
   2. Public offering
   3. Sale
   4. M&A
   5. Financial recapitalization
   6. Maturity of loan
   7. Optimize market timing for exit
8. Identify Buyers
   1. Strategic buyers
   2. Financial buyers
   3. Opportunistic buyers