Our Strategy

Growth Through Strategy

The investment strategy of Oak Capital Group focuses on serving privately owned, small to middle-market emerging and underperforming companies. The resources of Oak Capital Group and its affiliates are invested to facilitate growth plans, management buyouts, capital restructuring, turnarounds and bankruptcy reorganizations. 

Through our partnerships with existing management teams in scalable operating companies that have established revenues and predictable cash flows, we can provide both financial and human capital to significantly enhance the enterprise value of the core business. A typical Merchant Bank investment candidate will have annual revenues ranging from $3 million to $30 million and will be focused on consumer products, business services, energy, manufacturing, distribution and non-profits.

Our Investment Strategy Has Four Components

  1. Invest in basic industries with established revenues and predictable cash flows.
  2. Invest in emerging or underperforming firms in the lower end of the middle-market.
  3. Structure our investments for success.
  4. Invest in partnership with management.

1. Invest in basic industries with established revenues and predictable cash flows

Our focus on basic industries allows us more flexibility in the amount of time and expertise we can invest in our clients. There are significant economic returns available to those investors in smaller firms that can recognize and harness the power of business metrics and information systems. We utilize proven technology to bring stable and predictable cash flows to our partnerships. We recognize that even good management teams can be overwhelmed by financial challenges. We invest where we can complement the operational talents of existing management.

2. Invest in emerging or underperforming firms in the lower end of the middle-market

The smaller emerging and underperforming firms are underserved. We view our investments as a value opportunity. Through our proprietary advisory experience, we are able to bundle a broad spectrum of critical expertise that smaller firms need but generally cannot afford. We invest significant time in developing corporate strategy, determining appropriate business benchmarks, supporting management teams and systems, and monitoring performance. Our experience continues to support our belief that this market provides the best opportunity for consistently superior returns and results that benefit customers, employees, vendors, lenders, management, owners and investors.

3. Structure our investments for success

Emerging and underperforming firms each require a unique strategy to achieve economic success. As a result of our extensive background in restructuring corporations we are very focused on transaction motivations. We have found that when key employees, management and partners are: a) equipped with appropriate action plans, systems and capital and b) are offered a fair incentive for superior results, then predictable superior results occur. We maintain that a flexible approach is required in achieving the best transaction outcome, whether through debt or stock, with either a majority or minority ownership basis.

4. Invest in partnerships with management

We seek opportunities where management has a collaborative approach in building its business. While we actively support management by providing strategic operating and financial guidance, we do not seek to operate our portfolio companies on a day-to-day basis. Fundamental teamwork typically occurs only when management interests are closely aligned with investor interests through meaningful equity ownership and performance-based equity incentives. We believe that seasoned, talented, and committed management teams that are financially incented are the best way to build shareholder wealth.

Investment Criteria

We believe attractive investment opportunities exist in the under $5 million range with a heavy weighting on the under $1 million investment size. We focus on jewelry, sporting goods, apparel and general retailers as well as vertically integrated manufacturers or wholesalers who serve those retail markets. We also seek investments in business services, energy, manufacturing, distribution and non-profits. While our investment criteria outlined below provide a general investment profile, each transaction is viewed and structured on an individual basis.

Management Characteristics

We prefer that the management team participates in ownership.

Transaction Types

  • Management Buyouts and Divestitures
  • Growth Stage (No Seed Round Funding)
  • Recapitalizations and Acquisitions
  • Turnarounds and Restructurings
  • Debtor in Possession (DIP) Funding
  • Bankruptcy Exit (POR) Funding
  • Project Finance

Industry Focus

  • Consumer Products
  • Business Services
  • Energy (Niche Sectors)
  • Manufacturing (Niche Sectors)
  • Distribution (Value Added)
  • Non-Profits (Capital Assets)

Company Size

  • Annual Revenues of $3 million to $30 million Transaction Size
  • Up to $5 million Company Characteristics
  • Established Products and Services
  • Defensible market position with strategic advantages
  • Reasonable ability to restructure for future profitable operations
  • Reasonable Technology Obsolescence
  • Material Asset Base and/or Cash Flows to Support Transaction