HOW WE INVEST ACROSS THE GLOBE
Relay Investments’ search funds invest in hidden gems in the lower end of the PE market. The firm’s search funds generate outsized returns for entrepreneurs and investors.
We strive to find hidden gems, typically in the $1-3mm EBITDA range, by using the search fund model to discover and invest in highly motivated entrepreneurs, usually graduates of top tier MBA programs. This lower end of the private equity market generally provides outsize return opportunity, because other financial and strategic players find it too small to enter.
We fund acquisitions of healthy businesses operating in fragmented markets under stable regulatory and political regimes. These companies tend to have been operating profitably for at least 3 years with B2B, recurring revenue business models and low capital intensity. Minimal customer and supplier concentration provides us with a margin of safety.
“This lower end of the private equity market generally provides outsize return opportunity…other financial and strategic players find it too small to enter.”
The owners of our target companies generally seek retirement after a long career and view our searchers as younger versions of themselves, allowing us oftentimes to pay lower prices than in competitive processes. The low entry multiples help improve investor IRR; our average EBITDA margin expansion on companies we have successfully sold is 69%.
We avoid investing in cyclical industries as well as those driven by commodity prices and other exogenous factors. We do not invest in start-ups, real estate, or turnarounds.