THE RELAY APPROACH
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 $1-5mm 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 opportunities… other financial and strategic players find it too small to enter.
SUCCESSION OVER TURNAROUND
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 entrepreneurs and their investors create value through:
(69% EBITDA expansion on Relay-backed exits)
(translates into efﬁciencies and multiple expansion)
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.