RC/Fontis partners with companies that substantially fit certain attributes and business criteria. We know that every opportunity is unique, and it is likely that no one company will meet every element of our profile, but we do look for candidates to meet a majority of them.
We look for companies with $10 – $50M in revenues and have reached profitability. The company should be operating cash flow positive (before growth initiatives).
We look at the full spectrum, including growth / acquisition capital, management buyouts, and recapitalizations. We generally invest in the form of equity, but will also consider mezzanine debt in concert with equity.
Our emphasis is on companies in California (particularly Southern California) and the western US, including, but not limited to, New Mexico, Arizona and Texas. We will go beyond this geography for the right opportunity, but prefer to be readily accessible, given our level of involvement. We do not invest outside the US.
Our targets are companies in consumer goods, media, and a broad range of service companies, with a particular emphasis on companies serving ethnic markets.
We generally invest $5-10M at the outset, with the expectation of follow-on financing, for a total of $10-12M per company.
Because we make a relatively small number of investments, being the lead investor and taking a board seat is more consistent with our approach. However, we frequently invest with other reputable private equity firms, and will follow one of those investors as long as we still obtain a board seat.
Our objective is equity appreciation. Our compensation is a function of the returns we generate for our investors; as such, we evaluate opportunities according to a set of criteria that we believe is essential to value creation.
The Company has the potential to substantially grow their business, and serves a market that is large enough to facilitate the creation of a substantial business over time. The Company’s product or service must address a recognized need in the marketplace. Finally, the market should allow for attractive financial returns.
A successful company is built by a strong and cohesive team that has the leadership skills to inspire greatness and to seek best practices, as well as market expertise and strategic vision. We recognize that not every company has all the pieces in place to support significant growth, and we are prepared to help management fill those gaps.
The Company should be a leader in its market segment. Furthermore, the management team should possess a clear vision of the changing competitive environment and how to strengthen and sustain its competitive advantage.