R&M seeks opportunities to invest in (and from time to time invites others to co-invest with it in) –
• well-established profitable private companies
• that have sustainable business models
• generate an EBIT of $2.5 million to about $8 million per annum, and
• are valued at 4 to 5 times EBIT
(A 4 to 5 times EBIT multiple implies 20% to 25% per annum pre-tax and pre-gearing returns on investment.)
Little (if any) premium will be paid for ‘blue sky’ projections.
With a view to aligning the interests of the investors with those of management, R&M prefers the management team to also invest in the company and prefers them to receive any performance bonuses in shares held in escrow for at least 3 years.