We believe that a successful investment strategy begins with partnering with the right management team. We strive to partner with management teams that have demonstrated their ability to successfully manage and grow companies throughout economic cycles.
We believe that in order for a company to achieve success in the middle-market, a CEO must assemble a management team with various functional skills that each contribute to the value of the company as a whole. Many smaller companies are run by entrepreneurs who continue to make the vast majority of decisions within their organizations. These same companies may reach a point where their growth is limited by the experience and skill set of the entrepreneur.
We strive to partner with the appropriate leader, who recognizes the synergy and value created by building an experienced team, as well as by adding other components of corporate infrastructure normally required to take any business to the “next level”.
We firmly believe that in order to get everyone focused on creating shareholder value, the financial incentives of the management team and the shareholders must be properly aligned.
To that end, we strongly encourage a significant equity investment by our management teams. In addition, we offer a management incentive plan that provides the management team with the ability to earn up to an additional 20% of the company’s equity value on a tax-advantaged basis, upon the realization of the Fund’s investment.
For any partnership to be successful, each party must contribute and create value. We believe in providing active support in our role as a true partner.
The Fund’s philosophical approach to investing focuses on management’s historical experience and their strategic plan. The Fund’s professionals work extensively with management prior to any investment in order to understand and evaluate management’s strategic plan, and the challenges and opportunities inherent in the company at a micro level and in the industry at a macro level. We provide feedback as to the feasibility of the strategic plan, guidance as to what we believe the likely exit alternatives may be, and guidance regarding the corresponding financial results to all parties if the strategic plan is achieved.
The professionals of TGP have extensive and wide ranging experience in mergers and acquisitions, from the perspectives of both agent and principal. This transaction and investment history has given us the ability to design and execute the appropriate capital structure for each opportunity. Our experience also allows us to implement an extensive and aggressive game plan to identify and acquire add-on acquisitions for platform companies.
We provide board level support and strategic feedback to management on major financial and operational decisions, but we do not interfere with management’s execution of its strategic plan. When the strategic plan has been achieved, we provide guidance on maximizing shareholder value.
TGP’s approach to a portfolio company’s board of directors is to build a team of talented, proven professionals with relevant experience in order to bring great ideas, insights, and other resources for our portfolio company management teams.
Our Fund’s investors consist largely of individuals, most of whom are currently leading, or have historically led, successful middle-market companies. In addition, our belief in management has also enabled us to meet and attract various successful, experienced executives in the business community.
We may use individuals as board members that can add real-world, operational insight and experience to a portfolio company’s management team.
We also seek insights from existing management teams for potential director candidates in order to build the best board of directors possible to support and enhance the management team’s plan and long-term performance.