Investment Strategy
Expertise
Avem is focused primarily on the aerospace industry with an opportunistic approach to industrial companies. Aerospace is a large, growing global market, with a large number of suppliers having attractive investment characteristics. Avem looks to benefit from the increasing build rates of aerospace platforms and the globalization of the industry.
The Avem team has over 60 years of operating and investing in the lower middle market. All Avem principals have had P&L responsibility at lower middle market companies. Avem has significant relationships with all the major aerospace OEM’s.
Criteria
Avem seeks to make investments in founder-owned, lower middle market companies within the aerospace sector. In particular, the Fund invests $10-50 million per investment in companies with:
- Enterprise Value: $15-150 million
- Revenue: $15-200 million
- EBITDA: $3 million and up
Avem targets companies with certain characteristics:
- Profitable, stable cash flow
- Recurring revenue model
- Engineering-driven precision manufacturing
- Regulated quality controls and product certification requirements
- Long term competitive advantages
Approach
Sourcing
Avem employs a disciplined and consistent process to screen, evaluate and make decisions regarding prospective investments. The Fund’s investment process is analytical, thorough and influenced by the judgment and intuition developed by the Avem Team through their industry, management and investment experience. Avem leverages our extensive aerospace network to find proprietary deals in addition to partnering with a myriad of third party advisors to source new investment opportunities.
Structuring
Given the investment team’s experience as investors, advisors and executives, the Managers of the Fund have a keen sense for how to craft transaction structures that are mutually attractive, align and protect the interests of the parties and provide flexibility to allow for changes over time as necessary. The general principles that the Avem team follows in its deal structures are control investments through majority ownership; management retaining meaningful ownership and receiving competitive compensation packages that reward strong performance; and limited use of leverage.
Building
Avem applies a hands-on governance and portfolio management model to its portfolio companies and brings together the collective experience of its whole team, including the Operating Partners and Advisory Partner. Avem helps its portfolio companies through active board involvement, mentorship of senior executives, implementation of rigorous financial and operating controls, formal planning, budgeting and establishing strong accountability for performance. Additionally, Avem utilizes its extensive network of relationships to support the growth objectives of its portfolio companies.
Exiting
Following the successful implementation of operational improvements and best-in-class governance practices as well as achieving significant organic and acquisition-led growth, Avem seeks to run a competitive and banker led auction process in order to maximize investor returns. The culmination of 3 – 5 years of substantial effort leads to outstanding returns for our limited partner investors.