Process Oriented. Diligent Underwriting and Oversight. Aversion to Risk.
A different way to manage assets … tailored for legacy assets with … balancing investment horizon with potential returns.
The tension between maximizing value vs. timing of liquidity is the initial gating issue to address. While the approach is tailored to the specific assets, the parties and the situation, Colonnade employs the following basic principles:
- Manage companies, not macro trends. Holding middle market companies to profit from cyclical, political or financial possibilities is not a reasonable investment strategy.
- Critique the original investment thesis. If it is broken or outdated stop investing resources to execute it. Identify strengths and components of value and maximize their contribution to the exit value.
- Low valuation and weak liquidity are often driven by liabilities, often contingent and sometimes only perceived. Deal with these head on – eliminate them or effectively ring fence them and get third party verification of the value/cost. Do not wait for a proposed liquidity event to address them.
- In both the short and long term manage the asset to the ultimate purchase and sale agreement. It is impossible to achieve exit finality in the absence of transparency, mitigating the unknowns and having third party input to support a valuation the buyer can rely on.
- Explore solutions that already exist inside the portfolio company. Often imperfect but are known and quickly implemented. Empower those with knowledge, not titles or position.
- Hold everyone accountable. Discourage excuses. History and the future plans it drives are all that matter.
- Every day we don’t seek liquidity we are de facto making a new investment. Know why.