Company: CODI-PB
Filing Date: 2025-02-27
Form Type: 10-K
Source: 0001345126-25-000015
Chunk: 97

Company: Compass Diversified Holdings
Filing Date: 2025-02-27
Form: 10-K
Item: Item 1
Chunk 97
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 or services for customers;

•improving and expanding existing sales and marketing programs;

•pursuing reductions in operating costs through improved operational efficiency or outsourcing of certain processes and products; and

•consolidating or improving management of certain overhead functions.

12

Our businesses typically acquire and integrate complementary businesses. We believe that complementary add-on acquisitions improve our overall financial and operational performance by allowing us to:

•leverage manufacturing and distribution operations;

•leverage branding and marketing programs, as well as customer relationships;

•add experienced management or management expertise;

•increase market share and penetrate new markets; and

•realize cost synergies by allocating the corporate overhead expenses of our businesses across a larger number of businesses and by implementing and coordinating improved management practices.

Acquisition Strategy

Our acquisition strategy is to acquire middle-market companies that we believe have a sustainable competitive advantage and are poised to gain share in attractive markets. Our goal is to produce stable and growing earnings and cash flow. We expect to make platform acquisitions in industries other than those in which our businesses currently operate. We believe that attractive opportunities will continue to present themselves, as private sector owners seek to monetize their interests in long-standing and privately-held businesses and large corporate parents seek to dispose of their “non-core” operations.

Our ideal acquisition candidate has the following characteristics:

•is a leading branded consumer, industrial, healthcare or critical outsourced service company headquartered in North America;

•maintains highly defensible position in the markets it serves and with customers;

•operates in an industry with favorable long-term macroeconomic trends;

•has a strong management team, either currently in place or previously identified, and meaningful incentives;

•has low technological and/or product obsolescence risk; and

•maintains a diversified customer and supplier base.

We benefit from our Manager’s ability to identify potential diverse acquisition opportunities in a variety of industries. In addition, we rely upon our management team’s experience and expertise in researching and valuing prospective target businesses, as well as negotiating the ultimate acquisition of such target businesses. In particular, because there may be a lack of information available about these target businesses, which may make it more difficult to understand or appropriately value such target businesses, on our behalf, our Manager:

•engages in a substantial level of internal and third-party due diligence;

•critically evaluates the target management team;

•identifies and assesses any financial and operational strengths and weaknesses of the target business;

•analyzes comparable businesses to assess financial and operational performances relative to industry competitors;

•actively