arcee-ai/sec-data-full · Datasets at Hugging Face

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provides us with certain additional advantages, including the ability t ● recruit
and develop management teams for our businesses that are familiar with the industries in
which our businesses operate; ● focus
on developing and implementing business and operational strategies to build and sustain shareholder
value over the long term; ● create
sector-specific businesses enabling us to take advantage of vertical and horizontal acquisition
opportunities within a given sector; ● achieve
exposure in certain industries in order to create opportunities for future acquisitions;
and ● develop
and maintain long-term collaborative relationships with customers and suppliers. We intend to continually increase our intellectual
capital as we operate our businesses and acquire new businesses and as our manager identifies and recruits qualified operating partners
and managers for our businesses. Acquisition Strategy Our acquisition strategies involve the acquisition
of small businesses in various industries that we expect will produce positive and stable earnings and cash flow, as well as achieve
attractive returns on our invested capital. In this respect, we expect to make acquisitions in industries wherein we believe an acquisition
presents an attractive opportunity from the perspective of both (i) return on assets or equity and (ii) an easily identifiable path for
growing the acquired businesses. We believe that attractive opportunities will increasingly present themselves as private sector owners
seek to monetize their interests in longstanding and privately held businesses and large corporate parents seek to dispose of their “non-core”
operations. We believe that the greatest opportunities for
generating consistently positive annual returns and, ultimately, residual returns on capital invested in acquisitions will result from
targeting capital light businesses operating in niche geographical markets with a clearly identifiable competitive advantage within the
following industri business services, consumer services, consumer products, consumable industrial products, industrial services, niche
light manufacturing, distribution, alternative/specialty finance and in select cases, specialty retail. While we believe that the professional
experience of our management team within the industries identified above will offer the greatest number of acquisition opportunities,
we will not eschew opportunities if a business enjoys an inarguable moat around its products and services in an industry which our management
team may have less familiarity. From a financial perspective, we expect to make
acquisitions of small businesses that are stable, have minimal bad debt, and strong accounts receivable. In addition, we expect to acquire
companies that have been able to generate positive pro forma cash available for distribution for a minimum of three years prior to acquisition.
Our previous acquisitions met these acquisition criteria. 4 We benefit from our manager’s ability to
identify diverse acquisition opportunities in a variety of industries. In addition, we rely upon our management teams’ 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, our manager wil ● engage
in a substantial level of internal and third-party due diligence; ● critically
evaluate the management team; ● identify
and assess any financial and operational strengths and weaknesses of any target business; ● analyze
comparable businesses to assess financial and operational performances relative to industry
competitors; ● actively
research and evaluate information on the relevant industry; and ● thoroughly
negotiate appropriate terms and conditions of any acquisition. The process of acquiring new businesses is time-consuming
and complex. Our manager has historically taken from 2 to 24 months to perform due diligence on, negotiate and close acquisitions. Although
we expect our manager to be at various stages of evaluating several transactions at any given time, there may be significant periods
of time during which it does not recommend any new acquisitions to us. Upon an acquisition of a new business, we rely
on our manager’s experience and expertise to work efficiently and effectively with the management of the new business to jointly
develop and execute a business plan. While primarily seek to acquire controlling interests
in a business, we may also acquire non-control or minority equity positions in businesses where we believe it is consistent with our
long-term strategy. As discussed in more detail below, we intend
to raise capital for additional acquisitions primarily through debt financing, primarily at our operating company level, additional equity
offerings by our company, the sale of all or a part of our businesses or by undertaking a combination of any of the above. Our primary corporate purpose is to own, operate
and grow our operating businesses. However, in addition to acquiring businesses, we expect to sell businesses that we own from
time to time. Our decision to sell a business will be based upon financial, operating and other considerations rather than a plan
to complete a sale of a business within any specific time frame. We may also decide to own and operate some or all of our businesses
in perpetuity if our board believes that it makes sense to do so. Upon the sale of a business, we may use the resulting proceeds to retire
debt or retain proceeds for future acquisitions or general corporate purposes. Generally, we do not expect to make special distributions
at the time of a sale of one of our businesses; instead, we expect that we will seek to gradually increase regular common shareholder
distributions over time. There are several risks associated with our acquisition
strategy, including the following risks, which are described more fully in Item 1A “ Risk Factors—Risks Related to Our
Business and Structure ”: ● we
may not be able to successfully fund future acquisitions of new businesses due to the unavailability
of debt or equity financing on acceptable terms, which could impede the implementation of
our acquisition strategy; ● we
may experience difficulty as we evaluate, acquire and integrate businesses that we may acquire,
which could result in drains on our resources, including the attention of our management,
and disruptions of our on-going business; ● we
face competition for businesses that fit our acquisition strategy and, therefore, we may
have to acquire targets at sub-optimal prices or, alternatively, forego certain acquisition
opportunities; and ● we
may change our management and acquisition strategies without the consent of our shareholders,
which may result in a determination by us to pursue riskier business activities. Strategic Advantages Based on the experience of our manager and its
ability to identify and negotiate acquisitions, we believe that we are strongly positioned to acquire additional businesses. Our manager
has strong relationships with business brokers, investment and commercial bankers, accountants, attorneys and other potential sources
of acquisition opportunities. In negotiating these acquisitions, we believe our manager will be able to successfully navigate complex
situations surrounding acquisitions, including corporate spin-offs, transitions of family-owned businesses, management buy-outs and reorganizations. 5 We believe that the flexibility, creativity,
experience and expertise of our manager in structuring transactions provides us with strategic advantages by allowing us to consider
non-traditional and complex transactions tailored to fit a specific acquisition target. Our manager also has a large network of deal
intermediaries who expose us to potential acquisitions. Through this network, we have a substantial pipeline of potential acquisition
targets. Our manager also has a well-established network of contacts, including professional managers, attorneys, accountants and other
third-party consultants and advisors, who may be available to assist us in the performance of due diligence and the negotiation of acquisitions,
as well as the management and operation of our businesses once acquired. Valuation and Due Diligence When evaluating businesses or assets for acquisition,
we perform a rigorous due diligence and financial evaluation process. In doing so, we seek to evaluate the operations of the target business
as well as the outlook for the industry in which the target business operates. While valuation of a business is, by definition, a subjective
process, we define valuations under a variety of analyses, includin ● discounted
cash flow analyses; ● evaluation
of trading values of comparable companies; ● expected
value matrices; ● assessment
of competitor, supplier and customer environments; and ● examination
of recent/precedent transactions. One outcome of this process is an effort to project
the expected cash flows from the target business as accurately as possible. A further outcome is an understanding of the types and levels
of risk associated with those projections. While future performance and projections are always uncertain, we believe that our detailed
due diligence review process allows us to more accurately estimate future cash flows and more effectively evaluate the prospects for
operating the business in the future. To assist us in identifying material risks and validating key assumptions in our financial and
operational analysis, in addition to our own analysis, we engage third-party experts to review key risk areas, including legal, tax,
regulatory, accounting, insurance and environmental. We may also engage technical, operational or industry consultants, as necessary. A further critical component of the evaluation
of potential target businesses is the assessment of the capability of the existing management team, including recent performance, expertise,
experience, culture and incentives to perform. Where necessary, and consistent with our management strategy, we actively seek to augment,
supplement or replace existing members of management who we believe are not likely to execute the business plan for the target business.
Similarly, we analyze and evaluate the financial and operational information systems of target businesses and, where necessary, we actively
seek to enhance and improve those existing systems that are deemed to be inadequate or insufficient to support our business plan for
the target business. Financing We finance acquisitions primarily through additional
equity and debt financings. We believe that having the ability to finance most, if not all, acquisitions with the general capital resources
raised by our company, rather than financing relating to the acquisition of individual businesses, provides us with an advantage in acquiring

provides us with certain additional advantages, including the ability t ● recruit

and develop management teams for our businesses that are familiar with the industries in

which our businesses operate; ● focus

on developing and implementing business and operational strategies to build and sustain shareholder

value over the long term; ● create

sector-specific businesses enabling us to take advantage of vertical and horizontal acquisition

opportunities within a given sector; ● achieve

exposure in certain industries in order to create opportunities for future acquisitions;

and ● develop

and maintain long-term collaborative relationships with customers and suppliers. We intend to continually increase our intellectual

capital as we operate our businesses and acquire new businesses and as our manager identifies and recruits qualified operating partners

and managers for our businesses. Acquisition Strategy Our acquisition strategies involve the acquisition

of small businesses in various industries that we expect will produce positive and stable earnings and cash flow, as well as achieve

attractive returns on our invested capital. In this respect, we expect to make acquisitions in industries wherein we believe an acquisition

presents an attractive opportunity from the perspective of both (i) return on assets or equity and (ii) an easily identifiable path for

growing the acquired businesses. We believe that attractive opportunities will increasingly present themselves as private sector owners

seek to monetize their interests in longstanding and privately held businesses and large corporate parents seek to dispose of their “non-core”

operations. We believe that the greatest opportunities for

generating consistently positive annual returns and, ultimately, residual returns on capital invested in acquisitions will result from

targeting capital light businesses operating in niche geographical markets with a clearly identifiable competitive advantage within the

following industri business services, consumer services, consumer products, consumable industrial products, industrial services, niche

light manufacturing, distribution, alternative/specialty finance and in select cases, specialty retail. While we believe that the professional

experience of our management team within the industries identified above will offer the greatest number of acquisition opportunities,

we will not eschew opportunities if a business enjoys an inarguable moat around its products and services in an industry which our management

team may have less familiarity. From a financial perspective, we expect to make

acquisitions of small businesses that are stable, have minimal bad debt, and strong accounts receivable. In addition, we expect to acquire

companies that have been able to generate positive pro forma cash available for distribution for a minimum of three years prior to acquisition.

Our previous acquisitions met these acquisition criteria. 4 We benefit from our manager’s ability to

identify diverse acquisition opportunities in a variety of industries. In addition, we rely upon our management teams’ 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, our manager wil ● engage

in a substantial level of internal and third-party due diligence; ● critically

evaluate the management team; ● identify

and assess any financial and operational strengths and weaknesses of any target business; ● analyze

comparable businesses to assess financial and operational performances relative to industry

competitors; ● actively

research and evaluate information on the relevant industry; and ● thoroughly

negotiate appropriate terms and conditions of any acquisition. The process of acquiring new businesses is time-consuming

and complex. Our manager has historically taken from 2 to 24 months to perform due diligence on, negotiate and close acquisitions. Although

we expect our manager to be at various stages of evaluating several transactions at any given time, there may be significant periods

of time during which it does not recommend any new acquisitions to us. Upon an acquisition of a new business, we rely

on our manager’s experience and expertise to work efficiently and effectively with the management of the new business to jointly

develop and execute a business plan. While primarily seek to acquire controlling interests

in a business, we may also acquire non-control or minority equity positions in businesses where we believe it is consistent with our

long-term strategy. As discussed in more detail below, we intend

to raise capital for additional acquisitions primarily through debt financing, primarily at our operating company level, additional equity

offerings by our company, the sale of all or a part of our businesses or by undertaking a combination of any of the above. Our primary corporate purpose is to own, operate

and grow our operating businesses. However, in addition to acquiring businesses, we expect to sell businesses that we own from

time to time. Our decision to sell a business will be based upon financial, operating and other considerations rather than a plan

to complete a sale of a business within any specific time frame. We may also decide to own and operate some or all of our businesses

in perpetuity if our board believes that it makes sense to do so. Upon the sale of a business, we may use the resulting proceeds to retire

debt or retain proceeds for future acquisitions or general corporate purposes. Generally, we do not expect to make special distributions

at the time of a sale of one of our businesses; instead, we expect that we will seek to gradually increase regular common shareholder

distributions over time. There are several risks associated with our acquisition

strategy, including the following risks, which are described more fully in Item 1A “ Risk Factors—Risks Related to Our

Business and Structure ”: ● we

may not be able to successfully fund future acquisitions of new businesses due to the unavailability

of debt or equity financing on acceptable terms, which could impede the implementation of

our acquisition strategy; ● we

may experience difficulty as we evaluate, acquire and integrate businesses that we may acquire,

which could result in drains on our resources, including the attention of our management,

and disruptions of our on-going business; ● we

face competition for businesses that fit our acquisition strategy and, therefore, we may

have to acquire targets at sub-optimal prices or, alternatively, forego certain acquisition

opportunities; and ● we

may change our management and acquisition strategies without the consent of our shareholders,

which may result in a determination by us to pursue riskier business activities. Strategic Advantages Based on the experience of our manager and its

ability to identify and negotiate acquisitions, we believe that we are strongly positioned to acquire additional businesses. Our manager

has strong relationships with business brokers, investment and commercial bankers, accountants, attorneys and other potential sources

of acquisition opportunities. In negotiating these acquisitions, we believe our manager will be able to successfully navigate complex

situations surrounding acquisitions, including corporate spin-offs, transitions of family-owned businesses, management buy-outs and reorganizations. 5 We believe that the flexibility, creativity,

experience and expertise of our manager in structuring transactions provides us with strategic advantages by allowing us to consider

non-traditional and complex transactions tailored to fit a specific acquisition target. Our manager also has a large network of deal

intermediaries who expose us to potential acquisitions. Through this network, we have a substantial pipeline of potential acquisition

targets. Our manager also has a well-established network of contacts, including professional managers, attorneys, accountants and other

third-party consultants and advisors, who may be available to assist us in the performance of due diligence and the negotiation of acquisitions,

as well as the management and operation of our businesses once acquired. Valuation and Due Diligence When evaluating businesses or assets for acquisition,

we perform a rigorous due diligence and financial evaluation process. In doing so, we seek to evaluate the operations of the target business

as well as the outlook for the industry in which the target business operates. While valuation of a business is, by definition, a subjective

process, we define valuations under a variety of analyses, includin ● discounted

cash flow analyses; ● evaluation

of trading values of comparable companies; ● expected

value matrices; ● assessment

of competitor, supplier and customer environments; and ● examination

of recent/precedent transactions. One outcome of this process is an effort to project

the expected cash flows from the target business as accurately as possible. A further outcome is an understanding of the types and levels

of risk associated with those projections. While future performance and projections are always uncertain, we believe that our detailed

due diligence review process allows us to more accurately estimate future cash flows and more effectively evaluate the prospects for

operating the business in the future. To assist us in identifying material risks and validating key assumptions in our financial and

operational analysis, in addition to our own analysis, we engage third-party experts to review key risk areas, including legal, tax,

regulatory, accounting, insurance and environmental. We may also engage technical, operational or industry consultants, as necessary. A further critical component of the evaluation

of potential target businesses is the assessment of the capability of the existing management team, including recent performance, expertise,

experience, culture and incentives to perform. Where necessary, and consistent with our management strategy, we actively seek to augment,

supplement or replace existing members of management who we believe are not likely to execute the business plan for the target business.

Similarly, we analyze and evaluate the financial and operational information systems of target businesses and, where necessary, we actively

seek to enhance and improve those existing systems that are deemed to be inadequate or insufficient to support our business plan for

the target business. Financing We finance acquisitions primarily through additional

equity and debt financings. We believe that having the ability to finance most, if not all, acquisitions with the general capital resources

raised by our company, rather than financing relating to the acquisition of individual businesses, provides us with an advantage in acquiring