Within the Business Services sector, Millpond focuses on investments in businesses providing mission-critical products and services underpinning a strong customer value proposition and high levels of customer retention.
Many of these businesses offer particular expertise which is difficult for their customers to develop and maintain internally, present structural barriers to competition and when combined with the mission-critical nature of their services, command pricing power underpinning a favorable investment risk-return profile.
Additionally, today’s outsourced services sector often includes businesses where technology and human resources are utilized to differentiate service offerings and go-to-market strategies, providing businesses the ability to scale and offering attractive investment attributes.
Millpond targets businesses possessing the following core characteristics:
- Mission critical services underpinning a high customer value proposition and recurring demand.
- Critical reliance on specialized expertise that is more optimally managed and maintained outside of a customer’s core operations.
- Businesses providing competitive differentiation in how customers are acquired or in how services are delivered.
- Target investments possess attractive financial metrics including compelling profit and cash flow margins.
- Opportunity to execute Millpond Operating Process to drive value post-close.
Several key trends are driving growth in the large and fragmented Business Services sector, yielding attractive investment opportunities, which include:
- An under-penetrated market, with an estimated 70% of functional business services still performed in-house across all enterprises.
- The expansion of outsourced service adoption by small- and medium-sized enterprises, driven in part by technological advances, which facilitate efficient service delivery.
“Millpond has an appreciation for mission-driven companies in the business services industry. Their Principals were ideal to work with to further establish CPI as the leader in our market and execute our strategic growth initiatives.”
Primary Investment Focus
We partner with leaders of middle market business services companies.