Consistent Focus on Mid-Cap Companies in BrazilSince its establishment, Axxon has maintained a consistent and exclusive focus on the mid-cap market. Axxon believes that this segment is particularly well suited for its hands-on, value-added investment approach, as mid-cap companies often lack access to critical financial, operational or strategic development resources, and therefore are excellent candidates for improved performance and growth.
Proven Track Record in Creating Value for Family-Owned BusinessesAxxon has established an excellent reputation and a proven track record in creating significant value for family-owned businesses. Over the past two decades, Axxon partners have developed a deep understanding of the unique set of challenges and opportunities facing family-owned businesses in Latin America, particularly in Brazil. Axxon leverages this experience and understanding to help family-owned businesses “professionalize” their operations and reach their full potential. Examples of family-owned businesses in Axxon’s current and former portfolio include: Aspro, Guerra, Instalarme, Lupatech, Mills, Mundo Verde, and Vetbrands.
Demonstrated Ability to Drive Revenue and EBITDA GrowthSince its inception, Axxon has demonstrated a consistent ability to identify key operational and strategic initiatives with the potential to drive substantial growth in the revenue and EBITDA of its portfolio companies. To date, the companies in Axxon’s realized portfolio have shown an average revenue and EBITDA compound annual growth rates (“CAGRs”) of more than 25% and 40%, respectively.
Experienced and Cohesive Investment TeamAxxon has one of the most experienced and cohesive investment teams with a focus on the mid-cap market in Brazil. In aggregate, the partners have more than 50 years of experience in operating, consulting, M&A, capital markets, and private equity in Latin America. It’s important to note that the partners have worked together for an average of more than seven years.
Investment StrategyAxxon has developed an investment approach which contemplates the capital and professional needs of mid-cap companies in Brazil. Axxon targets companies that have the potential to benefit from its capital resources and support in strategic, financial and operational issues. Axxon’s investment strategy has the following specific elements:
Partner with Management to Improve Operations and Strategic Direction:
The cornerstone of Axxon’s disciplined value-oriented investment strategy is the firm’s ability to partner with management to make significant improvements to the growth and profitability of its portfolio companies. Unlike many private equity firms, Axxon does not rely primarily on leverage or financial engineering to generate attractive investment returns. Instead, Axxon focuses on increasing the value of its portfolio companies by optimizing both their operating performance and strategic direction. This is accomplished by the direct and personal involvement of Axxon’s team with the management of the portfolio companies. Axxon’s initiatives to create value include, but are not limited to:
- Enhancing or replacing management, when necessary
- Partnering with management to develop detailed operational, financial and strategic initiatives designed to facilitate significant revenue and EBITDA growth
- Implementing modern management techniques and governance measures with an emphasis on transparency, information systems, and financial controls
- Structuring clearly defined, performance driven compensation programs designed to retain and motivate key personnel
- Identifying, analyzing and performing executing add on acquisitions
To date, Axxon’s realized portfolio companies have presented average revenue and EBITDA compound annual growth rates (“CAGRs”) of more than 25% and 40%, respectively.
Focus on Control and Significant Minority InvestmentsAxxon focuses exclusively on investments through which it can have the control or the “effective control” of the company to be acquired. Axxon seeks to obtain equity control whenever possible, particularly when a target company requires meaningful modifications to its senior management team or significant changes to its operations to reach its full potential. Axxon will selectively consider significant minority investments if: (i) it can obtain “effective control” through veto rights and/or negative covenants; (ii) it is part of a controlling shareholder group whose interests are closely aligned; or (iii) a target company has exceptionally strong corporate governance and a proven management team that has bought into Axxon’s detailed value creation plan.
Disciplined, value-oriented approach to pricingAxxon proactively seeks out situations that, due to their nature, lead to privately negotiated transactions at attractive prices. Examples of such situations include, but are not limited to: (i) opportunities that require extensive or complex due diligence; (ii) transactions exhibiting many of the idiosyncrasies associated with family-owned businesses, such as a lack of professional management, succession issues, multiple shareholders with divergent interests, insufficient financial reporting; (iv) intricate tax, legal, or regulatory issues; (iv) companies that require complex financial or operational restructuring; and (v) industry consolidations.