Investment Profile
Investment Criteria - Specific Factors
Meaningful Position in a Reasonably Defined and Distinct Market
- Mature industry dynamics with identifiable competitors.
- High growth potential is a lesser consideration.
Clear Barriers to Entry into this Market Position
- Examples may include small markets with unique operational or other pre-requisites for entry, high customer switching costs, control over key assets or resources and contractual, licensing or permitting rights.
- Emphasis on evaluating the sustainability of this market position and the potential for adjacent competition.
Non-Discretionary Demand Profile
Appropriate Margins and Return on Capital
- In relation to the predictability of demand and risk of the business model.
- Emphasis on evaluating pricing power and free cash flow capability.
Appropriate Capital Requirements
- In relation to operating margins and return on capital.
- Preference for predictable, manageable capital expenditures and modest working capital investment.
Cost Structure that Compliments Other Key Characteristics
- More variable to the extent that operating margins are lower, capital intensity is greater or demand is less predictable.
Diversified Customer Base
- In relation to end market concentration and relative market power.
Areas of No Interest
- Nicolet Capital will not invest in technology-dependent or telecommunications companies, pure retail businesses, financial services, severe operational turnarounds and companies with a limited history operations.
