STRATEGY
The Micro Mergers & Acquisitions Opportunity
Belevon Capital seeks to make individual investments, in lower middle market companies (typically to $500k to 5million in EBITDA) to create strategic rollups with an emphasis on business services. We call this approach Micro Mergers & Acquisitions
Over the long-term, Belevon Capital believes the Micro Mergers & Acquisitions market presents the greatest return opportunities for patient, disciplined, and experienced investors for several reasons.
Attractive Entry Points
By the end of 2017, median entry multiples in buyout deals up to $25 million hovered around 6x EBITDA, roughly half the level of larger deals. The more telling trend is the relative consistency of the sub $25 million-deal multiples which have fluctuated within a small range over the same period in which deal multiples upstream have swelled over 20%.
Abundant Low Hanging Fruit
Buying companies in the Micro Mergers & Acquisitions segment often means partnering with operators who know their businesses intimately but require a partner with robust operational and business development expertise to help capture the company’s full potential. This affords Belevon Capital the opportunity to realize early significant gains from implementing processes and systems to increase efficiencies
Arbitrage Through Rollups
Belevon Capital seeks out add-on acquisitions within highly fragmented industries to leverage natural arbitrage opportunities. The large universe permits Belevon Capital to select the most attractive opportunities when sourcing add- ons and exit multiples of the larger rollup are markedly higher than Micro Mergers & Acquisitions entry multiples.
Large Playing Field
There are approximately 1.3 million US companies with annual revenue from $1 million to $20 million. For comparison, there are only about 100,000 companies with revenue greater than $20 million. This robust supply of candidate companies solves the supply/demand imbalance and spares Belevon Capital from having to pick through the late inning leftovers of the current economic cycle.