Crescent Capital Partners takes a generalist approach to investment, that is, the Fund does not focus on particular industry sectors or types of transactions. We seek partnerships with management where we can constructively advise on strategic and board level issues.

Crescent’s analysis of any investment opportunity is underpinned by a rigorous and analytical focus on value. Crescent believes that this disciplined, value orientated approach will always serve investors well, even in an environment which may have flat or contracting valuation multiples over the holding period of an investment.

All investments will be equity or equity linked (eg. ordinary shares, preference shares, convertible shares or notes) over an expected investment horizon of three to five years.

We expect that the size of individual investments by Crescent Capital Partners II itself will be $3.0 million to $15.0 million over the investment term for each investment. Investors in Crescent’s Funds include a number of institutions and corporations with appetite to co-invest alongside Crescent where suitable opportunities arise. This enables Crescent to lead syndicates with the capability to invest up to $25 million equity capital in a single transaction.

Experience tells us that we are most likely to invest where several of the following factors are evident. However we will also consider opportunities where not all factors are evident:

• The business is established with existing customers and operations;
• The business has a strong and sustainable market position;
• Enterprise value is in excess of $10 million;
• The business is based in Australia or New Zealand;
• There is a quality management team with experience in relevant markets; or
• A basis of sustainable competitive advantage exists or is expected to be created.

Businesses based upon commercially unproven technologies or concepts are avoided. The Manager will exclude investments in Mining or Property sectors.

Typical investment opportunities may include the following types of transactions where some or all of the listed factors are present:

Expansion or Development Capital where a business:
• Has the ability to grow quickly;
• Operates in a growing industry sector or if not is pursuing a consolidation or roll-up strategy;
• Is led by a strong management team; or
• Has a basis of sustainable competitive advantage or is expected to create such.

Management Buyouts of businesses with:
• A strong management team or Chief Executive Officer;
• Revenue of at least $15 million;
• Predictable cashflows; or
• A basis of sustainable competitive advantage .

Restructurings or Management Buyins
of businesses where:
• There is assessed to be substantial trapped value due to inefficient use of assets or low profitability vis a vis industry best practice which can be released;
• There is shareholder or board infighting and certain shareholders seek to exit the business;
• The business requires a new CEO or strengthening of the senior management team and the Management Buyin addresses this; or

Partial Sell Downs of businesses:
• To provide the opportunity for existing shareholders to sell part of the value of their shareholding prior to a planned full sale of business (eg. IPO or trade sale) within the medium term and existing shareholders retain a significant economic exposure to the business;
• To facilitate a staged exit by founding shareholders where strong management have already assumed operational responsibility for the business; or
• Which would otherwise satisfy the criteria for Expansion Capital or a Management Buyout.

Involvement with Investee Companies
Crescent’s investment philosophy is based on a partnership approach with management where our input is valued. Usually, the Manager seeks active participation with investee companies. Although the Manager’s involvement varies between investee companies, there is a base level of involvement which is consistent across all investee companies:

• Board representation (and usually Audit Committee membership)
• Active involvement in the annual budgeting and strategic planning process
• Regular liaison with the CEO

The Manager relies on the CEO and senior management team of each investee company to operate its business. A core philosophy of the Manager is not to become involved in the implementation of operational matters but to ensure that the right management team is in place to carry out the goals and strategies of the investee company.

Crescent has previously assisted companies in a range of areas including:

• Aiding in the preparation of a company’s strategic plan
• Hiring and finding senior staff (CEO, CFO, Marketing etc.)
• Review of acquisitions and due diligence on acquisitions
• Management of legal issues on behalf of an investee company
• Review of internal cost structures and processes alongside management
• Management of new debt facilities or banking tenders
• Review of asset utilisation
• Broader involvement in problem areas
• Market entry planning

Crescent believes its proactive style with investee companies helps identify problems and issues early and deal with them. Crescent believes this proactive approach to investing is the best way to preserve capital invested and optimise the performance of an investee company.