Team

Our Strategy

Philosophy

Overview
Our philosophy is simple: we believe a company should focus on profitability first and foremost to insure that it will be viable over the long term for its customers, employees and owners. Therefore, at LBF all portfolio companies operate profitably and focus on customer satisfaction and product quality before focusing on new sales and growth. Once a reliable track record of profitability has been established, a growth strategy, primarily driven by M&A activities, is implemented. The goal is to create a business with the size and scale to compete “normally” in the segment. In pursuing this strategy, we focus on a number of special situations including:

Divestitures or Spin-Offs
LBF targets non-strategic business units of larger corporations that would benefit from new ownership, including divestitures, spin-offs or carve-outs. We invest our capital based on our ability to effect material improvement in profitability through the implementation of a new business strategy, cost reduction and capital investment.

Financial Restructurings
Another core focus of LBF are businesses with good operations but burdened with insufficient liquidity, excessive debt, operating in default of obligations to creditors, or lacking capital for investment, modernization or growth. We actively seek to invest capital in such opportunities but only in connection with a comprehensive plan to eliminate, reduce or restructure a company’s liabilities.

“Orphaned, Stranded and Below-the-Radar” companies
LBF specializes in acquiring positions in and operating software companies with revenue between $1,000,000 and $30,000,000. These smaller companies often lack the management expertise, effective and achievable strategies, and access to capital. In many cases the owners have no path to liquidity because the company is not growing and is too small for financial investors or strategic buyers. These types of companies make ideal investment targets for LBF because our investment strategy is generally not predicated on achieving investment returns through revenue growth. It should be noted that we have been successful in sponsoring buyout transactions in the smallest end of the market.

Turnaround Opportunities
We believe the best way to achieve superior investment returns for our partners and investors is by affecting a disciplined turnaround strategy for underperforming or distressed companies. By maintaining a disciplined focus on enterprise software companies, we are comfortable with challenging situations including businesses that are facing shut down, liquidation, and/or significant and sustained operating losses. We look for situations where our expertise, access to capital, and willingness to operate the business on a day-to-day basis will result in a rapid transition to profitability and allows our capital to be returned relatively quickly. In general, we invest in turnaround plans predicated on cost reduction, operational efficiency, limited capital investment and capital availability. LBF does not invest in turnaround plans where success depends on revenue growth or the ability to complete subsequent acquisitions.

Businesses Operating in Bankruptcy
The General Partners have extensive experience in acquiring businesses that are operating in Chapter 11 bankruptcy. We are experts in sponsoring and funding plans of reorganization for a debtors-in-possession or creating new companies to purchase operating assets out of bankruptcy pursuant to Section 363 sales. We have extensive experience in structuring complex transactions involving banks, bondholders, other creditor constituencies and stockholders. We have successfully raised significant capital to provide exit financing to banks and other creditor groups in connection with our bankruptcy activities.

Failed Attempted Sales
Because of our highly specialized market niche, we are an ideal buyer for failed auctions by financial service industry firms such as investment bankers and sales agents. LBF actively encourages financial intermediaries to bring these opportunities to our attention.


 

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