TSG focuses on companies primarily in the Finance or Technology arena, but has also done opportunistic deals in Real Estate, Biotech, Payment Processing, and Litigation Finance among others.
TSG targets companies with $5MM-25MM in revenues and a minimum target of $1MM in EBITDA in niche areas with some discernible competitive advantage usually involving proprietary elements to sustain margins and erect barriers to entry from competition. We do not invest at the VC stage. We normally take 100 percent stakes in companies we invest in and offer synthetic equity to founders and other key stakeholders, which helps them retain upside while TSG retains full control. In rare cases, TSG takes smaller but still controlling positions with options to purchase the minority position based on pre-established metrics.
Our value add is in our Human Capital, even more so than financial capital, which is a commodity. Our team has been cultivated over 25 years and is made up of experienced professionals in Finance, Capital Markets, Quantitative Analysis, BI (Business Intelligence), IT (with almost 30 professional front, back end and full stack programmers utilizing SCRUM and AGILE methodology), a 3 person HR department, Marketing, FP&A, 3 In house attorneys specifically with Securities and M&A experience, a full accounting department including 3 CPA’s with specialty in International Tax and Transfer pricing, as well as Project Managers and a cadre of other professionals outside the firm that we regularly have worked with for many years.
All of our stakeholders in leadership positions complete a 6 month and then a 13 month management training program based on our philosophy of Radical Truth and Transparency (that exceeds 100 hours each) with a full time LEAD (Leadership, Education, Training and Development) Coach, who is a former Green Beret and Harvard Graduate. The objective of the courses is to instill our business and life philosophies which are based on The Seven Habits of Highly Effective People by Stephen Covey, as well as Principles by Ray Dalio from Bridgewater Associates. Our professionals have degrees from some of the best schools both inside and outside the country including Harvard, Wharton, University of Chicago, and Georgetown among many others which speaks to the caliber of training and management. Between the private equity side and our multi-strategy hedge fund group (which is separate and distinct from TSG (please see The Strategic Funds) we have stakeholders with experience in transactions from such large firms as Lehman Brothers, Cantor Fitzgerald, Wells Fargo, Accenture, BDO, and DLA Piper, among others.
We are a metrics oriented firm, and use proprietary software to rate stakeholder interaction in meetings as well as daily interactions to build a profile of intelligent decision making and reach effective consensus on important decisions with an emphasis on subject matter experts (SME’s) for weighted decision making. It is important to track errors made on deals, as well as the successes, in order to identify systemic issues, and we also use software to document the responsible party and corrective action needed in order to minimize repeating mistakes. We also follow plan vs. actual by creating and monitoring OKR’s (Objectives and Key Results), which are measured quarterly and subscribe to a philosophy of binary outcomes. You either reached the objective or you did not; there is no reward for effort. We believe in the abundance mentality and every single stakeholder (we do not use the term employees which delineates between principals and staff and suggests improper alignment), participates in quarterly profit sharing, regardless of position in the firm or portfolio company.
This collectively is our EDGE and what sets us apart from other firms. It is what allows us to take companies that are typically founder-based to the next level, by putting our TSG wrapper around a growing and profitable entity in order to help manage and scale a small but growing company in a way a typical founder cannot without the requisite experience and resources.
This is the TSG way.