Communities

A key advantage to our fund is that our investments impact low to moderate income communities. With over 18 years of experience, we have been able to identify and target investments that serve the dual bottom line of community development with top quartile returns. Our fund tries, where possible, to marry our investments with local redevelopment initiatives. For example, we were able to leverage the community’s redevelopment efforts on the South Side Lamar Street redevelopment project to enhance our business investments in the area. The fund is also able to attract financing from strategic banking partners who utilize the fund to meet their mandated Community Reinvestment Act requirements for making investments and loans in these targeted areas. Because our investments serve locally distressed communities and enhance local businesses in the state of Texas, our management team has been recognized in the private equity and business community for their creative and innovative approach to private equity.

Companies

In order to best meet the needs of our targeted communities we look for companies with a strong historical track record and growth profile. We utilize the investment and operating experience of our management team to identify those companies that have strong fundamentals and can fulfill an employment need in targeted communities. Lone Star’s management team experience along with its ability to tap several community and business professionals enables the partnership to invest in a wide range of companies in various industries. Our due diligence process consists of evaluating overall industry trends as well as company specific financial data points that support steady revenue growth. In addition, because we are looking for business that will serve as catalysts for community development we target businesses that have a dedication to best practices, efficiency, and superior growth to spur sustainable employment.

Strong Management

Lone Star looks for strong management with a proven track record when evaluating potential portfolio acquisitions. Beyond the financial statements of the company we are looking for leadership in the company that has a commitment to continued growth and performance of the company. While the fund does provide substantial management support, we believe our portfolio managers need to possess the skills and competencies necessary to run efficient day-to-day operations. Lone Star usually looks to provide a substantial equity position to management in an effort to align the performance objectives of the company with those of the fund. In addition we also strive to maintain current ownership of minority and women owned businesses by taking a minority interest in some companies.

The Deal

Lone Star’s management has conducted over thirty transactions all with varying business motivations and financial structuring. The fund has a historical record of being able to quickly deploy capital and close transactions. This is largely due to an innovative partnership structure that eliminates lengthy approval processes and gives management the flexibility to access capital quickly. Our management’s generalist experience is well suited to complete middle market transactions including management recapitalizations, buyouts, round B&C venture capital, and growth financing within our targeted geographic region. Our ownership position is dictated by a thorough due diligence process that weighs the risk and return of each transaction on a case-by-case basis.

Ongoing Commitment

Lone Star has a multi-phased approach to supporting management in their efforts to grow the business. The first area of this support is to develop individual performance metrics that allow both company and fund level managers to monitor the weekly progress of the business. This enables portfolio companies to focus their tactical day-to-day activities and gives fund managers an avenue to provide strategic guidance for the business. Secondly, Lone Star has an in-house operations specialist that is able to work in a consultative role for specific efficiency initiatives undertaken by our portfolio companies. Finally, Lone Star management is able to apply their financial skill and experience, along with their wide banking network, to advise companies on financing and risk hedging techniques.

Exit

Lone Star’s ongoing commitment to our portfolio companies continues all the way through the exit process. We believe that our commitment of resources to company growth pays returns for all stakeholders: investors, company management, and targeted communities. If we have done our job properly we have aligned the interests of all parties and provided the best opportunity for enhanced returns. By establishing strong working relationships we are able to work with company management on the best approach to exit. In addition, Lone Star management’s 18 plus years of experience allows the firm to access a vast network of intermediaries to facilitate the sale of companies. Further, because we implement a best practices approach to monitoring our companies we are able to provide timely and accurate information to facilitate a seamless transaction.