Sullivan Street is a conviction investor actively seeking investment opportunities which require both taking a strong view and committing time and thought to resolving one or more specific, identifiable and fixable complex issues. This may be in some key aspect of the company, market or strategy where others may be sceptical, or in an area of the process or transaction structuring where others are not prepared to commit the time to fully understand and mitigate the specific issue. Frequently our strength in operations and its representation at the highest level in the firm plays a role in our confidence to surmount such given issue.
Upon investment we then adopt a high intensity approach to stewarding and improving our businesses, proactively managing the major risks and issues associated with those views. This is crucial to understand as we are therefore unlikely to be the right home for a business lacking near-term challenges (positive or negative) and which are already on a serene path to growth and value creation.
While we seek transformational opportunities and achieve transformational effects in our businesses, we do not in general seek turnaround situations, unless, which has been the case in the past, we see the cause behind the requirement for such turnaround to be specific and identifiable. Generally speaking we are looking for the type of strong underlying fundamentals and multiple levers and options to support future growth which are not present in turnaround situations.
Further to the presence of some complexity on entry which we believe we can resolve, there are other characteristics and requirements typical of the businesses we acquire – the need to commit to a strategic view with the patience to see that through; the presence of multiple levers and options within the business or industry to enable us to withstand the headwinds always present or around the corner for smaller business; and operationally the need for intensive practical support for change in operations or improvement in personnel.
Sullivan Street focuses on businesses with these characteristics which operate in sectors or niche sectors with broadly positive long-term macroeconomic or demographic trends, but (as true with many investors) is attracted to assets which have previously been misowned in one way or another. We believe there are such things as good stewards for businesses, and if we do not believe we can be a better owner and steward than the incumbent then we have nothing to add to the business.
Given this approach, Sullivan Street does not build an extensive portfolio but concentrates energy and resources on a limited number of companies at any one time.