THE EMPLOYEE OWNERSHIP FUND
​The Employee Ownership Fund (EOF) is a private equity fund that invests in buyouts of lower-middle market companies. The fund targets majority acquisitions of high-quality small businesses and creates opportunities for all employees to become owners. Employee Ownership has been proven to unlock talent and productivity, build wealth, and improve individual and community outcomes. In short, Employee Ownership is good business.
Envisioning a world in which every employee is an owner
EOF’s mission is to deliver top-decile returns while creating wealth for thousands of employee owners. We are a part of a growing wave of asset managers and asset owners demonstrating that Employee Ownership leads to stronger businesses and better returns. And nothing scales like good returns. Outstanding returns will attract the capital that is required to capitalize on the $T opportunity presented by the generational wealth transfer underway in the lower middle market.
EOF offers an Employee Ownership solution for "the other 95%" of the market
Less than 2M of the over 56M employees at US small businesses own equity in their company. Current Employee Ownership solutions address the less than 5% of business transitions that are owner-led. EOF targets the other 95% of business transitions, which are market-led, and creates a way for Employee Ownership models to compete with and win against traditional buyers of small businesses.
Innovating in the Lower Middle Market
Employee Ownership has long been a common feature of public and venture-backed companies, where Employee Stock Purchase Plans and Stock Options are available to over 20M workers. Increasingly, large-cap private equity firms are demonstrating the ability for Employee Ownership to improve returns while creating a positive impact. However, few firms are actively investing with an Employee Ownership lens in the return-rich Lower Middle Market.
EOF seeks to create a replicable and scalable model to drive greater adoption of Employee Ownership in the Lower Middle Market.
INVESTMENT THESIS
Employee Ownership creates value across the investment lifecycle.
EOF leverages Employee Ownership and an Operating Partner-centric lower-middle market acquisition strategy to deliver attractive risk-adjusted returns.
1) Lower-Middle Market: The Lower-Middle Market is a return-rich asset class with lower valuations and higher growth potential. EOF targets businesses with defensible characteristics in industries with strong organic and inorganic growth potential.
2) Employee Ownership: Employee Ownership is a tool for risk management and value creation across the investment lifecycle, from sourcing deals to de-risking the transition to recruiting talent to creating a culture focused on long-term value.
3) Capital + Talent: EOF’s Operating Partner-centric acquisition strategy brings both capital and talent to high-potential lower-middle market businesses. We partner with mission-aligned executives who are passionate about the value creation and impact opportunity presented by Employee Ownership.
INVESTMENT CRITERIA
Financial: $10-40M Revenue / $2-8M EBITDA / $8-50M Enterprise Value
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Industry: Consumer, Business & Industrial Services; Food; Building Products; Manufacturing & Distribution.
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Business Characteristics: Low customer concentration, recurring revenue, operating leverage, differentiated margins.
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Transaction Structure: Leveraged buyout (LBO) with broad-based employee equity ownership
INVESTMENT TEAM
T​he Employee Ownership Fund is led by the team at Southeast Acquisition Capital.​​​​
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Michael Morosi, Managing Partner
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CONTACT US
Email: mmorosi at southeastacquisition.com