Red Clay Advisors, LLC (d/b/a Red Clay Equity; d/b/a Red Clay Capital): a private equity firm dedicated to acquiring and building small businesses

RED CLAY EQUITY INVESTMENT CRITERIA

Red Clay seeks businesses characterized by stable cash flow with strong competitive positions and opportunities for growth and equity value creation. Red Clay evaluates investment opportunities based on a large number of attributes, many of which will be highly specific to the business in question. In general, however, Red Clay attempts to invest in transactions and businesses with the following attributes:

1. Well-established revenue streams and market positions (i.e., not early stage venture capital investments)

2. Customer and revenue diversity (i.e., no severe customer concentration unless there are significant mitigating circumstances)

3. Sustainability / repeatability of sales

4. Positive pro forma adjusted EBITDA (or clear ability to achieve positive EBITDA soon after closing), generally above $500,000 for platform companies but with no minimum for add-on acquisitions, and generally below $3 million for all acquisitions, although larger transactions will be considered in partnership with larger sponsor groups

5. Strong gross margins or other clear indication of compelling value proposition, competitive advantages and strong overall competitive position

6. Leadership potential in fragmented and/or niche market(s)

7. Strong management team

8. Clear and significant opportunities to grow revenue and/or earnings and/or execute accretive acquisitions

9. Likelihood of growing or adding-on to exceed $3 million of EBITDA within investment horizon

10. A simple and compelling investment thesis

11. Fair pricing and terms

12. Multiple viable exit strategies

In addition to the above, in general Red Clay will favor transactions and businesses with the following attributes:

13. Attractive asset base to facilitate financing

14. Significant operating leverage potential

15. Significant barriers to entry

Home · Values · Strategy · Criteria · Searches · Team · News · LP Login · Resources · Contact

1601 Delaware Avenue · Trolley Square Suite 24A, #196 · Wilmington, DE 19806 · tel: (302) 351-3764 · fax: (302) 861-1462 · mkelley@redclayequity.com