What we look for
Investment criteria for Southern California businesses
We're looking for established, profitable businesses that fit the following:
Criteria by category
Financial Profile
- SDE
- $500K–$1M
- Large enough to support a full-time owner-operator and a real management layer; small enough that one person's attention still moves the needle.
- Profitability
- 3+ consecutive years of positive earnings
- Consistent profit through hiring cycles, pricing changes, and customer turnover tells us the model works, not just the year.
- SDE Margin
- 15%+ (SDE as a percentage of revenue)
- Healthy margins leave room to reinvest in people and equipment without starving the business.
| Metric | Target | Why it matters |
|---|---|---|
| SDE | $500K–$1M | Large enough to support a full-time owner-operator and a real management layer; small enough that one person's attention still moves the needle. |
| Profitability | 3+ consecutive years of positive earnings | Consistent profit through hiring cycles, pricing changes, and customer turnover tells us the model works, not just the year. |
| SDE Margin | 15%+ (SDE as a percentage of revenue) | Healthy margins leave room to reinvest in people and equipment without starving the business. |
Revenue Quality
- Recurring Revenue
- 50%+ from recurring, contractual, or repeat-customer sources
- Contracts and repeat customers make next year's revenue a plan rather than a hope.
- Revenue Stability
- No single year of revenue decline greater than 10% over the trailing three years
- We can work with a soft year. A pattern of steep drops usually points to something structural.
- Customer Retention
- 80%+ annual customer/revenue retention preferred
- Customers who stay are the clearest signal that the business delivers what it promises.
| Metric | Target | Why it matters |
|---|---|---|
| Recurring Revenue | 50%+ from recurring, contractual, or repeat-customer sources | Contracts and repeat customers make next year's revenue a plan rather than a hope. |
| Revenue Stability | No single year of revenue decline greater than 10% over the trailing three years | We can work with a soft year. A pattern of steep drops usually points to something structural. |
| Customer Retention | 80%+ annual customer/revenue retention preferred | Customers who stay are the clearest signal that the business delivers what it promises. |
Risk Profile
- Customer Concentration
- No single customer above 20% of revenue (ideally under 15%)
- No single customer should be able to decide the company's future.
- Capital Intensity
- Maintenance capital expenditures under 10% of revenue
- Cash that goes to replacing equipment can't go to growth or to the team.
| Metric | Target | Why it matters |
|---|---|---|
| Customer Concentration | No single customer above 20% of revenue (ideally under 15%) | No single customer should be able to decide the company's future. |
| Capital Intensity | Maintenance capital expenditures under 10% of revenue | Cash that goes to replacing equipment can't go to growth or to the team. |
Company Profile
- Operating History
- 5+ years in business
- A business that has survived its early mistakes has already answered most of the hard questions.
- Management Depth
- At least one experienced operational leader or manager below the owner, preferred
- Someone who already runs part of the operation makes the transition smoother for everyone, especially customers.
- Location
- Southern California
- We operate in person. That only works if we can be on site.
| Metric | Target | Why it matters |
|---|---|---|
| Operating History | 5+ years in business | A business that has survived its early mistakes has already answered most of the hard questions. |
| Management Depth | At least one experienced operational leader or manager below the owner, preferred | Someone who already runs part of the operation makes the transition smoother for everyone, especially customers. |
| Location | Southern California | We operate in person. That only works if we can be on site. |
Fit
Where we're not the right buyer
Being clear about fit early respects everyone's time. We're unlikely to be the right partner for:
- Pre-profit companies or turnaround situations. We buy businesses that already work.
- Businesses whose customer relationships can't outlast the current owner. We want to earn trust, but there has to be something to inherit.
- Companies outside Southern California. We operate in person, and that's non-negotiable.
- Owners looking for a quick flip. We buy to run, and we say so from the first call.
Intermediaries
For brokers and advisors
We respond to every credible opportunity that fits the profile above, and we move at the pace the seller needs. The fastest way to get a useful answer from us is to send:
- 01A teaser or CIM with a plain description of what the business does and who it serves
- 02Three years of financials (P&L and balance sheet), with SDE add-backs itemized
- 03A customer concentration summary (top ten customers as a share of revenue)
- 04The owner's role today and the management layer beneath them