Introduction

Coastal's private equity investment group provides equity capital and management resources to assist shareholders and operating managers generate growth and capital appreciation. Coastal invests primarily in medium-sized companies across a variety of industry sectors.

Investment Philosophy 

Coastal invests in partnership with management teams in companies with market leadership, strong growth prospects and a proven track record.  Coastal works in partnership with management to maximize value by:

• Developing long-term strategic plans;

• Identifying and negotiating acquisitions; and

• Overseeing capital allocation.

Coastal may participate on the board and is available to assist management as required.  We draw upon our established business relationships to assist investee companies meet expansion and growth objectives.

Coastal's investment can take many forms including subordinated convertible debt, bridge loans or equity.

Investee Characteristics

Coastal seeks to invest in companies with established management teams, a competitive strategy, the proven ability to respond to technological and industry change, and an efficient cost structure. Characteristics of companies in which Coastal invests include:

Strong Management Team:  The management team should have industry experience and proven experience of adding value. Where buyouts are financed, Coastal requires management to have a significant portion of their personal net worth at-risk.

Niche Product or Service:  The company should possess a distinctive competitive advantage that may include low cost production, proprietary products or services, a widely recognized brand name, significant barriers to entry, franchise or distribution rights, efficient marketing or distribution channels or other identifiable advantages.

Financial Stability:  The company should have low levels of debt and a stable history of generating free cash flow that can be reinvested for future-growth.  Companies should have a stable history of profitability and rising gross margins.  The business should not be vulnerable to economic downturns and demand for the product or service should be stable.  In addition, companies with undervalued or surplus assets that can be sold to pay down debt or provide expansion capital are attractive acquisition candidates.

Reasonable Acquisition Price:   The acquisition price should be reasonable compared with tangible net book value and to historic and projected cash flows.  Coastal will consider opportunities falling outside these defined areas if the catalyst to create significant capital appreciation can be identified

Transaction TypeS

Coastal invests in the following types of transactions:

Recapitalization of family-owned companies:  Coastal will recapitalize family-owned or closely-held companies, providing liquidity and, over the medium-term, a succession plan for the founding entrepreneur or controlling shareholders.  Investments will be considered where the company is not dependent on a few key suppliers or customers, nor on the specific skills of the owner operator.

Expansion Capital:  Coastal will provide expansion capital to profitable, growing companies to accelerate product expansion or market penetration, either through domestic or international markets, or to finance the acquisition of complementary business units.  

Acquisition Capital:  Coastal will provide capital to companies planning to make acquisitions to achieve greater market dominance.  These companies must demonstrate a synergistic reason for the acquisition.  

In addition, Coastal provides restructuring and workout capital that may involve:

• Purchasing debt (or in certain instances equity) positions in financially distressed companies and actively participating in the company’s recapitalization.

• Providing capital to troubled companies to facilitate a reorganization.

In these circumstances, Coastal will invest in companies with sound core operations that have encountered financial difficulties because of an over-leveraged balance sheet, a lack of liquidity, or distressed non—core business units.  Coastal will invest when we can identify the particular skills required for creating value, which will likely involve working with creditor constituencies to carry out a turnaround and recovery strategy.

Coastal’s investments are structured to provide for the adequate capitalization of each investee company, allowing them to implement their short and long-term operating strategies.  Coastal is also prepared to invest additional capital to finance expansion or growth initiatives.

Targeted Industries

Coastal will consider investment opportunities across a wide business spectrum, seeking in particular companies with strong competitive positions in stable, non-cyclical industries. Coastal will also examine investment opportunities in newer, rapidly growing industries and in those industries that can consolidate through strategic industry acquisitions.

Neither the industry nor the business should require uniquely specialized management or technical skills.  Start-up technology companies and companies requiring significant investments in developmental research are generally avoided.

Investment Period

While Coastal intends to hold an ownership position for three to five years, exit strategies will vary depending on market conditions, industry cycles and other economic factors.  Coastal‘s preferred exit strategy is an initial public offering or a sale to a strategic buyer.

Contact Information

For further information please contact:

Daniel Soares, Vice President

Suite 280 - 12 Church Street

Hamilton, HM11

Bermuda

441-799-2928 (telephone)