Investment holding companies and private equity play a pivotal role in fostering economic growth, supporting business, and maximizing returns for investors. While many holding companies and private equity firms focus on specific industries, there’s a growing trend towards embracing industry-agnostic approaches. CPC is among them and believes there are a variety of advantages associated with remaining generalists.
Access to Diverse Opportunities
Perpetually structured funds like CPC offer investors access to a broader range of investment opportunities compared to traditional private equity. With no fixed investment horizon and no real limitations on industry, CPC can explore a diverse array of sectors, geographies, and asset classes. CPC can say “yes” to the right business without limiting itself to any one industry.
Diversification Can Mitigate Risk
One of the primary advantages of being industry-agnostic is the ability to diversify across various sectors. By spreading investments across different industries, holding companies can mitigate risks associated with industry-specific downturns or market fluctuations.
Diversification not only safeguards against sector-specific risks but also enhances resilience during economic downturns. When one industry faces challenges, investments in other sectors can offset losses, ensuring a more stable financial performance over the long term.
Access to Varied Growth Opportunities
Industry-agnostic holding companies have the flexibility to capitalize on emerging trends and growth opportunities across multiple sectors. They are not constrained by the limitations of a single industry, allowing them to pursue investments in sectors with high growth potential.
This approach enables holding companies to adapt to changing market dynamics and capitalize on evolving consumer preferences and technological advancements. By staying nimble and agile, they can seize opportunities in sectors poised for rapid expansion.
CPC’s Investment Criteria
When CPC evaluates a new acquisition, it considers characteristics such as the cyclicality of the business, the sustainability of customer relationships and recurrence of revenues, the cost structure and asset intensity of the business, and the business’ positioning within the overall market. While they operate in different industries, all of CPC’s operating companies want to build a long-term market dominant position. They all have brands that are important in their customers’ eyes, where they are more than just commodities. And, most importantly, all of CPC’s businesses share the language of the Five Key Battles™ – a scalable framework applicable to all industries.
- People
- Operational Systems
- Product Leadership
- Execution Capabilities
- Customer Intimacy
The Fives Key BattlesTM (5KBs) are a set of challenges (or opportunities) that every business can relate to, improve on, and benefit from – regardless of industry. CPC has built up its Excellence Group and continually seeks to support its management teams in all of the 5KBs. Every business needs to win in the 5KBs – regardless of industry or ownership. This is really the common thread that connects all of CPC’s businesses and management teams.
CPC Management, LLC is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. More information about CPC Management’s investment advisory services can be found in its Form ADV Part 2, which is available upon request.
The opinions expressed are those of CPCM. The opinions referenced are as of the date of publication and are subject to change due to changes in the market or economic conditions and may not necessarily come to pass.