Arlington’s deep understanding of the industries surrounding the government and their corresponding sub-verticals allows us to:
A key to our strategy is identifying and building strong relationships with top management teams within our targeted industries. We will either partner with a high performing incumbent management team already in place at a company, or utilize our network of executives to identify and pursue investment opportunities. We support our management partners through incentive-driven structures designed to build additional value post-investment. Arlington’s professionals work closely with management on major strategic issues through its participation on the board of directors, but we do not get involved with day-to-day operations, a responsibility that resides solely and exclusively with management.
Furthermore, we pride ourselves in our ability to structure transactions that serve the goals and objectives of all parties, from founder recapitalizations with substantial ongoing ownership to complex corporate carve-outs and traditional buyouts.
Having invested in dozens of companies in our target sectors and being active participants in the industry communities, we retain close relationships with management teams, board members and customers, all of whom have insights and perspectives that are relevant for our current and future investments. We feel that we have a unique ability to assist our portfolio companies through our network and bring value-added resources to each investment.
The federal government directly contributes to well over one-fifth of all economic activity in the United States and indirectly impacts an even wider range of economic behavior through its regulatory mechanisms. We believe that this dynamic – a concentrated influence over economic activity – presents an opportunity for sophisticated investors who live and work within the Washington D.C. community, to navigate the complicated dynamics of the U.S. government. Impending legislation, regulation, geopolitical developments and shifting political winds can have magnified effects on certain economic sectors – Arlington seeks to understand, verify and invest behind such trends.
After an investment in a platform is made, we work closely with the management team to identify the various avenues for growth, which, more often than not, include acquiring companies with complementary capabilities, technology or customers. Most importantly, we recognize the importance of fostering a culture of shared values, philosophy and commitment to excellence when building through acquisition to supplement organic growth. Arlington evaluates these potential acquisitions in support of platform investments, combining our investment acumen and industry knowledge with the tactical and operational expertise of our portfolio company executives. Since 1999, Arlington has made numerous platform investments in our target industries. These acquisitions have created a variety of opportunities that have driven the growth of the combined companies going forward:
Arlington pursues platform investments with enterprise values between $50 million and $1.5 billion. We seek investments that:
Within each industry of interest, we seek to invest in companies with Franchise Value – those substantial and differentiating characteristics that create strategic value and the opportunity to build industry-leading companies with strong growth and profit margins. These embedded characteristics may include:
Our firm believes that companies possessing Franchise Value are most likely to become market leaders and earn superior returns on invested capital. Franchise Value is quantitatively demonstrated by a company’s ability to achieve at or near market leading financial margins in comparison to its relative peer group. Arlington has consistently focused on its portfolio companies’ ability to achieve superior financial results to capture the value unlocked by such a performance enhancement.