erseus makes control equity investments in middle market companies that offer opportunities for value creation and enhancement.  Distressed and growth equity investing have been core investment focuses of Perseus since inception, supplemented by occasional opportunistic leveraged buyouts when supported by appropriate market conditions.

The Perseus investment strategy is atypical among middle market private equity firms, beginning with the manner in which investment opportunities are sourced, and continuing through the value enhancement and realization stages. Perseus sources investment opportunities through its vast network of relationships and contacts, rarely competing in the traditional investment banking auctions prevalent in the middle market. Perseus combines its industry expertise and sector knowledge with the firm's understanding of macroeconomic trends and insight into restructuring possibilities to assess each opportunity. When the firm determines to make an investment, it generally obtains control, or at a minimum, strong negative control rights. Perseus then teams with strong management to create and enhance value.  Perseus frequently invests in an initial entity as a platform for a consolidation strategy, thereby permitting follow-on strategic investments. Utilizing this approach, the firm has achieved superior returns, most frequently without the use of extensive leverage.

The firm's principals, Frank H. Pearl, Kenneth M. Socha, Brian Leitch, John C. Fox, Norman C. Selby, Dave Davis, and Christopher J. Davis, collectively have more than 100 years of private equity experience and boast a broad experience base from their prior positions as senior managers of leading corporations, law firms, investment banks, and strategic consulting firms.  Four of the principals have substantial operating experience in the roles of chief executive officer, chief financial officer, or chief operating officer at major companies.  The principals have the background, the investment expertise, and the personal networks necessary to execute successfully on the firm's investment strategy.

Perseus typically seeks one or more of the following characteristics in the companies in which it invests:  

(i) Powerful intellectual property;
(ii) Highly skilled workforces;
(iii) Strong consumer brands; and
(iv) Fundamentally sound business characteristics and prospects, notwithstanding a distressed situation as a result of too much leverage, cyclical macroeconomic factors, or poor management.

Perseus is a disciplined private equity investor. Perseus adheres to the guiding principles set forth below:

(i) Obtain control or negative control in nearly all transactions;
(ii) Avoid overleveraging companies;
(iii) Avoid investments that have material technology risk;
(iv) Exercise prudence in maintaining investment reserves (be financially prepared for unexpected developments, which frequently arise);
(v) Assure that a strong management team is in place; and
(vi) Rely on in-house management talent to support portfolio companies experiencing difficulty.

Perseus' investment activities fall primarily into the categories described below.

Distressed Investing

Perseus acquires or takes control equity positions in businesses experiencing financial, operational, or cyclical distress.  Perseus targets companies that have, or have the potential to develop, a strong market position within their segment or niche and companies that have significant potential for profit improvement or value creation with improved management or through restructurings, reorganizations, mergers, or acquisitions.  

Perseus is at a distinct advantage over other private equity firms considering distressed opportunities because of the in-depth knowledge and expertise of its principals.  Members of Perseus' senior team have been involved in acquisitions involving bankruptcies and financially distressed companies on the cusp of bankruptcy in numerous industries, including the airline, beverage, biopharmaceutical, branded apparel, business management outsourcing, cycling equipment, electrical services, media, and the power generation and distribution industries.  Successful investing in distressed companies is highly dependent on mastering the complexities arising from the pre-bankruptcy and bankruptcy processes. Tactics and process, however, are not enough.  A successful distressed investment usually also involves taking a “hands on” control position to fix the business and its operational problems.  

All of Perseus' principals have significant financial and senior leadership experience.  In addition, four members of the firm's senior team have practical experience as a chief executive officer, chief financial officer, or chief operating officer at one or more major companies.  The principals' experience permits them to work alongside management at a “nuts and bolts” level to develop and execute turnaround plans.  If needed, the Perseus principals are prepared to step into key leadership positions at the portfolio company level until the turnaround plans are running smoothly.  Perseus' principals have demonstrated their mastery of this “hands-on” approach. The firm's strategy is based on value creation, not financial engineering.

Growth Equity Investing

Perseus has a long and successful history investing growth equity capital in a variety of industries.  Perseus acquires control positions at attractive valuations in middle market companies in industries which are likely to experience substantial growth and in which its principals can leverage their particular expertise.  Many of the investments Perseus considers involve companies that have never achieved their early promise but still retain significant, though often misunderstood, value. Perseus also focuses on companies where value can be enhanced through reorganizations, further acquisitions, and/or consolidations.    

Like its distressed investment strategy, Perseus believes that a “hands on” approach is critical to the implementation and success of its growth strategies.  As a result, Perseus works alongside management to refine and execute each portfolio company's business plan.  When appropriate, Perseus will identify and recruit new management teams whose past operational, managerial, and transactional successes are transferable to the respective portfolio company.  Perseus has the know-how and industry expertise necessary to execute on its strategies and, using its wide network of contacts, can access opportunities not available to other private equity firms.  

Perseus' growth equity strategy concentrates primarily on the industries described below:

Healthcare.  Perseus has a long history of investing in healthcare businesses.  Perseus' focus in this area is on segments that have strong growth potential and where Perseus professionals not only have meaningful experience but also extensive industry contacts, including with clinical and academic experts.  These sectors include drug development in oncology and infectious disease; specialty pharmaceuticals; pharmaceutical sales and marketing, particularly Internet-enabled alternative channels; and diagnostics and specialty devices.  Perseus focuses on healthcare companies that have a demonstrated growth potential, either in the form of human efficacy and safety data or early commercial results.  

Energy, Environmental, and Engineering Technologies. Perseus has been actively investing in energy, environmental, and engineering technology companies for more than a decade and has made successful investments in such sectors as distributed generation, solar power, power storage, oil recycling, clean fuels, and grid enhancing technologies.  Perseus continues this focus based on the following beliefs:  (i) enormous capital has been expended over the last two decades for the research and development of energy efficiency and environmental technologies that are now maturing and becoming commercially valuable; (ii) energy deregulation, the resulting growth in competition, and the attendant need for efficiency improvements have created vast new investment opportunities; (iii) new technologies are needed to upgrade and modernize the North American electrical grid, including with respect to power generation, infrastructure, and power delivery; (iv) the growth of the digital economy has created demand for reliable, high-quality power, which presents unique investment opportunities in the areas of energy storage, distributed power, and power marketing; (v) the increase in regulatory and legislative directives around sustainability and emissions has radically increased the demand for cleaner energy solutions that result in the release of significantly less emissions; and (vi) enormous demand exists for new energy, environmental, and engineering technologies and products and alternative and renewable fuel sources.  Perseus' focus in this attractive market segment will include companies that are developing products in the areas of distributed energy and energy conservation technologies (including microgeneration), natural gas powered vehicles, power transmission and distribution (including “smart grid” technologies), alternative and renewable energy (including wind and photovoltaics), energy efficiency, and energy management systems.  

Branded Consumer Products.  Potentially powerful brands have always been one of the key attributes sought by Perseus in its investment initiatives.  Not infrequently, prominent brands become devalued or lose significance by virtue of inadequate brand management.  Brand maintenance and development requires skilled and insightful management and an ability to identify and execute growth initiatives. Perseus has significant expertise creating value in opportunities involving consumer brands.