Meridian OHC LLC is a specialty finance company that operates as an "Orphan Holding Company" (an "OHC"). Our investment strategy is to be an aligned long-term investor in small mature cash flowing American companies. An "Orphan" is a company that is frequently told it is too small and not growing fa…
Meridian OHC LLC is a specialty finance company that operates as an "Orphan Holding Company" (an "OHC"). Our investment strategy is to be an aligned long-term investor in small mature cash flowing American companies. An "Orphan" is a company that is frequently told it is too small and not growing fast enough for anyone to care. An "Orphan Holding Company" is an investment entity that (i) invests in a portfolio of underappreciated slow growth but high cash flow companies and (ii) assists its companies in transitioning from the early life-cycle stage strategies they have been following to value creation strategies more appropriate for later stage businesses. It is common for companies to be orphaned by the market after their growth rates slow. We believe this is due to the dynamic American economy that has for the last several decades produced a steady stream of exciting new growth companies (see, for example, this very short history of successive public technology leaders: AT&T, Motorola, IBM, Microsoft, Dell, Cisco, Google). Investors have learned to profit in this dynamic market by emphasizing strategies based upon stock appreciation that is driven by the future growth potential of a company's products. The reality of this strategy is that when a company's products mature and its growth rates slow, the prevailing investment rationale collapses, growth-oriented investors exit en masse, and a company's valuation falls dramatically. Orphaned companies tend not only to be undervalued, they are also commonly pushed into a "grow or go away" paradigm. Positioned as a growth company, but currently lacking the ability to deliver on that model, small mature companies are told by their critics that they serve no purpose in their current form and must either find a way to quickly increase their size and growth rate to levels that will find support among growth-oriented investors or they should offer themselves for sale to the highest bidder. Meridian OHC has a different investment model. We understand that companies are subject to the life cycles of their products and see value in companies beyond their current ability to deliver on exciting growth stories. As an investor, we become interested in companies around the same time most growth-oriented investors are making their exits. Structured as a holding company, Meridian seeks to an aligned long term investor in companies that have been orphaned by the market. Meridian works with its portfolio companies to develop and pursue value creation strategies that are not dependent upon promises of outsized future growth. These strategies highlight the value of the strong sustainable cash flows enjoyed by mature leaders in niche markets. Meridian OHC was specifically designed to provide solutions for orphaned companies: Investors that desire a way to exit their investment are provided liquidity Investors that desire to stay in the investment get a new long-term partner, greater organizational stability, and new value creation strategies Management gets a new sponsor that understands and appreciates the company's circumstances and that rapid organic growth is not the only way to create significant value By operating as an Orphan Holding Company, Meridian and its investors receive multiple benefits: The opportunity to invest in a portfolio of successful American small capitalization companies The ability to participate in the profitable operations of these companies via special distributions and dividends The potential to benefit from the long-term equity upside in these companies developed via improved performance, new business opportunities, and/or future sales to motivated strategic or financial buyers The chance to support great American small businesses by providing these companies an alternative to a forced sale to strategic or private equity buyers
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