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checklist, calculator, inventory (© 2010 Photos.com, a division of Getty Images. All rights reserved.)
checklist, calculator, inventory (© 2010 Photos.com, a division of Getty Images. All rights reserved.)

Auxo's investing checklist Add to ...

Starting with a few contacts from professor Joel Peterson, founder of private equity firm Peterson Partners and current chairman of JetBlue Airways Corp., Rob Cherun and Erik Mikkelsen hashed out a business plan for their search fund, Auxo Management: Find one or more companies with $2-million to-$10-million in earnings before interest, taxes, depreciation and amortization (EBITDA) whose owners are looking to sell, then take over the business and actively manage it.

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What are they looking for?

Auxo’s investment criteria includes:

  • Stable cash flows from an established business that has potential to grow with more money behind it
  • Straight forward industry, rather than complex oil and gas infrastructure, for instance, that has high barriers to entry that prevent other firms from copying the business model
  • Three or more years of continuous profits
  • A sustainable competitive advantage that isn’t easily replicated and works an interesting niche

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