Focused Strategy, Proven and Demonstrated Track Record

Managers pursuing leveraged buyout (“LBO”) transactions make equity investments used to acquire or purchase an ownership interest in profitable, cash flowing companies where leverage can be employed. LBOs broadly encompass full acquisitions in which a controlling ownership interest in the target company is obtained, as well as non-control investments, recapitalizations and refinancing transactions. LBO managers look to create value through some combination of operating improvements (e.g., working with companies to increase cash flow through growing revenues, reducing costs, or other operational efficiencies), multiple expansion (e.g., acquiring companies at low valuation multiples and selling at higher multiples), and financial engineering/use of leverage (e.g., applying leverage to optimize company balance sheets and lower interest expense).

In contrast, growth capital investments refer to equity investments in high-growth companies that are typically at or near profitability, and the equity capital is used to help accelerate the company’s growth/expansion plans. Such companies typically aren’t mature enough from a cash generation standpoint to take on debt capital. Some managers broadly classified as “buyout” managers pursue some combination of LBO and growth capital investments. Adams Street is taking a more cautious stance towards this sector in the U.S., and expects its target allocation to be 40-45% over the next several years, an underweight relative to the broader U.S. private equity market.

Outside the U.S., Adams Street Partners currently has buyout/growth capital investments with managers in Europe, Asia and Australia. Adams Street Partners' non-U.S. target allocation to the buyout/growth capital sector is expected to be 50-70% in the coming years, an overweight relative to the broader non-U.S. private equity market.

Distinguishing Characteristics

Despite today’s highly competitive global market, Adams Street believes that prudent selection of top-tier buyout/growth capital managers will generate attractive returns for investors. Distinguishing characteristics of successful buyout managers include:

• Differentiated, Focused Strategy

  Leveraging deep industry expertise and global market awareness

• Robust, High-Quality Deal Flow

  Through established networks and sourcing channels

• Proven and Demonstrated Track Record

  Consistent with the investment strategy and defensible through business cycles

• Stable and Complementary Investment Team

  With a history of success investing together

• Operational Capabilities

  With a demonstrated ability of helping companies improve fundamental performance