Investment Strategy

We are passionate about investing in the lower mid market (companies valued between £5m and £30m) where we believe it is possible to generate exceptional returns by working closely with dynamic companies and ambitious management teams.

Best Returns –

The lower mid market has generated some of the highest returns in our industry. However, most traditional private equity houses have moved on to bigger deals leaving a gap for firms such as Octopus. We see Octopus becoming the equity provider of choice in this part of the market.

The Team –

We have invested in building an exceptional team to exploit this opportunity. Between us we have in excess of 70 years of mid market private equity experience, encompassing more than 106 deals and over 81 exits. This enables us to respond quickly and decisively and bring innovative solutions to the most complex transactions.

Adding Value –

Our strategy is to engage the key individuals who will drive value out of these businesses and work with them to realise this value. We have considerable experience in working with fast growing companies and understand many of the issues they face. For this reason the Octopus executive leading a new investment will usually join the board post investment to support the executive team going forward.

Most Active –

We believe that by being one of the most active investors in this market we will see the best quality investment opportunities. Our deal flow is generated through strong relationships with the leading corporate finance advisors around the UK; experienced management teams with whom we have previously worked; and our extensive network of contacts within specific sectors.

Established Businesses with Something Special –

We want to invest in businesses that have a clear and sustainable competitive advantage. This may take the form of a unique product, IPR, brand names or trade marks. A company will also need to have a proven business model with at least £5m of historic annual sales, strong growth potential and a management team which can demonstrate success.

Sectors –

We invest in dynamic markets: either because they are growing or because they are consolidating. We have a particular interest in the following sectors but will consider backing high quality teams in most sectors:

  • Media & Marketing
  • Business Services
  • Education and Training
  • Healthcare
  • Consumer & Retail
  • Environmental and Waste Management
  • Leisure
  • Food and Beverage
  • Specialist Manufacturing

Types of Deal –

We believe the following types of transaction present the most attractive investment opportunities in this segment of the market.

  • Management Buy-Outs
    Backing a management team to acquire the business they are running in order to unlock the potential of that business and incentivise the management with equity. Typically a retirement sale, a corporate disposal, or a secondary buy-out from a financial investor.

  • Industry Consolidation ("Buy and Builds")
    Supporting a management team running a successful company to acquire complementary businesses in industries that offer potential for consolidation.

  • Development Capital
    Investing in an established business to enable exceptional growth. The businesses will typically be operating in high growth markets with outstanding management teams.

  • Management Buy Ins
    Backing a proven management team to acquire a business that they do not currently manage. Considered only occasionally and only where the team have previously bought a business.