In these cases we first scrutinize the performance of the management team. Good management is the foundation of our acquisition strategy, because our goal is to keep the team intact after the transaction is complete. Like a politician running on their record, the past success of the company in meeting benchmarks is a good indication that the current managers are highly competent.

When looking for opportunities, we are especially drawn to companies that serve the high end of their chosen market. There are a variety of sound reasons for doing this, and these stretch from the factory floor to the boardroom. Our experience has shown us that people involved in a company that's considered among the best take more pride in their work. The quality of the product becomes a part of the employee's identity, which creates a virtuous cycle across the organization of striving to remain the best.

Practically speaking, the high end of the market is able to command better margins. We have made the decision that it's better to produce a thousand excellent items than a million bulk ones. In some business areas, the high end is also more insulated from economic cycles because your client base has the resources to withstand downturns better than the population as a whole.