Allegro and its principals have a longstanding commitment to honest and straightforward business practices. Our work with helping to develop the companies in which we get involved is primarily based on the following principles:
- Form a true partnership with our management teams.
- Preserve the characteristics and culture of the company.
- Align our interests with management.
- Provide strategic guidance, not day-to-day control.
- Help management to grow.
- Be persistent.
- Be patient.
- Reinvest earnings.
We believe that the greatest value is created when people work together to achieve a common goal. We want our management teams to feel that we are “in their corner” and working in every way we can to help them build a winning business.
We try not to handle all companies in which we invest the same. The individual characteristics and culture of a company are often what make it special. We believe that preserving these is very important and helps ensure the continued commitment by employees, customers and others in spite of new ownership.
We believe it is important not only to work well together with management, but to share success together. We strive to ensure that management and other key employees have clear incentives that align their interests with us as owners.
We expect to be actively involved with our portfolio companies at the board level, and management should expect us to provide more than just investment capital. We try to add value primarily via assisting management in strategy formulation, recruiting key executives and board members, development of appropriate policies and procedures, creation of strategic partnerships, financing, engineering and execution of exits.
A cornerstone in our collaborative approach is a focus on supporting management and the overall human organization to grow as the company grows. The challenges management faces are often quite different at a company’s early stage compared to later in the growth cycle. Having already gone through this process a number of times with other companies in which we have invested helps us to recognize early the changes required, and to help management implement these proactively as the company grows.
Most companies experience difficulties along the way. Rather than stepping back, our strong bias is to step in and help the company and management to overcome such challenges. Our strong belief is that a key to success for most companies is the ability to work through the problems that inevitably will arise. Very often the ultimate winners are companies that have managed to work through tough times rather than companies that never have experienced any problems.
We build companies for the long term. Since we judge success over the long term, and have no ambition to raise another fund that would require us to demonstrate a certain short term IRR, we have no pressure to exit our investments or to resort to “short term fixes” of any issues that may arise.
Although we do not believe our investments should accumulate excess cash flow, we have a strong preference to reinvest earnings rather than to receive dividends.