SMH Private Equity Group focuses on technology opportunities that will be attractive to the energy and power industries, but first require unique positioning to be relevant. These technologies often are used in other industries to drive incremental revenue or deliver cost reductions, but have not made the transition to the energy and power sectors. By doing so we reduce risk and enhance returns to our investors.
Active investment management style with a private equity mindset is essential.
Regardless of ownership interest or form, we are an “active” investor and a board member. A key characteristic of our investment approach is to improve management teams through active coaching, improving functional area performance, improving governance, implementing aligned incentive compensation plans, and recruiting new management personnel. Our team provides a range of technical support for its portfolio companies, including analysis of outside financing options, strategic partnerships, and acquisition opportunities. Additionally, we actively work to develop customer relationships and regularly provide market analysis to management.
Industry relationships provide validation of opportunities.
Our principals have an extensive network of energy and power professionals that offer deal referrals, industry insights, and validation of market theses or specific investment opportunities. Additionally, the team maintains relationships with boutique energy investment banks and large private energy-oriented funds.
Internally generated concepts can build companies.
We have built companies around ideas – concept companies. Our team identifies a technology-based solution with potential application to the energy or power industries, builds out the concept/business model, and recruits a management team to execute the idea.
Concept and business model are the primary drivers of portfolio company selection.
The five primary investment screens are:
- 5x to 10x investment return to the customer from the purchase of the company’s solution
- Large incumbent market
- Low product development risk
- Fit with energy IT transfer strategy
- Limited syndication requirements
Experience counts.
Our principals total more than 50 years of professional investment experience, much of it in early to growth-stage companies. We have served on boards of directors ranging from start-up companies, to high-growth Nasdaq companies, to mature public companies traded on the NYSE. We lived through the tech crash. We believe all of this gives our investors an edge as we structure and manage early to growth-stage investments.
We are headquartered in Houston, Texas, the energy capital of the world. More major energy exploration and production companies are based in Houston than anywhere else. Texas is the epicenter of a supporting cast that numbers in the thousands—the largest oil companies, drilling contractors, seismic companies, tooling providers, engineering firms, power distributors, energy market markers, and energy retailers have corporate headquarters here. Collectively, they spend billions of dollars annually and their appetite for improved technology is enormous. The level of information technology adoption within the energy sector is huge. We believe this newly elevated acceptance of information and process technology will increase.
We prefer investments in companies headquartered in the “Oil Corridor” states of Texas, Oklahoma, Louisiana, New Mexico and Colorado.