Subscribe to Inc. magazine
MONEY

What Pension Funds Want

What institutional investors look for when they are considering investments in growing companies.
Advertisement

Let's be clear about one thing right away: if you want to approach institutional investors, your company should invest in topflight advisers. That means hiring a Big Six or large regional accounting firm to audit your results. You'll also need a good investment banker. "We do not deal directly with small companies; we look only at deals that investment bankers bring to us," explains Kent Weymouth of Wayne, Pa., an adviser to the $25-billion Pennsylvania Public School Employees Retirement System, the pension fund that invested in Osiris Holding. (See "A Private Placement to Die For," [Article link].)

So what do institutional investors look for when they are actively considering investments in growing companies? Inc. asked Weymouth to share his priorities:

· History: "We look for at least two to three years of growth and positive financial results," he says. An occasional downturn can be overlooked, but only if there is a good explanation of what went wrong and why it won't be repeated.

· Capital plans: "We want our investments to be used to help companies grow." That means no private placements -- for this fund at least -- if the cash is to be used to buy out management or venture capitalists or to pay off debt, rather than to support a growth-oriented business plan.

· Quality of management: "Since we don't invest to take control, we want to be sure management is well qualified and firmly committed, with an ownership stake," he says.

* * *
Last updated: Aug 1, 1994




Register on Inc.com today to get full access to:
All articles  |  Magazine archives | Livestream events | Comments
EMAIL
PASSWORD
EMAIL
FIRST NAME
LAST NAME
EMAIL
PASSWORD

Or sign up using: