Investment Criteria

Financials

EBITDA: $1.0M - $5.0M

Preference is given to companies with 3 year history of consistent 15%+ operating margin. Companies with margin under 10% will not be considered.

Location

West Coast, Northeast, or Remotely Run

Midnight can be flexible on location depending on other business characteristics. However, we've found that the companies we're often interested in are located in the following areas:

Los Angeles-Long Beach-Anaheim, CA MSA
San Francisco-Oakland-Fremont, CA MSA
NY-NJ-CT-PA metro area
Washington DC metro area

Management & Senior Leadership

We prefer opportunities with continuing management and senior leadership, but we are also happy to consider an investment in which management and manager/owners are transitioned out over a reasonable time period.

Attractive compensation programs and incentive-based options for owners and/or senior managers are an integral part of our investment philosophy.

Industry & Business Model

Midnight's core focus is on the managed services business model. With information technology managed service providers and managed security service providers (IT MSP/MSSP) being our primary targets.

Deal Structure

Midnight typicalies pursues leveraged buyouts, but will occasionally consider a minority interest acquisition. We strive to keep the structure simple for sellers while aligning incentives for the team and management. We do this by utilizing the following elements when structuring investments:

Cash payment/investment for the seller
Rollover equity (if desired) for owners/managers seeking to maintain an ongoing ownership stake
Seller note