Applying these principles consistently will deliver long term value for investors. It also provides entrepreneurs comfort knowing their work is respected; their staff given new opportunities; and their customers serviced following an exit.
- Only in businesses with solid intrinsic value;
- Only in businesses with the potential to be improved and grown;
- Only in businesses which can be bought at an attractive Valuation.
- The operational and financial performance of the business;
- The motivation of management to drive growth;
- The ultimate offering to the local market and community.
- By building platforms of compatible businesses;
- By unlocking those synergies which do not come at a significant cost;
- By recognising the value of what previous owners built.
SigmaRoc was set up with the vision to build a competitive construction materials group, focussed on the long term benefits our industry has to offer. Our business model was conceived out of the experiences of many high level executives and entrepreneurs in the sector, allowing several important conclusions to be drawn.
Construction materials are a local product, consumed and produced locally, and, due to their high mass to price ratio, they tend to travel shorter distances to end customers than other commodities, such as oil or metals. This brings a particular dynamic to the sector, focussed on local and fragmented markets.
Our business model starts from the understanding that each local market is different, with its own particularities, competitive pressures and local history.
Understanding that structure, preserving its history and local dynamics, while applying best-in-class operational and financial management, will ultimately, all things being equal, lead to a better offering, for investors, customers, employees and local communities.
A particular ingredient in that structure is empowering local managers and operators to take full responsibility for their business or division. Only local managers fully understand the requirements of the local market. Product innovation, customer engagement and Capex decisions are all driven by local requirements and not by a group agenda, which may or may not be adequate for what is required on the ground.
At a group level, we utilise this decentralised approach to focus on what we are best at; finding appealing investment opportunities, helping the acquired businesses reach a best-in-class status operationally and financially, and lock in synergies available to us through scale and expertise.
In practice, the implementation of the vision expressed above can be achieved through three core principles:
We invest in businesses. This is not the same as acquiring them. We aim to keep and improve those aspects which made them worth acquiring, whether that is their independent mind-set, their entrepreneurial nature or their founder.
We improve the businesses we have bought by targeting those aspects which were less efficient than they could be. This can vary widely from inefficient sales efforts, poor cash management to operational difficulties.
Lastly, we integrate the businesses we buy into platforms where compatibility secures synergies and where scale helps to generate local buying power. We also integrate acquired businesses into the infrastructure of the Group, providing centralised technical, financial and managerial support, allowing the newly integrated business to capture efficiencies and economies of scale.