We focus on Christian-owned companies whose owners would rather find a successor who will preserve what they built than sell to traditional private equity. Then we ask of every business: is it a Compounder — one that earns high returns on invested capital, can sustain them, and has a long runway to reinvest at attractive returns? Three tests help us answer that.
We look for a high return on invested capital, sustained over time and measured on all the capital a business employs, including intangible investment such as R&D and SG&A. We also look for strong free cash flow conversion and attractive returns on newly invested capital — the marks of a Compounder.
A Compounder’s returns typically have a structural cause. Drawing on the Hicks-Marshall laws of derived demand, we look for products and services that are a small share of the customer’s budget, hard to substitute, and sold to buyers who can bear a price increase. Drawing on Helmer’s 7 Powers, we look for durable competitive advantages such as scale economies, switching costs, branding and process power.
Primarily control equity investments in private companies. We typically ask the seller to roll over meaningful equity on the same terms as our fund, and we generally prefer that key leaders remain with the business for several years after close. In select cases we may consider a minority investment with strong governance rights and a defined path to control.
Companies, typically with $2–15MM of EBITDA and primarily in North America, that have strong free cash flow, a high-quality management team and sustainably high returns on invested capital — the profile of a Compounder. Under STAPLE Investments’ ownership, each company will be run with intentional Christian ownership.
STAPLE Investments looks for Compounders across the industries where they tend to be found — businesses with mission-critical products, pricing power, durable and repeatable revenue, and room to reinvest at attractive returns — and tends to avoid industries with a history of value destruction or volatile returns.
STAPLE Investments’ evergreen, permanent-capital fund has no fixed investment period and no artificial exit timeline. Our general expectation is to own a compounding business for the long term — for as long as it continues to earn strong returns on capital and remains aligned with our mission — while staying actively engaged as its owner. We retain the flexibility to pursue a sale, recapitalization or partial liquidity event where that would best serve our investors.
Stories of Integrity & Success from Those Who’ve Walked This Path Before You.