Investment Overview

Through our perspective, experience, resources and relationships, we have created a clear value-creation strategy to establish market-leading businesses. We focus on investments within specific core industries, transaction types, structures and operating profiles where we leverage our experience and network of relationships to build long-term value.

Investment Approach

  • Owner’s Perspective. We are the largest collective investor in our partnerships — our firm, partners, affiliates and related persons account for approximately 30% of the capital committed to and invested by our partnerships. We have intentionally aligned our incentives with our outside partners, encouraging prudent stewardship and capital preservation while working towards return maximization. We are also keenly focused on aligning our management teams’ interests with our own.
  • Historical Context. LKCM was founded in 1979 and has experienced many economic cycles. The firm and its principals have also been investing in private equity for over 30 years. This long institutional investment history in both public and private markets, combined with breadth of experience of the professional staff, shapes our investment philosophy, helping us effectively manage market cycles.
  • Well-Resourced Partners. We are supportive partners to our portfolio companies and have significant value-added resources:
    • LKCM Headwater Investments leverages LKCM’s highly regarded, in-house proprietary research analysts, many of whom are sector focused and have over a decade in their respective industries.
    • Our investor base includes several families with long-standing relationships and historical investments across multiple industries.
    • We are constantly cultivating a stable of operating partners and directors with expertise and demonstrated success in a variety of our targeted industries.
  • Values Conscious. The firm promotes a culture of strong values and community orientation. Our investment team shares this common set of core values whereby we remain active, value-added partners who consistently strive to be ethical, honest, trustworthy and resourceful partners.

Investment Criteria

Transaction Types
  • Buyouts and recapitalizations of family-owned companies
  • Growth capital
  • Consolidations & build-ups
  • Corporate carve-outs
  • Capital constrained or distressed opportunities
  • Complex, time-sensitive opportunities
  • Flexible capital partner
  • Generally control investor
  • Will consider minority investments up the capital structure for select opportunities
  • Revenue of $50 – $500 million for platform companies, or $3-$100 million for add-on acquisitions
  • $5 – $80 million equity investments for each platform, with ability to opportunistically provide larger investments through existing partner base
Focus Areas
  • Distribution Services
  • Manufacturing
  • Healthcare
  • Financial and Professional Services
  • Consumer Products
  • Technology
  • Energy
Operating Profile
  • Operating in fragmented, underserved, misunderstood or out-of-favor segments within our focus areas
  • Opportunities to enhance value through product extension, market expansion or operational improvements
  • Potential for meaningful scale and/or scope benefits
  • Experienced management teams with successful track records in their specific industries

Investment Strategy

LKCM Headwater Investments demonstrates a clear, hands-on, value-creation strategy with each portfolio company that leverages our expertise, experience and network of relationships in order to help establish market-leading businesses.

  • Partner with Winning Management Teams. We believe that leadership is the driver of success for every investment; therefore, we look to partner with teams and leaders with demonstrated success in their respective industries. Our management partners also have access to our broad relationship network and stable of operating partners, who serve our portfolio companies as directors, strategic advisors and mentors. We also align a management teams’ interests with those of our investors to emphasize the concept of shared success.
  • Invest Where We Can Add Value. Our preference is to invest in companies and industries where we can identify opportunities to enhance a company’s return profile through operational improvements. As a general rule, we try to avoid investment opportunities too dependent upon financial leverage in order to gain attractive investor returns.
  • Prudently Pursue Strategic Growth. We desire to grow our companies through a variety of avenues but seek to do this within the context of maintaining strategic direction.
    • Product Extension – Further penetrate existing customer relationships through additions of relevant products.
    • Market Expansion – Leverage core competencies and institutional knowledge to win new customers in adjacent or otherwise related markets.
    • Acquisition – Acquire complementary niche businesses to help our companies attain critical mass or identify and fill gaps in their product offering or geographic coverage.
  • Capture Benefits of Scope and Scale. We choose to focus on businesses with opportunities to benefit meaningfully from scope and scale expansion. Whether this growth is organic or acquisition-driven, we always strive to improve working capital efficiency, leverage cross-selling opportunities and optimize procurement and pricing.