Prior to our first meeting with management, we will typically request a business plan or executive summary to set the groundwork for an efficient and productive initial encounter. Following this meeting and the introductory presentation, Huntington will consider a variety of factors in assessing the growth potential of a potential investee company. The evaluation of technology and markets, together with a careful review of the quality of the match between the investee company and the investment priorities of Huntington, are but a few of the steps in this process. Because our investment philosophy is based on a close working relationship with management, considerable attention will also be given to the management team of any prospective portfolio company. Our due diligence process is designed to create evaluation platform from which to assess the skills, judgment, integrity and leadership of all key management.
A portfolio company should address a genuine market need. In certain cases, it might also identify a market need that did not previously exist. Existing markets will be specific, large, and growing; or, if not, they should be changing rapidly. These markets should have significant barriers to entry and have a forecast of sustainable high profitability. Competent technical analysis of markets should strongly support a probable leadership position for the investee company or at least an unassailable niche. If a new market is being defined and created, then the investee company should indicate their commitment, resources, and plan to achieve preeminence in the new market.
The competitive advantage of the investee company should be novel and protectable. Whether the companyıs proprietary position is defensible from a legal point of view (patents, copyrights, etc.), or from a business point of view (trade secrets, supply contracts, etc.) it is essential for a potential investee company to demonstrate the ability to hold a market advantage over a period of time. To the extent that such an advantage can be projected, the management team should also be prepared to demonstrate both how the advantage will be achieved and in what ways in can be leveraged to establish a dominant market position.
The evaluation criteria built into investment process ensure that each new investment conforms closely to the strategy and approach of Huntington Ventures and that potential returns are commensurate with the risk assumed. Evaluation criteria are grounded in due diligence and the investment team thoroughly analyzes each opportunity before making a financial commitment. Only upon shared consensus by the investment team that the potential investee company has both the adequate market potential and the management suited to develop the venture does the investment move forward to the next phase of the financial cycle. The investment team's analysis includes a review of the company's management, technology, strategy, operating plan, markets, competitors, cost structure, regulatory profile, patents, financing requirements, and deal structure.



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