Within the parameters set by the investment approach, WesternOne looks to acquire a portfolio of growth businesses primarily in equipment and infrastructure industries which meet the Fund ’s acquisition criteria of the following key items.

Western Canada Focus

WesternOne is focusing on acquisition opportunities located primarily in Western Canada where the Fund ’s extensive network of relationships and geographic proximity allow it to be the most effective in sourcing new acquisitions and in working with the businesses post-acquisition. Western Canada has in recent years been the engine of growth for the Canadian economy. According to Statistics Canada, since 1991 Western Canada has experienced an average GDP growth rate of 3.4%, as compared to the national average of 2.8%.

This growth has been fuelled by a combination of soaring revenues from oil and gas and other natural resources, from strong growth in both residential and non-residential construction and from steady increases in consumer spending and retail sales.

Management believes that these trends will continue in the coming years and with the initial platform business and primary focus on the Western Canadian region for new acquisitions and organic growth, WesternOne is well positioned to benefit from the region’s economic strength and population trends.

WesternOne is well positioned to identify acquisition opportunities in Western Canada by leveraging its strong network of relationships through its well connected management team and Board of Directors.

Through this network, WesternOne is able to identify and complete off-market acquisitions. By avoiding a competitive bidding process, these off-market transactions are completed at valuations that are more accretive to WesternOne, thus maximizing overall returns to Unitholders.

The management team and the majority of the directors and trustees are located in Western Canada, making post-acquisition management of the acquired businesses more efficient and effective. By being located near to the acquired businesses, WesternOne is better able to monitor its investments while allowing managers of acquired businesses easier access to the knowledge, advice and support of WesternOne.

Growth Opportunities with Stable Cash Flows

WesternOne targets acquisitions of platform businesses who have a history of stable cash flows and who offer strong growth opportunities either through the acquisition or consolidation of other complementary businesses, or through expansion and organic growth.

WesternOne is growing its acquired businesses through identifying and implementing operational improvements and continuing their historical growth, both internally and through add-on acquisitions. Acquiring add-on acquisitions, which are smaller businesses within the same industry as platform businesses, expands product offerings, leverages economies of scale and enables management to realize the significant savings and growth which it believes will result in more profitable businesses.

WesternOne is also pursuing growth through industry consolidation. Consolidation can be considered a subset of outsourcing, in which larger industries look for strength in their outsourcing partners, strength not available from smaller independents. Management expects these smaller firms will find it more difficult in the future to compete on a stand-alone basis in an increasingly competitive environment and will need to consolidate to create larger, more efficient businesses able to compete and to service their customers who are also consolidating and seeking more efficient suppliers. In many cases, efficiencies of combining facilities or capabilities enable a business to become stronger, leaner and larger.

Strong Market Share Positions

Acquisition targets are typically leaders in their markets with strong and growing market share positions in a well defined market, a long term or loyal customer base and a dedicated group of employees. Acquiring a market leader helps WesternOne pursue additional add-on acquisitions of smaller, independent businesses operating in the same industry as the platform business. Being the dominant player in a market also provides a more stable position for the business which in turn ensures stability of cash flows for distributions to Unitholders.

Mid Market Capitalization

WesternOne seeks primarily to acquire businesses with trailing EBITDA of between $3 million and $10 million. Once a platform business has been acquired, smaller companies in the same industry may be considered.

WesternOne has chosen to focus on the mid-market as these businesses typically embody many of the other facets of its acquisition criteria. In particular, mid-market businesses are frequently privately owned, in the early or middle stages of a growth while requiring additional capital to continue and/or accelerate the growth opportunities, have stable historical cash flows, and have strong and committed management teams. Additionally, mid-market businesses are frequently overlooked by larger acquisition funds or private equity groups and thus offer less competition for WesternOne which will result in superior returns to Unitholders.

Strong Committed Management Team

WesternOne’s goal is to be partners with and not just owners of its acquired businesses. WesternOne’s role is not to manage the day-to-day operations of the acquired business, but to offer strategic advice, provide growth capital, and to assist in further add-on acquisition. As such, WesternOne looks for targets that have strong, experienced management teams who have in-depth knowledge of their business and the industry and who are committed to the continuing growth and development of their business.

Privately Owned

WesternOne predominantly focuses on privately owned businesses who are experiencing succession or transitional issues, or who require additional capital in order to finance their ongoing growth. WesternOne believes that by focusing on these privately owned businesses it can achieve superior returns for Unitholders as there is typically less competition when acquiring private businesses, thus reducing the risk of inflated prices caused by multiple bidders or public auctions. In addition, a ‘private company discount’ is usually applied to the valuation, thus improving the overall return to WesternOne.

While the focus is primarily on privately owned businesses, sometimes the listed securities of public companies and trusts are unjustly penalized by the public markets for a variety of reasons, including short term earnings disappointments and overall depressed market conditions. These firms can be undervalued as compared to their private counterparts and can provide an attractive and accretive acquisition opportunity.

Advantageous transactions also arise from acquiring non-core divisions of larger businesses who are focusing on their core competencies. Most businesses today are focusing on their core skills and strategic goals as they manage for greater profitability and growth. This trend has led businesses to divest non-core business lines as well as shed assets such as manufacturing and distribution facilities. This trend will generate opportunities for WesternOne as businesses look to increase value by disposing of non-core operations and redeploying resources.

Many of these non-core divisions are neglected by senior management and on acquisition can be revitalized by providing existing management with proper incentives and bringing in new team members to increase cash flow and decrease inefficiency.