Ep 4 – How do we look at selling at Itus

Please find below the transcript for our snippet video:

Welcome to our Video Snippet Series. Through this, we aim to open up the fund, philosophy, and process to our current & potential investors and partners. In this episode of the Snippet series we take you through:

How do we look at selling at Itus?

Risk management is an essential part of running our fund, and businesses evolve and change over time. As a result, selling is an essential part of the process at Itus. There are 3 aspects that we care about around a business.

1. Its ability to generate cash flows – when this stalls, we want to be studying further to understand if this is a temporary aspect or if there is something structural which is a cause of concern
2. Change in Management – we invest in people, and we are weary when people or managements change as this effectively means, we need to rethink our investment
3. Change in capital allocation – the reason we care about cash flows, as this acts as the raw material to reinvest for the company. If the cash flows are invested in unrelated businesses, we are weary about our investment.

Change in either of the above forces us to rethink our business which may eventually lead to us selling the business. It is important to understand that businesses go through transitions and we would never forget about risk along the way.