Recurring Revenue Business Services

During the last decade or more, a predominant business trend has been the outsourcing of functions that were once managed internally. Companies impacted by pricing constraints caused by international competition and low inflation have sought to become more efficient by eliminating non-core functions that specialists or firms that aggregate demand can provide to them at a lower cost. This, of course, creates opportunity for those businesses that can provide the required functions reliably and on a cost-efficient basis.

Within this outsourcing trend are other changes that can create opportunities. After a period of outsourcing functions to multiple providers, companies often favor reducing the number of providers they deal with and concentrating their needs on those who can offer a broad range of services or a broad geographic coverage. Opportunity also comes from the ever-increasing use of technology and the Internet to achieve business efficiencies.

In the past, we have invested in businesses providing marketing services of various kinds, customer relationship management services, specialized consulting services, and document and network management. Our current focus is on businesses in sectors such as financial services, information services and transaction processing that have been able to develop a recurring revenue stream because their services are provided under long-term contracts, change costs make existing customer relationships particularly reliable, or their services are so unique that substitution is unusually difficult.