AEA's investment philosophy is centered on the belief that we can continue to provide our investors with superior returns by using the firm's experience and expertise to buy excellent businesses with strong management teams at the right price. AEA has developed a set of investment principles based on extensive experience in both favorable and unfavorable environments.

At its core, AEA is a business builder, committed to investing in well-positioned middle-market businesses that have the potential to improve operationally, strategically and financially. AEA looks for companies with five fundamental qualities:

1. strong position relative to their competitors;
2. proven ability to generate free cash flow;
3. operating in a stable-to-growing industry;
4. value-added plan that AEA and management have developed prior to our investment that has the potential to build the business and increase the value of the company; and,
5. management team that AEA recognizes as having the capability and drive to implement the value-added plan.

While making good investment decisions is important, management excellence and strategic execution are also critical to successfully building businesses.

Successful portfolio companies have strong management teams. These teams execute effectively and implement realistic, identified strategies to create businesses that can significantly increase profits. These teams enter with conviction and ability into a cooperative and constructive relationship with the AEA team and its Participants and demonstrate a capacity for quick but thoughtful action.

To further strengthen AEA's ability to drive investment returns through growing portfolio company profits and free cash flow, we have added Operating Partners to the AEA team. AEA's Operating Partners are members of the firm, each of whom has a successful track record as a senior executive of an operating business. In addition, we have retained a group of operating executives who work closely with AEA's investment teams to identify and perform due diligence reviews on prospective investment opportunities.

The AEA Participant group, combined with our Operating Partners, provides a powerful competitive advantage in making thoughtful investment decisions and supporting our companies after we have made the investment.