This is the first in an occasional series we call Behind the Investment, where our M&A team looks back at a company that joined the Solen portfolio and explains, plainly, what we saw, what we questioned, and what finally convinced us. We are starting with Track Star.
We meet a lot of companies. Most do not move forward, and that is not a criticism of them. It usually means the fit is not right, for them or for us. Track Star was different early on. Here is why, including the parts that took work.
The Thesis: Durable Software in Workflows That Cannot Fail
Track Star International builds GPS, automatic vehicle location, and video telematics software for public safety, utilities, and transportation. Police fleets, utility crews, and transit operators use it to know where their vehicles and assets are, in real time, every shift. Michael Hughes started building the underlying hardware and software designs in 1994 and grew the company into a SaaS platform trusted in settings where being wrong is not an option.
That last point is the thesis in one line. We look for mission-critical software, the kind a customer cannot switch off without disrupting how they operate. When a police department or a utility runs its fleet on your platform, the software is woven into the daily work. That produces the two things we value most: deep customer trust and durable, recurring revenue.
Our criteria are not a secret. We look for a high share of recurring revenue, strong retention with low churn, real domain expertise, and a product customers depend on rather than merely like. Track Star fit that shape before we ever discussed terms.
What We Looked For in Diligence
A thesis is a hypothesis. Diligence is where we try to disprove it. These are the questions we worked through, and the spirit of what we found.
Revenue quality. We care less about the headline revenue figure and more about how much of it recurs, how predictable it is, and how concentrated it is across customers. Recurring revenue in mission-critical settings tends to be sticky, and that is what we set out to confirm.
Retention and churn. Growth means little if customers leave through the back door. We study retention by cohort, because an average can hide a problem. In Track Star's markets, customers do not change telematics platforms casually, and the usage patterns reflected that.
Customer trust. We talk to customers directly. In public safety and utilities, references tend to be blunt, which we appreciate. We wanted to know whether the product earned its place every day or simply held it by inertia.
Product and technology. We looked honestly at the state of the platform. A product built over many years carries history, and part of our thesis was that there was room to modernize and to add a mobile experience. We had to be confident that the modernization was achievable, not just desirable.
The team and the founder. We spend as much time on people as on numbers. We needed to understand what Michael Hughes wanted next, because a transition only works when the founder's intentions and ours point in the same direction.
We will not pretend every answer was perfect. No company is. The point of diligence is not to find a flawless business. It is to understand exactly what you are taking on, so the plan after the close is grounded in reality.
What Convinced Us
Three things moved this from interesting to compelling.
First, the customers. The trust Track Star had earned in unforgiving environments was real, and it is very hard to build from scratch. That trust was the asset.
Second, the founder's motivation. Michael Hughes was not looking for whoever would pay the most and move on. In his words: "Many of the people who approached me really were looking to flip the business. I wanted the product to continue, I wanted the team to be taken care of." That is exactly the founder we are built to partner with, because we hold for the long term and have no predefined exit. The fit was not only financial. It was about intent.
Third, a clear and fundable path to grow. We could see specific ways to strengthen the business: lift the non-core back-office work off a lean team, modernize the product, add a mobile app, and pursue a follow-on acquisition to widen what Track Star could offer its customers. None of that required a dramatic overhaul. It required patience and reinvestment, which is what permanent capital is for.
What Happened Next
We try to judge our own decisions by what actually happened, not by how good the thesis sounded.
After Track Star joined the portfolio, the non-core back office was lifted off the team. The product was modernized, including the new mobile app we had hoped to add. The business grew revenue by roughly 40 percent through a follow-on acquisition. And Michael Hughes moved into an advisory role on his own terms, staying involved as Strategic Advisor rather than being shown the door.
The team did not shrink. It grew stronger, with better tools and a clearer path forward. That outcome is the thesis, proven in practice rather than on paper.
If You Are a Founder Reading This
We wrote this the way we wish more firms would: plainly, including the parts that took work. What we look for is consistent. Mission-critical software, customers who depend on it, a capable team, and a founder who cares what happens next. When we pass, it is usually about fit, not worth.
If that sounds like your company, and you are starting to think about its next chapter, we would be glad to talk. Reach out to the Solen team at any time.
Solen Software Group is a permanent-capital acquirer and operator of mission-critical software businesses serving enterprise B2B markets. Solen partners with founders for the long term, with a decentralized operating model and a focus on reinvesting in people, product, and customer outcomes.
FAQs
What does Solen look for when evaluating a company?
A high share of recurring revenue, strong retention and low churn, real domain expertise, mission-critical workflows customers depend on, a capable team, and a founder whose intentions fit a long-term home. When Solen passes, it is usually about fit rather than the quality of the business.
What was the investment thesis for Track Star?
Track Star builds GPS, automatic vehicle location, and video telematics software for public safety, utilities, and transportation, workflows that cannot fail. That produced deep customer trust and durable recurring revenue, with a clear path to modernize the product and grow.
What happened to Track Star after it joined Solen?
The non-core back office was lifted off the team, the product was modernized with a new mobile app, the business grew revenue by roughly 40 percent through a follow-on acquisition, and founder Michael Hughes moved into an advisory role as Strategic Advisor.