Our team targets SMEs, which tend to be undervalued due to a lack of available funding, thus optimising the potential return for our investors. Furthermore, we will enhance shareholder value by ensuring that:
- Vendors remain at risk for 20%-30% of the initial consideration.
- On-going management acquire an equity stake.
- Acquisitions are on a debt-free and cash-free basis.
Our consensus valuation for each deal will be based on a mix of commercial judgement and financial modelling. Forecast cash flows are accessed with the appropriate due diligence which, as a minimum, will consist of financial, commercial and legal due diligence, as well as a Management Team appraisal.
Should the due diligence process identify matters of concern, we will either terminate discussions or renegotiate the terms. We cover the costs of any aborted deal, so they aren’t passed on to Members.
If vetted successfully, deal opportunities are presented to Club Members in the form of a detailed Investment Memorandum, which covers the investment terms, deal structure, potential risks and forecast returns, as well as likely exit strategies and timelines. Our senior team can answer any additional questions Members may have on the investment. Following this, the decision to invest is entirely up to the individual Member.
The entry level for each investment is £25,000, which is acquired through a combination of Ordinary Shares and either Preference Shares or Loan Notes (usually with a coupon or yield attached).