43 Private Equity   Fa Qs
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43 Private Equity Group - Company FAQ Sheet

43 Private Equity Group - Company FAQ Sheet

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  • 1. 776 E. Riverside Dr., Suite 200 Eagle, ID 83616 Tel (208) 250-6253 COMPANY MOTTO “CREATING TOMORROW’S RETURN ON INVESTMENT FASTER” MISSION STATEMENTWe seek business acquisitions where we can achieve a return on investment of greater than8% in 18 months or less, as opposed to the market average time to achieve the same resultof 36 months. We also seek opportunities where we can provide growth for the businesseswe acquire and provide jobs for the local community. SUMMARY KEY ACQUISITION CRITERIA Revenue Size: $500,000 to $10,000,000 Adjusted EBDITA: $250,000 to $1,250,000, Excluding Real Property, With A Maximum Of $1,900,000 Combined With Real Property Business Types: Primary – Manufacturing Secondary – Assisted Living and Added-value Wholesale/Distribution Industries: All Management: Qualified Management, Replace, or Fund Managed Geographic Market: Primary: Boise Area Secondary: Other Areas of the Mountain States Financial Trending: Moderate Growth, Stable, or Moderate Declining, No Distressed Situations Control: 100% COMPANY FAQsThe following addresses frequently asked questions about the Saltwater Creek Fund, our operations,strategy, investment philosophy, and approach to managing our portfolio companies.Fund Name: Saltwater Creek Fund, LLC.Fund Niche: Acquisition of small to medium sized manufacturing, independent living, gas stations with c-stores, and added-value wholesale / distribution businesses. All transactions to include real estate.Why Invest with Saltwater Creek Fund?A lot of people will ask why we choose to invest in manufacturing based businesses. Isn’t manufacturingdead in the United States? Actually, there are a lot of great investment opportunities in manufacturing herein all geographic regions of the United States. Properly positioned strategically, manufacturing offers a greatinvestment for a variety of reasons, including: manufacturing firms have assets that provide security torecoup some of the our investment in the event the investment becomes insolvent and the assets of amanufacturing firm can also be used as collateral for obtaining financing for those acquiring businesses fromus that are in our portfolio. Finally, there are many factors for improving company financial performance ina relatively short time within a manufacturing business. Consequently, manufacturing businesses offer aplatform for achieving above average return for our investors.
  • 2. Why invest with a private equity firm?Investing with a private equity firm offers investors many benefits over investing in small to medium sizedbusiness on their own. Such benefits include: Investment risk is spread over a portfolio of companies, rather than a single business. The expertise and experience in business acquisitions, managing business, and increasing the return on investment opportunities offered by the management team of the private equity group often exceeds the individual investor. The private equity group has established a broad network of contacts that enable it to achieve its objectives in all areas of operations in order to facilitate its ability to achieve targeted returns on a timely basis.What is Saltwater Creek Fund’s investment strategy? We have a focused investment strategy, keyelements of which are to: Acquire businesses with underperforming assets (not distressed assets), including the underlying real property. Turnaround the business, increase its cash flow, then sell the business when targeted returns are achieved. The investment cycle is generally short-term 18 months or less. Invest in businesses with significant upside potential requiring minimal additional capital infusion to achieve targeted results. Target industries that correspond to our direct experience and ability to add value.What kind of return on investment can expect by investing with 43 Private Equity Group’s Fund?While we can not guarantee what your return on investment will be, you can expect a return on investmentin the range of 8% to 20%, depending on the business acquired, amount of investment, time to achieve thetarget return on investment, strategies employed to achieve desired results, general economy, marketconditions, competitive conditions, and a variety of other factors. However, it is not uncommon under thestrategies we employ to achieve a return on investment of 10% to 20%.How will the Fund minimize my investment risk?Where appropriate, the Fund intends to mitigate its downside risks by taking such measures as:  Invest in companies that have a historical operating history  Invest in companies that are not distressed  Invest only in businesses that have clear opportunities for restructuring and revitalizing the business  Invest in businesses that have tangible assets that can be leveraged or sold, if needed  Invest in transactions that include the sale of the real property that can be leveraged or sold, if necessary  Maintain business acquisition insurance  Prior to acquisition conduct in-depth due diligence into the target company’s business operations, property, legal risks, internal and external threatsWhat is Saltwater Creek Fund’s acquisition focus?We focus on investing in small to lower middle market businesses in industries where we have relevantexperience. These include: light manufacturing, independent living, gas stations with c-stores, and value-added wholesale / distribution. For platform investments, we target companies with at least $250,000 inEBITDA and enterprise values ranging from $500,000 to $2,000,000. In addition, we focus on businessesthat have moderately declining cash flow, stable cash flow, or moderately increasing cash flow.
  • 3. What is Saltwater Creek Fund’s preferred type of transaction?Our greatest strength lies in helping established companies reach greater levels of growth. We prefer all cashtransactions for 100% control, with either management that can stay on, replace management, manage thefirm ourselves, then install new management prior to exiting the business.Who will manage the business acquired in the Fund’s portfolio?Management of the acquired business will depend on the skills and abilities of the existing management ofthe acquired firm. In some cases, two of the Fund’s Managing Members will fill the role of the day-to-daymanagement of the acquired business until a qualified manager(s) are put in place and trained. But, in allcases the Managing Members of the Fund will oversee and guide the company’s managers to implement thestrategies for restructuring the company.What is Saltwater Creek Fund’s average equity investment?Our equity investments range from $500,000 to $2,500,000 depending on the needs of the company andopportunity presented. Our preferred range is between $750,000 and $1,500,000.Does Saltwater Creek Fund pay referral fees?Securing attractive new investment opportunities is part of Saltwater Creek Fund’s lifeline. We welcomeyour showing us new deal opportunities and we do pay fees for referrals upon the closing of transactions.Does Saltwater Creek Fund prefer to be the sole institutional investor or will Saltwater Creek Fundco-invest with another private equity firm?We choose to make a small number of investments so that we can bring real focus and commitment to eachrelationship. As a result, we prefer to be the sole or primary investor in our transactions. Saltwater CreekFund will, however, invest selectively with other private equity firms.Does Saltwater Creek Fund manage portfolio businesses?We will manage the day-to-day operations of portfolio businesses in select cases where there is not strongenough management in place. It is preferential to have management in place that is sufficiently strong tocarry out day-to-day functions of the business. However, prior to selling a portfolio business will make surethat good management is in place to increase the value of the business and to assure a smooth transition uponsale of the business. Upon sale of a portfolio business we will attempt to remain on the board in an advisorycapacity.As either board members and shareholders or hands-on manager, we act to enhance the operating andfinancial performance of the business at all levels. We deliberately make a relatively few number of largerinvestments so we can commit considerable time and resources to each company in our portfolio. Ourinvestment strategy ensures that our companies and management partners get the attention and support theydeserve.Who are Saltwater Creek Fund’s investors?Our investors are “accredited investors” as defined under the rules of SEC regulation D and EB-5 VisaInvestors. Such investors are: institutions, foundations, financial institutions, and high net worth individualsbased in the United States, Europe, and the Pacific Rim. Having forged a close and productive relationshipwith these parties, we benefit from a two-way flow of ideas, information and contacts.How can I be sure Saltwater Creek Fund will keep the information I share confidential?We believe that successful investment partnerships are based on mutual trust. As such, we zealously protectour reputation for professionalism and integrity. We will always respect the confidentiality of our
  • 4. discussions with you. After hearing or reading a brief description of the opportunity, we will sign aconfidentiality/nondisclosure agreement.What information do you find most helpful in evaluating an investment opportunity?A complete investment memorandum or business plan is the most useful document. A concise executivesummary usually gives us sufficient information to make a preliminary evaluation. While we do not requireany particular format for submissions, to assure a prompt and decisive response your proposal should enableus to answer the following questions quickly: What are your companys products/services? Who are your customers? What is your growth strategy? What are your companys market/competitive position? Who are your current competitors? What unique competitive advantages does the company possess? Who are the key managers, and what makes them qualified to run this business? (Please include key bios.) What is your current capitalization structure? (Please list owners and ownership percentages.) What is the companys current revenue and profitability? What is the companys historical five-year financial performance? What are your financial projections for the next five years.How long does it take Saltwater Creek Fund to make a decision?You can generally expect to hear back from us within a few days after submitting an investment opportunity.We believe in thorough due diligence, but this doesnt prevent us from moving quickly when necessary.Depending on the complexity of the situation and the type of transaction, we can make a binding investmentdecision in less than 30 days and can generally close 5 to 15 days after that.What factors influence Saltwater Creek Fund’s investment decision?While we recognize that there is no single determinant of success, our investment assessment typicallyfocuses on two core areas: are there areas of a target company’s business that can be exploited to increase itscash flow; can these opportunities be developed to turn around the business in a relatively short amount oftime; and with the changes made can the Fund achieve its target return on investment?What can I expect from the due diligence process?Our due diligence process typically includes an examination of key current customers and suppliers; averification of the differentiation of product or service; an evaluation of industry competitive dynamics; areview of historical and projected financial performance; evaluation of strategic opportunities; and anassessment of the strength of the management team.What is Saltwater Creek Fund’s preferred exit strategy?We approach every investment opportunity expecting and working towards a successful sale or merger ofthe company. Each exit decision is made through a careful joint evaluation with management, and takes intoaccount the optimal strategic interests of the companys employees, customers, suppliers, and investors.What is Saltwater Creek Fund’s investment horizon?Saltwater Creek Fund is a short-term investor. Our investment horizon is usually between 6 months to 18months, although we have the ability to hold an investment for up to 3 years. Our fundamental goal for eachportfolio company is to build intrinsic long-term value through responsible operation of the business.
  • 5. What is the best way to reach someone at Saltwater Creek Fund? Do I need an introduction?We welcome investment opportunities and your inquiries. Moreover, you are welcome to email or call us. Areferral from an industry contact or friend of the firm is helpful but not necessary. You may contact us at:43 Private Equity Group, LLC.776 E. Riverside Dr., Suite 200Eagle, ID 83616 USATel: 208-250-6253Email: info@idahoprivateequity.comWebsite: www.IdahoPrivateEquity.comAsk for: Jim McCuneHow Can I Get Started Investing With The Saltwater Creek Fund?Below is an outline of how to begin investing with our Fund. 1. Complete the “Accredited Investor Questionnaire”. Your completing this questionnaire is required to be completed before we can consider you as an investor in the Fund. 2. After we notify you of your qualifying as an Accredited Investor 3. Have your attorney or other advisor review with you the contents of the Offering Memorandum, Commitment Agreement, Subscription Agreement, and Operating Agreement so that you understand how our Fund operates and what responsibilities are born by the Fund and you as an investor. 4. Complete and submit the Commitment Agreement, Subscription Agreement, and Operating Agreement 5. Items in 3 above will be held on file, then when you receive the Capital Call Notice and have wired the funds into your Fund Account you will receive the corresponding Certificate of Membership with the number of units you purchased and the transaction is complete and you will begin to benefit from membership in the Fund.As a special thanks for your investing with our Fund you will receive a FREE 3-Day/2 Night Vacation travelvoucher for two people to one of three vacation destinations upon receipt of your Commitment Agreement.