VC Returns Without VC Risk
Macro background, experienced management team, available leverage, consistent low risk distributions, and rerating optionality on exit.
Learn more: Incoming Tsunami – For The Investors →
Highlights
- Large universe of attractive acquisitions
- Wolf Business Services employees have proven track record of analyzing companies from the outside, and identifying value
- Gain benefits of leverage with no recourse means more bang for your buck
- Vehicle on a small business strategy offers passive exposure to a new asset class with limited risk and resources
50%+
IRRs, optionality on exit
98%+
ETA Odds of success
11,000+
Retirees a day, large universe
9:1
No recourse leverage on your investment
Frequently Asked Questions
Where is the risk?
Small businesses are generally well-run, evidenced by a relatively low average delinquency rate of ~1.7%, but sometimes the key is the owner. With 11,000+ small business owners retiring daily, identifying the right business with assured continuity is crucial. The risk is not in post-acquisition operations, as an effective vetting process can effectively mitigate any risk.
What multiples do these small businesses trade at?
Small businesses with a sale price of $5 million and below typically trade at multiples ranging from 2.5x to 3.5x EBITDA. Small businesses in high-growth sectors, those with significant fixed assets, or those possessing an intangible premium may trade closer to 5.0x EBITDA. As these businesses grow and achieve higher EBITDA ($5mn to $10mn), they often experience a doubling to higher multiples. Additionally, favorable economic conditions, such as lower interest rates, can also contribute to higher valuation multiples.
What are the benefits?
Investing in small business acquisitions provides access to a vast array of well-run companies at highly attractive valuations. With the ability to leverage $9 for every $1 in down payment with no recourse debt, investors can significantly amplify their potential returns. Management with a history of analyzing companies limits acquisition risk and owns debt risk. Additionally, there is considerable potential for re-rating, further enhancing the valuation multiples and overall returns as these businesses grow and increase their earnings.
Why hasn’t this been arbed out?
This opportunity hasn’t been fully arbitraged due to a demographic mismatch and significant market inefficiencies. As a wave of small business owners retire, many are eager to sell their businesses to secure retirement funds. However, key barriers such as risk aversion among potential buyers and the inherently inefficient nature of the small business market prevent these opportunities from being fully exploited. This creates a unique window for savvy investors and experienced analysts to capitalize on attractive valuations and high potential returns
Can this be executed?
Yes, we are so convinced we left a career on Wall Street to pursue it. We have an established network of business brokers, successful entrepreneurs, and ETAs, along with a proven track record in due diligence and value creation.
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