EXECUTIVE SUMMARY
514 Equity Group (“Management Company”) intends to establish a Holding Company to acquire, scale and hold lower to mid-market tech-enabled business service companies ("TEBS") to: (1) close the wealth gap for under-represented talent by diversifying ownership and (2) increase the participation of women & minorities in the leadership ranks of tech & PE portfolio companies. We seek to accomplish these goals while also seeking substantial opportunities for investor liquidity and returns.
WHO WE ARE*: - Our team leverages over 70 years of experience in leadership, culture, and governance as buy-side professionals, portfolio company operating executives, and Board members, to drive business growth and deliver investor returns:
- +25% Increase in ARR
- +73% Increase in EBITDA
- +25% Increase in Valuation
- 3.5x - 25x Multiple on Invested Capital
THE OPPORTUNITY:
- The short investment horizon for traditional funds makes it difficult for founders/ closely held companies to protect employees and their legacy when selling to a PE firm.
- We believe that true value creation, without cheap capital and/or luck, doesn’t occur within 3 – 5 years.
- Lack of diversity (avg. 8%) in the leadership of traditional PE portfolio companies results in EBIT underperformance from 21% - 33% (McKinsey: Delivering through Diversity).
VALUES-DRIVEN STRATEGY:
- We will strive to transform the growth trajectory of our companies by focusing on the 4 pillars of scaling a middle market business: People (diverse leadership pool focus), Strategy, Execution & Cash.
LAUNCH INVESTOR OFFERING:
- A dedicated channel to deploy capital in TEBS businesses with demonstrated economic resiliency.
- The ability to make a true impact on the long-term ESG footprint of a business, increasing potential to add value.
- Ability to participate in founder economics and right of first refusal on future side-car investments.
LAUNCH INVESTOR RETURNS**:
- Launch Investment: $3M
- Principal Returned: Year 5
- Carried Interest Split: $21M
- IRR: 26%
* Past performance is not indicative of future results. Results achieved as operators of various portfolio companies and buy-side professionals prior to the formation of 514 Equity Group.
** The projections above represent hypothetical performance. Actual investment sizes, structures, terms and return profiles may vary materially from the hypothetical example presented above. Assumes acquisition of 3 TEBS companies in Years 1 - 3 and a 10-year operating horizon.
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