We raise capital transaction by transaction rather than from a committed fund. That structure has real advantages for a seller, and one obvious liability: the money is not sitting in an account with our name on it the day we sign a letter of intent. This page explains exactly how it works, who holds what, and what the record looks like.
The two terminations were ours. In both cases we told the intermediary why within a week, in writing, and in one of them we paid for the quality of earnings work the seller had commissioned. An intermediary who has been through a broken process knows how rare that is.
This is the question our investors ask most often, and the one sellers never think to ask until a deal has broken once. The answer is structural, not a matter of trust.
Committed capital is deposited with [escrow agent] into an account established for that specific transaction. Kestrel Ridge is not a signatory with unilateral release authority.
[Fund administrator] maintains the register of investors, processes capital calls and distributions, and produces the statements investors receive. We do not keep the books on our own capital.
Each acquisition sits in its own holding company with its own investors. No transaction cross-collateralizes another, and a problem in one company cannot reach capital committed to a different one.
Each holding company is audited by [accounting firm], and investors receive audited statements regardless of the size of their position.
Transaction counsel is [law firm] in Chicago. Quality of earnings is performed by [accounting firm]. Senior debt is arranged through lending relationships we have used on eleven transactions.
Every investor completes know-your-customer and source-of-funds review before capital is accepted, regardless of size, relationship or how long we have known them.
A committed fund can point to capital already raised. We point to a process that has run to schedule twelve times. Here is what each week actually contains, and who is carrying the work.
Exclusivity begins. We do not sign a letter of intent before meeting the second layer of management, and we do not sign one we expect to renegotiate later.
The transaction is circulated to the investor network with a full memorandum. Commitments are typically complete within ten business days; on the last four transactions it took six, nine, four and eleven.
Quality of earnings, legal, insurance, environmental and IT run in parallel. We coordinate the providers so that the company faces a single request list rather than five.
Senior financing is committed in parallel with equity. We do not make a closing dependent on a lender we have not worked with before.
Purchase agreement, disclosure schedules, employment and rollover documents. Schedules are where transactions slip, so we start them in week four rather than week seven.
Capital is released from escrow, debt funds, and the transaction closes. The new chief executive and chairman are introduced to the organization the same week, not a month later.
Twice in the last five years it has run past eight weeks. Both times the cause was the same: financial records that could not support a quality of earnings review without reconstruction, which added five and seven weeks respectively.
If your company has never been audited, that is not a problem — most of the businesses we buy have not been. But it is worth knowing before a process starts, and it is the first thing we look at.
Roughly sixty private investors, family offices and operating executives. Most have participated in four or more acquisitions with us, and the repeat rate is the only marketing we do.
Nothing here is an offer to sell or a solicitation of an offer to buy any security. Participation is available only to qualified investors, through definitive documents, following a relationship established outside this website.
If you are considering an investment, speak with Rafael Duarte directly. He works in English, Portuguese and Spanish.
Ask us for references from the intermediaries on our last four transactions. We will give you names and numbers, including the two processes we terminated.
For intermediaries