For investors

How the structure works, described plainly.

This page is a description, not an offer. Participation in any transaction is available only to qualified investors, through definitive documents, following a relationship established away from this website. What follows is how the arrangement is built, so that anyone considering a conversation knows what they would be looking at.

~60

Investors in the network

Median transactions per investor

1/3

Of the network based outside the US

Realized exits since 2014

Participation

Transaction by transaction, never a blind pool

How it works

Each acquisition is presented to the network with a full memorandum: the company, the thesis, the price, the capital structure and the intended exit horizon. Every investor decides on that company alone. Nobody is committed in advance to anything.

One entity per company

Each acquisition sits in its own holding company with its own investors. No transaction cross-collateralizes another, and difficulty in one company cannot reach capital in a different one.

During the hold

Distributions are made from operating cash flow where the capital structure permits, typically from the second year. These are meaningful but modest. The return is realized at exit.

Exit horizon

Agreed before closing and stated in the memorandum. Three to five years in business services, five to seven in specialty manufacturing. Where we have extended a hold, investors were asked first.

Our own capital

The partners invest personally in every transaction, on the same terms and in the same class as everyone else. When a company underperforms we lose money at the same rate.

Minimum

Discussed individually. The network ranges from individual investors to family offices, and the structure does not favour the largest position in it.

Custody and reporting

Where the money sits, and who counts it

This is the question we are asked most often, and it has a structural answer rather than a reassuring one.

Escrow with a third party

Committed capital is deposited with [escrow agent] into an account opened for that transaction. Kestrel Ridge is not a signatory with unilateral release authority.

Independent administration

[Fund administrator] maintains the investor register, processes capital calls and distributions and issues statements. We do not keep the books on our own capital.

Audited annually

Each holding company is audited by [accounting firm]. Every investor receives the audited statements regardless of the size of the position.

Reporting cadence

Quarterly statements from the administrator, plus a written letter from the deal partner on each company twice a year. The letters say what went wrong as well as what went right.

Outside the United States

Non-US investors

Approximately a third of the network sits outside the United States, principally in Brazil, Argentina and Mexico. Cross-border participation is workable, but it has to be structured before capital is accepted rather than explained afterwards.

Structure

Non-US investors typically participate through a blocker entity established for that purpose, which addresses the treatment of effectively connected income and avoids a US filing obligation for the investor.

Withholding

Distributions to non-US investors are subject to US withholding, at rates depending on the investor's jurisdiction and applicable treaties. The expected treatment is set out in writing before any commitment.

Real property

Where a transaction includes US real estate, FIRPTA consequences are identified during diligence and reflected in the structure, not discovered at exit.

Documentation

Know-your-customer and source-of-funds review is completed on every investor before capital is accepted, regardless of size, jurisdiction or how long we have known them. We have declined commitments twice on this basis.

Language

Memoranda and reporting are issued in English. Conversations, and the explanation of anything in them, are available in Portuguese and Spanish through Rafael Duarte and Sofia Bartone.

A note on tax and legal advice

Nothing on this page is tax or legal advice, and the treatment of any investment depends entirely on the investor's own circumstances and jurisdiction. Every investor should take independent advice, and we will work with your advisors rather than around them.