Funding opportunity – successful franchise business
Investment required £300k
An opportunity to invest in a well established market leading franchise group in the UK.
The business was founded in 1998 and has developed an industry leading service via franchise. The franchise package is extremely thorough and addresses in great detail every aspect of running a franchise operation. The business has traded successfully and presently has 42 franchisees signed up. There is considerable potential to develop the business further, with a possible 1,000 franchises available in Great Britain alone. The founder is approaching retirement age and wishes to step back from leading the business forwards however, he will remain as a director and the ongoing business will benefit from his many years of experience. The promoter (an experienced chartered accountant and corporate financier) has the opportunity to purchase an 80% stake in the worldwide business for £1.3m and is seeking an investment of £300k to complete the transaction. The promoter is offering a 30% stake in the company together with the investment being repaid within three years and carrying interest at 12%. Applications are invited for investment amounts up to £300k in multiples of £5k. Each investment of £5k will be structured as a loan of £4,950 and share capital of £50. The loan will carry interest at 12% per annum payable quarterly and with the capital repayable by thirty monthly instalments commencing 30 April 2015. The £50 share capital will represent 0.5% of the issued share capital of the company. Using the above projections and a P/E ratio of 6 would imply a valuation for the £50 share capital of £30,001 after 4 years or £34,524 after 5 years. The company expects to distribute a proportion of profits annually by way of dividend and is willing to grant investors an option to sell their shareholding back to the company at an agreed valuation at any time between 36 and 60 months after investment. As suggested, investments can be made in multiples of £5000 although if a high net worth individual or group of business angels are interested, clearly the investment can be achieved relatively quickly and easily. Excellent opportunity for strong short and long term gains.
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