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For Investors
While Canada is a nascent market for Entrepreneurship Through Acquisition (ETA), these U.S. statistics highlight the proven success and potential of the model.
35% IRR
Historical return of Search Funds from 1986 to 2021
95%
Of current Search Funds in North America are in the U.S.
Only 2%
Historical Default Rate on Small Business Administration loans
73%
Acquisitions provide at least a 1x ROI within 5 years
81%
Of ETA firms are led by MBAs
(Resources: Stanford Search Fund Study and Buy then Build)
Valentis Capital Brings Together Strong Management Experience, The Potential For Strong ROI, And The Value Of ETA As A Proven Tool For Risk Diversification
Management Expertise: Our team includes two MBAs – one with Series B experience in fundraising and deal structuring, and another with a proven track record in corporate turnarounds, ensuring strong strategic leadership.
Due Diligence Excellence: The CFO on staff will lead our Quality of Earnings (QoE) analysis. We perform meticulous due diligence, backed by years of accounting expertise to minimize risks and maximize returns.
Strategic Partnerships: We leverage partnerships with a local law firm and several sell-side advisors, creating a powerful support network to streamline acquisitions and enhance deal execution.
ETA Provides The Opportunity For Strong Investor ROI
Through Seller Financing and the Equity Step-Up, ETA can be a Tool for Portfolio Diversification using these mechanisms to increase returns while balancing risk:
Seller Financing: The seller finances part of the purchase price, reducing upfront capital requirements for investors and aligning interests for mutual success.
Equity Step-Up: Investor ownership is amplified relative to their contribution. For example, contributing 27.5% of the project cost can translate into 41.2% ownership with a 1.5x step-up, increasing equity potential without additional investment.
Valentis Capital has completed an Equity Step-Up example for a business with a $2 million purchase price. To view the completed example, click here.
ETA As A Tool For Portfolio Diversification
Every investment can be evaluated through its contribution to capital growth, income generation, diversification from public equities, and safety. Entrepreneurship Through Acquisition (ETA) uniquely balances these four pillars, making it a valuable addition to any portfolio.
Capital Growth
ETA targets small, established businesses with strong growth potential unlocked by strategic operational improvements. This provides opportunities for long-term value creation.
Income
By acquiring business with stable cash flows, ETA generates consistent income, similar to income-focused investments like bonds or dividend-paying stocks.
Diversification from Public Equities
ETA reduces exposure to market volatility by focusing on private businesses, creating a hedge against the cyclical nature of public markets.
Safety
With a hands-on management approach, ETA prioritizes operational stability, ensuring consistent returns and mitigating risk.
