Dear future business owner,

I invest $100k-$1M of ‘zero-rate’ preferred equity in self-funded searchers’ deals generating $0.5-2.5M of EBITDA, so please keep me in mind once you're in LOI stage or later. I focus primarily on home services / property services companies (e.g. roofing, flooring, HVAC, fire protection, etc.), professional services companies (accounting, legal services, medical services, etc.), and other needs-based businesses. Unlike most other preferred equity investors, I’m willing to forego the preferred return on capital (hence ‘zero-rate’), so my equity is indistinguishable from your equity with the exception that my (and your) preferred equity would be repaid first and then we would participate pro rata to our ownership percentage with a preferred return hurdle rate of 0%, i.e. a preferred return of capital but no preferred return on capital. The tradeoff in this structure is that free cash flow would go primarily toward paying off the preferred (yours and mine) before other uses of cash. Alternatively, I'm happy to invest in the traditional preferred equity structure if you prefer. I would be happy to be as involved, or uninvolved, as you want me to be and I can provide a letter of support to brokers/sellers with a proof of funds, if helpful.

I run a real estate private equity firm that acquired more than 9,000 housing units over the past 10 years, I previously was an M&A banker at Morgan Stanley and hedge fund analyst at Citadel, and I recently chaired a small public company that owns roofing, fire protection, restoration, and electrical contractors. The investment funds are my own personal capital, not my fund’s capital, so I am very flexible regarding structures, exit timeline, etc. My fund is based in Florida and I personally spend most of my time in Toronto.

For a typical $5M deal with a 10% preferred equity requirement ($500k), I could fund up to 90% of the equity ($450k) and you might fund 10% of the 10% equity ($50k). For my 90% equity contribution (which in this case is 9% of the enterprise), I might own 18% of the equity (i.e. 2x step-up), with 82% owned by you. I am also happy to be a smaller investor along with others.

I would welcome the opportunity to review your deal and discuss a potential zero-rate preferred equity investment (or any other preferred equity you are offering under your terms). In the meantime, I invite you to connect with me for a brief introductory meeting or to join my LinkedIn network. Good luck with your search.

Regards,

Jeff Baryshnik www.linkedin.com/in/baryshnik