NOTES & ASSUMPTIONS: in addition to the primary NewCo metrics of $6.5million revenue, $1billion of assets, 2 founders and 4 staff, we are inputting the following business and M&A hypotheticals:
- The business grows at 6%.
- The business borrows $5million at 5% on an interest-only 5 year term at time of launch.
- The business adds a CAO to staff in year two.
- It buys a $2million, $250million aum RIA in year3, and again in year 5. The acquired businesses transition to NewCo's 60bps ROA. (See $1.5million Tuck-in Business line item).
- The business borrows $1 million and sells $3million of equity at time of tuck-in RIA purchases.
Note: NewCo's equity valuations and shareholder covenants are all handled by the NewCo founders working directly with Echelon Capital founder Dan Seivert.
- In this sample EVR there is no equity partner at time of NewCo launch.
- The price, the terms, the general methodology of bringing in debt and/or equity partners at time of launch will all be discussed at our initial meeting.
- Total headcount goes from 6, to 7, to 10, to 13. (Four co-founders/partners, and 9 staff by the end of the 5th year)
- We used a rather high contingency deduction (3.5%) to enable us to err on the side of caution. So many unforeseen expenses can pop up that it is helpful to have a category to capture those costs.
- Unallocated funds in this category can be applied to employee and/or partner bonuses.
- The "Professional services" section is highly variable and discretionary; we used an estimate with the caveat: we will discuss and explain.