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Rockwater
Capital Partners, LLC (“The Fund”) is currently in
its fund raising stage. The Fund’s management
team makes investments that meet a variety of criteria, as
outlined in The Fund.
The Fund invests in companies, which
represent exceptional opportunities for revenue growth, and which
will benefit from the Fund’s Royalty
Based Financing investment model and management assistance.
In considering portfolio companies,
the Fund closely examines candidates from among the thousands
of companies poised for growth that cannot obtain sufficient investment
capital from individual investors or institutional sources. On
the one hand, these companies don’t exhibit the massive
growth potential or huge market scale potential to achieve an
investor’s exit via an IPO or significant corporate
acquisition, and therefore, appear less attractive to institutional
investors.
These landscape dynamics reveal
a huge capital funding gap — what we term an “Opportunity
Gap” — between what individual
investors are willing to finance and what institutional investors
are willing to consider. Within this “Opportunity Gap”,
the Fund makes investments of $1 to 3 million within its market
region including New York, New Jersey and New England, drawn from
the a broad range of industries.
Examples of Royalty
Based Financing Transactions
Expansion
Stage Company
A precision industrial pump manufacturer with yearly sales of
$3.5 million and a patented life-extending product design wishes
to expand from the Northeast U.S. to a nationwide operation. It
needs to recruit, hire, train and field-test a new Vice President
of Sales and six regional Sales Executives. Additionally, the
company needs to fund the development and implementation of a
nationwide marketing and brand identification program to stimulate
demand in its new markets. Total one year cost for this market
expansion program is $1.2 million. Since no new fixed assets are
needed and the resulting inventory and receivable growth will
be bank financed, capital is provided through a Royalty
Based Financing structured by the Fund.
Intra-Family
Business Ownership Transfer
A sixty-five year old business owner desires to sell her 30-year
old, $5 million-a-year specialty brand food company to her 40-year
old son for $3 million. The son, with solid ideas to grow the
business, puts up $250,000, the mother takes an unsecured note
or “consulting contract” for $500,000, their bank
loans the company $1,000,000 secured by machinery and equipment,
and the balance is a $1,250,000 Royalty
Based Financing investment provided by the Fund. Ownership
remains undiluted and within the family.
Management
Team Buyout
A fifty-year old serial entrepreneur desires to sell his established
luxury boat builder with annual sales of $12 million to his five-person
management team for $4.5 million. The company has experienced
rapid growth, fueled by a patented new line of water-jet propulsion
systems. The management team contributes $600,000, the seller
takes back a $500,000 note, their local bank provides a $1.8 million
term loan, and a $1.6 million Royalty
Based Financing structure provided by the Fund completes
the package. The Fund orchestrates the entire transaction.
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