AURELIUS’ Post

4Front Ventures entered into a consulting agreement with CEO Leo Gontmakher. Pursuant to the Consulting Agreement, the Company has agreed to: (i) an annual base fee of $400,000 payable in regular installments; (ii) 6,000,000 shares at CAD$0.17 as a signing bonus; (iii) 1,800,000 shares if certain financial metrics of the Company are achieved by year-end 2023 and such number of SVS sufficient to make him a 1.00% owner calculated on a fully diluted basis to the extent not the case at the time of issuance and (iv) if he remains continuously retained through the date of the closing of a transaction that results in a Change in Control, eligible to receive a portion of the transaction bonus pool allocated for senior executives, which shall be equal to 1.00% of the fair market value of all consideration paid to the Company's stockholders in the transaction. In addition, the Company has agreed to issue 3,300,250 shares at a deemed issue price of CAD$0.17 in connection with his fiscal year-end 2022 compensation package. Extended the maturity date of Senior Secured Loan from LI Lending, LLC to May 1, 2026 and reduced the interest payable to 12.0% per year, payable monthly. Under the terms of the Extension, the Lender will receive a number of warrants equal to 33% of the Loan balance as of the current maturity date (US$17,061,000) each exercisable into one share for a term equal to the term of the Loan and with an exercise price not less than US$0.17. Under the terms of the Extension, while the Loan is outstanding, if 4Front unilaterally removes its CEO or President from their current positions without either cause or Lender consent the maturity date of the Loan will be accelerated to the date that is 30 days after the first unilateral removal. Leo Gontmakher, the CEO and a director of the Company, and Roman Tkachenko, a director of the Company, each own 14.28% of the Lender. https://lnkd.in/ePtpX9H2

Successful M&A’s rely on the right kind of funding. Whilst traditional finance is often the ‘go-to’ choice for most businesses, #mezzaninefinance could be an alternative choice. We look into the benefits and characteristics of this type of #funding and the impact it can have on your next acquisition.

Adding Value in M&A. The Road to Proprietary deals By Byron Cowan Managing Director  Oval Ventures https://www.ovalv.com/ To add value as a buyer in M&A transactions, it is essential to have a well-defined strategy that aligns with your organization's overall goals and objectives. This strategy should include a thorough understanding of your target market, as well as your company's strengths and weaknesses. Once you have identified potential sellers, it's important to approach them with diplomacy and professionalism. Understand the seller's goals, motivations, and concerns to tailor your approach accordingly. It's also essential to maintain open lines of communication and establish trust throughout the transaction process. To maximize value creation, you should focus on identifying synergies between your organization and the target company. These synergies could include operational efficiencies, cost savings, or revenue growth opportunities. Due diligence is a critical part of the M&A process, and it's essential to conduct it thoroughly and efficiently. This involves assessing the target company's financial and legal records, as well as its operational and strategic capabilities. By identifying potential risks and opportunities, you can make informed decisions and negotiate favorable terms for the transaction. In summary, to add value as a buyer in M&A transactions, it's important to have a clear strategy, approach sellers with diplomacy, identify synergies, and conduct due diligence thoroughly and efficiently. Proprietary deals in private equity refer to investment opportunities that are sourced and negotiated directly by a private equity firm, without going through intermediaries such as investment banks or brokers. These deals are often attractive to private equity firms because they provide a competitive advantage in terms of price, timing, and deal structure. By sourcing proprietary deals, private equity firms can gain access to investment opportunities that are not available to other investors, and they can negotiate better terms and pricing due to the lack of competition. This can lead to higher returns and better alignment with the private equity firm's investment strategy. To source proprietary deals, private equity firms often rely on their network of industry contacts, management teams, and other sources of deal flow. They may also use data analytics and other tools to identify potential targets and assess their suitability for investment. However, sourcing and executing proprietary deals can also pose some challenges. Private equity firms may need to invest significant resources in building and maintaining relationships with potential targets, and they may face more competition from other investors as the market becomes more crowded. Keep Smiling:)

Leveraged Buyouts (LBOs) in Private Equity (PE) are like strategic chess moves in the realm of business acquisitions. In a nutshell, it involves acquiring a company primarily using borrowed funds, with the assets of the target company often serving as collateral. This financial maneuver allows investors to amplify potential returns through leverage, but it also escalates risk. Now, let's dive into the mechanics behind LBOs. They typically follow a structured approach: Identifying Targets: PE firms carefully examine possible target companies, looking at things like how much they could grow, where they stand in the market, and how well they might work together. Structuring the Deal: Once a target is identified, the PE firm structures the deal, determining the mix of equity and debt financing required for the acquisition. Executing the Transaction: With the deal structured, the PE firm executes the transaction, often taking the target company private and implementing strategic initiatives to enhance its value. Valuation lies at the heart of any LBO transaction. Different valuation techniques come into play to determine the fair value of the target company. Some common methods include: Discounted Cash Flow (DCF) Analysis: This method forecasts the future cash flows of the target company and discounts them back to their present value, providing an intrinsic valuation. Comparable Company Analysis (CCA): CCA involves comparing the target company to similar publicly traded companies to derive a valuation multiple, such as Price-to-Earnings (P/E) or Enterprise Value-to-EBITDA (EV/EBITDA). Transaction Comparable Analysis (TCA): TCA compares the target company to recent transactions in the same industry, considering factors like deal multiples and transaction structures. Each valuation technique offers unique insights into the target company's worth, guiding PE firms in making informed investment decisions.

In the acquisition financing world, middle market private equity investors are held in high esteem. They are a sought-after relationship by lenders and service providers due to their continual investment activity and fee generation potential. #AcquisitionFinance #MergersAndAcquisitions #DealFunding #CorporateFinance #BusinessAcquisition #CapitalRaising #PrivateEquity #VentureCapital #LeveragedBuyout #DebtFinancing #AcquisitionStrategy

In the acquisition financing world, middle market private equity investors are held in high esteem. They are a sought-after relationship by lenders and service providers due to their continual investment activity and fee generation potential. #AcquisitionFinance #MergersAndAcquisitions #DealFunding #CorporateFinance #BusinessAcquisition #CapitalRaising #PrivateEquity #VentureCapital #LeveragedBuyout #DebtFinancing #AcquisitionStrategy

Unpacking the Complex World of Private Equity Deals: Negotiation and Structuring Demystified

Having advised on a PE backed "take private" last year, I would agree that this type of transaction together with "carve-outs" are going to increase in volume in 2024-2025 and it won't be just mega deals. There are lots of businesses at the mid to lower end of the market which would really benefit from going Public-to-private, the trick is to find the right ones and then develop an innovative growth thesis. My target pipeline in Business Services, Technology, Real estate and Professional services is growing. #privateequity #strategicadvisory #pensionfunds #dealsourcing

Proskauer Rose LLP’s Cameron Roper and Paul Tannenbaum explain why it is vital to get the structure and financing right for secondaries. Read the full comment here: https://lnkd.in/eCPxSYJg #alternativeassets #finance #operations #privateequity #venturecapital #assetmanagement #secondaries #financing #liquidity #continuationvehicle

Management Buy-Out (MBO) transactions are fairly common amongst South African private M&A deals. In an MBO, a Company’s management team secures debt and/or equity financing to acquire the assets and operations they oversee. Investors and bankers favour MBOs because managers possess deep operational insight, enabling them to enhance value by staying on board. These transactions often serve as crucial exit strategies for large corporations divesting themselves of unprofitable assets or for private business owners seeking retirement. MBOs streamline the sales process, saving time and expenses associated with marketing to third-party acquirers. Funding an MBO typically involves substantial capital. Typically, this consists of a mix of debt and equity sourced from buyers, financiers, and occasionally the seller. Given its heavy reliance on borrowed capital, it's categorized as a Leveraged Buy Out (management) transaction. However, conflicts of interest may arise among executive directors, necessitating their recusal from the Seller’s deliberations. When multiple bidders are involved, Sellers may form special committees of disinterested directors, supported by independent legal and financial advisors, to conduct the deal process in order to ensure a fair deal process and level the playing field for genuine bidders. A grey area arises in determining the point at which executive directors must inform the Board of their discussions with a private equity firm prepared to fund/participate in an MBO. #boardsofdirectors #mergersandacquisitions #corporatefinance _________________________ ✨ Our Company acts for corporate buyers, sellers, investors, private equity funds, and the like. Feel free to reach out to us if you would like to book a consultation. ✨✨ If you like reading these “One-Liners”, please click the 🔔 (on my profile) so you don’t miss any new posts and please let me know your comments and share with others.