Welcome to Search Fund Ventures investor network, your source for high quality self-funded search dealflow.

We're proud to announce we just finished our initial close for SFV Fund I.

We've sifted through hundreds of deals in the past few months and are excited to share the most exciting deals that land on our plate.

​

This Week's Deal: Kitchen and Home Remodling Company in Jacksonville, Florida

Executive Summary

Heyaw Yimer is under LOI to acquire a kitchen and home remodeling business. The company was founded in 2018, operates in Jacksonville, Florida, and generates $5.35 million in revenue with an EBITDA of $1.74 million. The purchase price for the company is $5.8 million, implying a 3.3x multiple over LTM EBITDA. Minimum check size for a direct investment is $50,000 and soft commitments are requested by the end of August 2024. Please feel free to let us know if you’d like an introduction and find below a bit more detail on the sponsor, terms, and the opportunity more broadly.

The Sponsor:

• Currently a Director of Investments at a Real Estate Investment Firm with $4 billion in assets under management.
• Oversees financial modeling and capex of the firm’s Single-Family Rental (SFR) platform, comprising $420 million AUM.
• Has direct experience with SFR operators and managing renovation processes.

The Company:

• Founded in 2018, located in Jacksonville, Florida.
• Specializes in home remodeling services for affluent clients, including kitchens, baths, flooring, outdoor kitchens, and room additions.
• Showroom in a high-traffic plaza in the Mandarin area, a suburb of Jacksonville.
• 25% of historic customers are within a 5-mile radius of the showroom.
• Revenue: $5.35 million (LTM), EBITDA: $1.74 million (LTM).
• LTM Gross profit margin: 59%.
• Project pipeline with $1.2 million of in-progress projects and $1.7 million under contract.

The Investment Terms:

• Equity step-up: 2x.
• Preferred return or coupon: 10% (<$100k commitment) - 11% (>$100k commitment).
• Type of investment: Preferred equity.
• Liquidation preference: 1x on invested capital.
• MOIC Target: 7x+, IRR Target: 30%+.
• Finalizing investor commitments by the end of August 2024, with anticipated close by the end of September 2024.

The Acquisition Terms:

• Purchase multiple: 3.3x LTM EBITDA.
• Sources of funding: 20% seller financing with $250k forgivable seller note.
• Seller financing details: 10% at 7% rate amortizing over 10 years, 10% at 7% rate on standby for 3 years followed by 7 years amortization.
• Total acquisition price: $5.55 million plus $250k forgivable seller note to be repaid over 3 years with EBITDA sustained over $1.7 million.

Please feel free to reply to this email or reach out to sean@searchfundventures.co for an introduction to the deal sponsor.

​