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The Greatest Transfer Of Wealth In the History Of Man


After spending a lifetime building up stable, profitable SME businesses, entrepreneurs of the post-war ‘baby boomer’ generation across Europe are now facing a dilemma.

How can they retire and transfer ownership in a way that protects the deeper values of their company legacy, their employees and the surrounding community?

The answer provides sophisticated investors with an unusual opportunity; one that has been skillfully designed by the Acuity Fund to offer substantial long-term returns to investors with a new generation private equity fund.

The Acuity Fund Managers have developed a sophisticated acquisition model that fills the major gap for SME buy- outs left by the banks and the private equity houses. This new style private equity fund allows the owners to retire whilst creating a new SME Asset Class with a targeted investor return of more than 25% per annum over the life of the fund.

Nearly a third of all the estimated 19.3 million SME’s in the EU are owner-managed businesses (OMBs) set up by the post- war ‘baby boomer’ generation. According to the European Commission’s “Wealth Transfer Report” there are 690,000 profitable trading businesses that must find new owners each year, many of which are smaller SMEs valued between €1m and €25m. This will continue up until 2025 and involve businesses that are worth €27.3 trillion in total.

Before the credit crunch, the exit strategy for such businesses was relatively simple: a management buy-out (MBO). The banks and private equity houses would put together a package that enabled the existing management to raise the cash to buy the business. The banks gave loans, which would be repaid over an agreed timespan, while the equity houses would provide cash in exchange for a share of the business. The business would then be re-financed or sold in due course – usually around five years – when the business had grown so the equity house would get back several times its original stake in the business.

The credit crunch put an end to that model, devastating the MBO market so that there was only a tenth of the number taking place compared to pre-2008 levels. The reasons are quite simple: the banks will not lend and the private equity houses are generally only interested in the bigger businesses, typically €60 million plus.

Acuity has developed three new intelligent buy-out frameworks (iBOs) that are specifically tailored to address this issue - Management Involved Buy Out (MIBO); Management and Employee Involved Buy Out (MEIBO); and Employee Co- Ownership (ECO). These iBO frameworks are all based on sharing the ownership of the business and its increasing value with managers and employees, but taking a long view. These iBO frameworks aim to deliver controlled growth over the long term in a low risk environment – not a high risk but with a high return.

The extraordinarily high returns stem from the leveraged investment that Acuity makes. When The Acuity Fund invests in the company it is a loan that is repaid monthly and then reinvested while the fund still owns the majority equity in each acquired business. Unlike traditional private equity houses Acuity keeps the companies for 10 years, not five, and so investors benefit from long term dividends.

The result is a new investment model that is reigniting the EU market for SME acquisitions. Acuity has had £287m of acquisition opportunities presented to them in the first 4 weeks of opening the fund. This Fund is the only one of its kind and offers an alternative investment platform for sophisticated investors wanting access to the SME returns spread over many different sectors - and over many different EU geographies.  A high yield with a social impact; indeed some have called it The Ethical Acquisition.