Private Equity Accelerator

Going Private

The Ritz Group provides a formal ACCELERATOR Program to "take" companies Private

The Ritz Group Equity Accelerator Program is designed to take a company, and their founding team, through a proven, structured methodology to create a private equity shareholder company – from womb to tomb.

The Structured Methodology is based on the Capital Drill that provides a blueprint for creating and managing a private shareholder company. The Capital Drill process provides a road map and tools to navigate specific milestones in the “drill.” Every early stage venture is different, but “business” is “business.” Going Private is a process. It is similar, but easier than Going Public.

The Capital Drill provides professional hands-on experience to take great concepts through the process of “going private.” We vet the Value proposition, the ability to deliver product and which markets yield the highest return. We provide each company with templates, financials and valuation modeling to complete every aspect of the investor collateral, plus the business planning expertise to help create and execute. Every step in the process is completed from the “lens of the investor.” Real Investors invest in businesses that can scale and provide a return. Nothing else counts. Investment success is based on a “lead” investor who “knows the drill.”

The Ritz Group has screened over 1,000 companies applying for Shark Attack. From that experience they can tell instantaneously which ones “have their act together” and which ones may have a good concept, but are far from creating a real fundable, scalable business. When they are behind the power curve, catch-up represents “Risk” in an arena with well over 90 percent ROI exit shortfall track record.

More importantly, every seasoned lead investor can also recognize a real business capable of scale from one with just a good idea. More importantly, success goes beyond just a real business and must be positioned to execute measurable milestones at an accelerated rate. Time is “money” and “burn” is everyone’s enemy. Success is only possible with experienced Teams - that can scale their business at entrepreneurial speed. It is essential that founders, or their TEAM, have done “this” before.

WHY ARE WE DIFFERENT?

The Equity Accelerator is NOT a typical accelerator 3 month course where you “learn” and then take that new found knowledge and go “do.”

We do it together It is a vested partnership with the founder at the helm. We bring all the KEY resources into play, because this is NOT our “first rodeo.” We do it right from inception and we are engaged for milestone-by-milestone success. We are not fans in the stands.. cheering you on. We are in the trenches with founders… making it happen.

WHAT IS THE IDEAL CANDIDATE?

The Ritz Group Accelerator is not for everyone. If you are very early stage - consider the Ritz Group Equity Mini Camp to learn about creating and running a private equity company.

If you have raised equity before, or have ALL of your investor collateral in place, consider the Capital Drill Audit to get a “second opinion.” Audits don’t tell you…’’what you want to hear – they tell you what you need to know.”

We have never conducted an Audit without identifying a major pivot. Why? Because EVERY entrepreneur and their team drink the same kool-aide. They are totally focused on what CAN go right and not on what CAN go wrong. The logic behind the audit is always to probe critical points of failure.

SELECTION PROCESS:

Acceptance in the Ritz Group Accelerator is highly selective. We must see a founder with a concept that can be produced, which has adoption merit with what’s in vogue in today’s market. That, when combined with all that we bring to the table, can provide major disruptive scale in the consumer (B2C) and/or Business Market (B2B).

In summary “ we really need to BELIEVE in you and the concept” And, with what we bring to the table represents the ideal business model for success.

ACCELERATOR MODULAR APPROACH:

The accelerator business process consists of six (6) defined modules – each with practices, procedures and deliverables. Discoveries and results in each module enable the founder, and their team, to continue to the next phase, or break-out and continue on their own.

EQUITY ACCELERATOR MODULES

PHASE I

PHASE II

PHASE III

PHASE IV

PHASE V

PHASE VI

PHASE I

Dissecting the Opportunity

1) Value Proposition validation. What is “it?” Who really “needs it?” How much will they really “pay to play?” Is it one product/service or a family of products and services?

2) Manufacturing and production. Can you make “it?” Steps and timeframe to produce the product or service. What are the costs, margins and production sourcing? What are the prototypes, betas and process to prove market acceptance

3) Making Markets happen. Can you sell “it” and to “whom?” Each of the channel sales strategies are looked at to determine the CAC, lowest hanging fruit, plus return on sales.

PHASE II

Constructing the Financial Business Model

1) Multi-Channel business forecast. Sales is KING and failure to execute the Sales PLAN is death

2) Financial Business Model. Addresses the business overhead and expense to launch the company, create and deliver product/services and scale over five years. It is all about defining the financial requirements to create the infrastructure to build and sell product/s. Done right, this will identify the amount of capital infusion required and when.

3) Financial modeling to construct the Private Equity Shareholder Company. The Financial Business Model projects three essential elements to determine company and ownership valuations through Exit. They are Revenue, EBITDA and, if applicable, Members. Using industry valuation multiples - the initial company valuations, share price, ownership percentages are calculated and then fully diluted for each capital raise. All investor returns are projected based on execution of the Financial Business Model (above). Key is executing the financial business model. And that NEVER happens as planned.

4) Reverse Financial Engineering. Rather than dividing everything by 50% as a forecast error, Reverse Financial modeling identifies the minimum revenue, EBITDA and/or Members required to return 20x to seed investors, 15x to Series A and 10x to Series B investors. This becomes the low water mark for performance deviations that impact investor returns. The team operation plan is always higher, and when achieved, represents a windfall for investors. However, when results fall near or below the Investor ROI line – it is time to notify the investors and also advise of the PIVOT to correct.

PHASE III

Telling the Story.

Now that the operational plan is in place and the reverse engineering results are identified, the Investor collateral can now be crafted.

For each, we provide templates and samples that can be tailored to the unique story defined above.

They consist of 1) White Paper, 2) elevator pitch, 3) one page Executive Summary, 4) Investor Deck (10-slides), 5) Terms Sheet, 6) Subscription Agreement.

Once created, practice to perfect and deliver in person, or via media, is essential.

PHASE IV

Resources to Execute.

Great accomplishments, like creating a $25 to $50 million dollar company in 5 years, just don’t happen with….”two guys and a dog named BLUE.”

They also don’t happen with founders and friends who have never built a company, run a company, managed employees, worked for anyone, or lead a corporation. Yes, occasionally an outlier can happen and a ball play goes from high school directly to the “BIGS” - but this is a rare exception.

You need a professional team, but this is expensive and they want cash and ownership. Therefore they need a plan, performance objectives and stock. For most early stage ventures, they are not required full time – but needed “just in time” based on growth. Therefore, the interim solution is to utilize fractional/s and third party companies to move the ball before bringing on full time professions with big bucks and stock requirements.

The Ritz Group for 2020 has identified key resources to provide mentoring, coaching, consulting and fractional CTO, CSO, CEO and CISO (Chief Investment & Shareholder Officer). In addition, the Ritz Group has a suite of Companies providing Legal, Accounting, HR, Marketing & Advertising that are proven in providing packages for early stage companies.

It is the above combination of resources that can be interviewed and virtually on boarded to identify the TEAM that is going to “make it happen.” More important than being cost effective.. is the impact to building Investor confidence in the execution strategy. Team + Concept + Strategy + Resources = Capital for Execution Success

PHASE V

Launch Equity Capital Raise.

Seed round funding is always difficult in Atlanta, even when all of the “thinking” and collateral defined above is perfect. There are no guarantees in capital funding

The Ritz Group has partnered with several Angel Pools and Funds. We know their “sweet-spots” However, the goal is to promote city-wide and even nationally given each region or territory have affinity for specific markets. It is anybody and everybody who will listen.

The Ritz Group Accelerator helps identify the ‘best” plan for raises. Because we are vested in the company (stockholders and boards) we can help with the pitches and evaluation of offers. We remodel the offers to assess impact on stockholder commitments, as well as the succession impact.

We work with the current management team, and professionals (i.e. lawyers & accountants) to review and decision each offer.

PHASE VI

Equity Accelerator Fees

The Equity Accelerator Program is a modular fee-based service offering consisting of six (6) Opt-In modules. Each module is quoted based on the company team participation and where each company is in their business development process.

Each module is funded with a cash retainer and company stock, plus a percentage of ownership tendered on successful milestone achievements. Each engagement is governed by a Statement of Work (SOW).

Companies can delay the period between modules, or Opt-Out and take what was delivered to continue on their own.

The Company selection process is based on creating a partnership to "finish the drill." This means creating a private shareholder company that consists of the founder's vision and their YTD business building progress, leveraged with our resources and expertise to rapidly execute.

Our continued engagement is predicated on our role as stakeholders in the company. Our expertise is creating a shareholder company that is fair and equitable to founders, backers, plus all existing and future funding sources. Stock management is almost as important as "cash" management.

Scholarship Program

The Scholarship Program is a vehicle used to fund the Equity Accelerator Program. Investors interested investing, or currently backing the concept, fund the Accelerator Program. For their investment - they receive stock from the company.

The Scholarship Program recognizes bootstrapped companies are broke - but have stock with terms as a by-product of the Accelerator Program.

Fractional CIAO Program

The Fractional CISO Program is our answer to today's managing private shareholders who are non-liquid until an exit event. Fractional Chief Investment and Shareholder Officers (CISO) ensure the capital "pot" is correct for past commitments and all down rounds.

In addition, CISO's provide the lead for syndication with Angels who want to just write a check when someone has "de-risk" the investment and is managing their interests through exit.

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