Target Overview

The target company has differentiated itself on the basis of a disruptive approach as a care and claims facilitator rather than furthering the adversarial posture of a personal injury attorney. The premise is that the patient receives better care, the providers capture more revenue, and the insurance providers have smaller claims which are more efficient to adjudicate.

Scalable Infrastructure and Standardized Systems
The founder and continuing CEO is a veteran of the industry and has worked diligently to optimize and document the proprietary processes. With a proven model generating consistent positive net income in little over a year and a half, the organization has an established blueprint for growth which requires nominal CapEx.

Strong Relationships
With a commitment to service, and prompt acquisition of approved AR, providers appreciate the value of working with this company. These relationships lead to more referrals and durable growth. On the Insurance provider side of the equation, a proven track record of providing a lower cost and highly efficient standardized adjudication experience, insurance providers appreciate the value of a relationship with this company. Since personal injury insurance is a highly concentrated industry, early stage relationships facilitate geometric growth potential.

Milestones

Q2 2017 – company was founded
Q3 2017 – company generates revenue
June 2018 – first positive net income month
July 2018 – last negative net income month to date

Target Strategy

The strategy of Blue Sky Capital would be to supplement the existing strengths of the organization while providing much needed financial management and operational planning support. Our overarching strategy will be predicated on building on the company’s
existing strengths to facilitate significant market penetration.

Phase 1: Fund Growth and Infrastructure

    • A $8M credit facility would be implemented to support incremental growth
      • Performance based Funding Traunches would be Established at $1M, $3M, $6M, and $8M to ensure disciplined growth
    • Perform a full infrastructure audit to ensure capacity for growth and consistent delivery of high quality service
    • Market Share Capitalization Strategy Development
      • Blue Sky will directly spearhead operations and strategic planning in partnership with existing leadership team

Phase2: Market Share Capitalization Strategy Implementation

    • Implement aggressive growth strategy
      • Capture market share in regional expansion toward national presence
    • Identify, onboard, and develop leadership team
      • Create robust transfer of knowledge and relationship strategy in preparation for exit

Investment Modeling

Anticipated Business Market Value:                          $ 1,140,000           to          $1,393,000

Add: Real Estate                                                                          $         –

Final value to be based on appraisal

Net Working Capital Requirement                                             $ (748,000)

Based on the last 12 month average or negotiated

Total Consideration                                                        $1,140,000             to         $1,139,000

Acquisition of 51% Equity Position                               $ 581,000            to              $ 710,000

Add: Anticipated Strategic Growth Funding                                $ 8,000,000

Employed as a credit facility to fund growth

Add: Anticipated Transaction Costs                                               $ 25,000

Estimated Total Fund Capital Employed                        $ 8,606,000         to          $ 8,735,000

Target IRR Minimum                                                                            18%

Target Hold Time (years)                                                                        7

Anticipated Exit Value                                                     $ 291,000,000       to     $ 339,000,000