A. AME Capital Partners – As a key part of mentorship through actual experience, AME buys and/or starts and incubates small businesses to train individuals and families in growing and operating their own business. We think this represents the ultimate application of the principles we teach. When the student family demonstrates their ability to successfully operate the business, it will be sold to them with favorable terms. This provides a reasonable return to AME (and its contributors/mentors) with an excellent opportunity for their future success. The proceeds will then be reinvested into other businesses. Coaching for the new owner will be ongoing as needed.
B. Proof of Concept – In April 2019 Mike and Corey Cheney acquired a struggling computer repair business which was in debt and operating at a loss for the preceding three years. The total acquisition cost was $35,000 cash including purchase price and working capital. It was anticipated the business would lose $15,000 by year end. Instead, it showed profit of $12,000 on $106,000 of revenue even after increasing salaries and adding an additional employee. In addition, they received back 35% of their initial investment. The 2020 operating budget anticipates profit of $35,000 on $144,000 of revenue. Assuming a conservative valuation method of 2X net profit, a business like this might be sold for $70,000. This would give the fund a 100% return on capital, while generating a 50% cash on cash return for the new owners, in addition to market rate employee salaries. The numbers would be somewhat different if an earnout (down payment with repayment terms) were structured in place of a cash sale. Historical data on the purchase of this business is actual and will be verified upon request. We are currently seeking purchase/start up opportunities of $100,000 or less.
C. Requirements and Guidelines – Parameters at this time include:
- Maximum investment of $100,000 (including all cash purchase price and initial operating capital)
- Located within 50 miles of Denver, CO (or the location of the mentor who would superintend the business and apprentice)
- Identifying the mentor who will superintend the business and apprentice
- Creation of measurable and achievable exit strategy for eventual sale of business
- Purchase transaction approved by AME advisory board