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Apex Acquisition Fund I

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Apex Acquisition Fund I

Introducing Apex Acquisition Fund I, a closed-end equity fund designed for a strategic 7-year investment horizon.

  • Target Investments: The fund is dedicated to financing self-directed and self-funded “Searchers” in their acquisition pursuits of already profitable small businesses. The small business sector, with its distinct value proposition, offers sale multiples significantly lower than the broader private market.

  • Strategy: Leveraging our expertise in operating and scaling small businesses, we aim to foster growth through additional acquisitions and strategic investments. Once these holdings surpass $3 million in EBITDA, they experience a substantial increase in value, representing a 2x step-up in equity value, fueled by both organic and inorganic growth.

  • Value Add: Our focus is on businesses where we can leverage our personal networks and experience to make a meaningful impact. Further value is generated as we establish advisory boards and forums for company operators, fostering collaboration in addressing shared challenges.

  • Partnership Approach: We partner with top-tier Searchers to find profitable businesses in defensible niches. Acquired with leverage, scaled with intelligence, and exited strategically — with AAF serving as advisor and capital partner throughout.

Meet the Founders

Linh Tran
Meet the Founders

Linh Tran

Linh Tran is a passionately seasoned professional with a Bachelor’s degree in Biology & Chemistry and an MBA from Duke University. Linh boasts an impressive career spanning 25 years that first began in financial services, specializing in structuring retirement plans and mutual funds while collaborating extensively with entrepreneurs for over a decade. His diverse ventures include acquiring and scaling businesses in the services sector, showcasing remarkable growth under his leadership. Linh is not only a proficient manager of private debt ladders but also oversees a successful private equity portfolio. Renowned as an expert in Entrepreneurship through Acquisition (ETA), Linh shares his insights at top MBA schools, solidifying his status as a sought-after thought leader in the ETA domain. Beyond his business acumen, Linh’s joy in life extends to diverse pursuits as a racecar driver, surfer, pilot and tennis player, embodying a dynamic approach in both his personal and professional life.

David Madden
Meet the Founders

David Madden

David Madden is a proficient innovator, armed with a Bachelor’s degree in Industrial Engineering from North Carolina State University and an MBA from Georgia Tech. David showcases a versatile career that blends engineering and entrepreneurship. As a TI:GER fellow at Georgia Tech, he delved into entrepreneurship, innovation, and venture capital investing. In 2006, David founded a bootstrapped online marketplace for used industrial equipment and is now a market leader. With a background in private equity and venture capital, David strategically invests in startups, facilitating private placements for Entrepreneurship through Acquisition (ETA) buyouts. His multifaceted expertise spans private markets, online commerce, and business-to-business software. Beyond business, David’s zest for life shines bright as an accomplished racecar driver and surfer, embodying both strategic insight and unrelenting spirit in his pursuits.

Welcome

Welcome to Apex Fund Group

Apex Fund Group is not just an investment firm; we’re architects of opportunity, fueled by a passion for innovation and strategic excellence. Created by entrepreneurs, for entrepreneurs, the Apex team brings a dynamic blend of expertise, experience, and an enthusiasm into the world of private investments.

We specialize in partnering with top-quality entrepreneurs to purchase and scale profitable, small businesses.

Overview

Who

We Work With

  • Searcher/MBA Graduate purchases/finances majority share and runs daily operations
  • Apex Fund Group investors purchase minority share and serves as mentors, giving tactical strategy based upon our experience as Successful Operators who have grown our collective businesses to over $1BB in revenue

Where

We Find The Acquisition Target

  • EO/YPO Networks
  • Self-Funded Searchers
  • ETA Speaking Engagements

What

We Are Looking For

  • Profitable businesses
  • Consistent EBITDA $500k-$2MM
  • Retiring owners

How

We Grow the Acquired Company

  • EOS framework
  • Shared Services (Accounting, HR, Marketing, Sales)
  • Updated Tech Stack
  • EO/YPO Forum Participation

When

We Exit

  • Searcher purchases our stake, or
  • Convert shares into the new investment entity, or
  • Sell to larger Private Equity Firm or Strategic Buyer.

Overview

Apex Acquisition Fund I (AAF)

Apex Acquisition Fund collaborates with skilled and driven entrepreneurs to ACQUIRE and SCALE profitable businesses. This type of fund is commonly referred to as a "Search Fund." Typically, previous business owners are seeking retirement without a successor to continue operations, making selling to new ownership their optimal exit strategy.

What is a Search Fund?

A Traditional Search Fund compensates a Searcher with a fixed salary to find a suitable business for acquisition. However, this traditional approach has room for enhancement. A significant portion of Searchers struggle to identify a viable acquisition target because of the Traditional Search Funds' large target acquisition size, leading to the Fund bearing the burden of paying their salary over a two-year period regardless of success. Moreover, if a Searcher does manage to secure a company for acquisition, their ownership stake typically hovers around 20%, resembling more of an employee role rather than an entrepreneurial venture.

AAF is different from a Traditional Search Fund.

Overview

AAF works with Self-Funded Searchers

What is a Self-Funded Searcher?

Self-Funded searchers are fully dedicated to finding a business to acquire. They look for deals in their spare time or treat looking for a business to acquire as their full time job, without any compensation from our fund.

What is AAF’s Role?

AAF serves as both an ADVISOR and FINANCIER for Self-Funded Searchers. We assist entrepreneurs in evaluating opportunities, negotiating deals, and structuring transactions. When the business is acquired, we take equity position by providing the majority of the capital required for the down payment on a business loan. Following the acquisition, our advisory support continues as we guide entrepreneurs in thinking expansively and implementing the right strategies to achieve significant exits.

What is the Searcher’s Role?

After identifying the business, the Searcher will assume full-time operational responsibilities post-acquisition. Additionally, the Searcher personally guarantees the business loan, thereby absolving AAF of any potential default risks.

Overview

AAF Searcher & Acquired Company Profile

Searcher Profile
  • Highly Self-Motivated
  • Entrepreneurial
  • Thinks BIG
  • Desire to Win
  • Demonstrated high performer in Business, Marketing, Sales, or Operations
  • MBAs from Top Tier MBA Programs like Duke, Wharton, and Harvard
  • Willingness to put “skin in the game”
Acquired Company Profile
  • $500k - $2m in Annual EBITDA
  • Purchase Price less than 5x Earnings
  • Strong Margins
  • Niche Industries & Services
  • Low capital expenditures
  • Recurring Revenues
  • Undervalued deals with problems we believe can be solved
  • Founder led businesses looking to retire
  • Founders that have the confidence to provide seller financing
  • Founders wishing to keep their company “team” intact

AAF — Typical Deal Structure

1st

SBA or Traditional Loan

70% of Capital Required

  • Searcher personally guarantees this loan.
  • Typically a 10 year loan at 10%.
2nd

Seller Note

10% of Capital Required

  • Exiting Entrepreneur provides “Seller Financing.”
  • Typically 5 year loan at 10%.
3rd

AAF Equity Capital

15% of Capital Required

  • AAF provides equity capital for the acquisition down payment and is entitled to a preferred return with annual interest accrual, as set forth in each deal’s terms.
  • AAF may receive an equity step-up that grants ownership rights proportional to invested capital and the deal terms agreed at closing.
  • Distribution rights prioritize payment of the preferred return and return of AAF invested capital before pro-rata distributions based on the cap table.
4th

Searcher

5% of Capital Required

  • Searcher retains 70-80% ownership of company.

Typical Questions

  • The Preferred Return sets a lower bound on our portfolio performance and aligns incentives between AAF, investors, and the Searcher. It ensures AAF’s capital is protected before broader distributions flow through the cap table.

AAF Playbook

Continuously refine and hone the Apex Playbook.

Inorganic Growth

  • Acquisition & Rollup Strategy - Acquire Competitors and Adjacent Businesses and Roll them into our portfolio company

Cost Reductions

  • Optimize for Labor
  • Contract negotiations
  • Group buying where available
  • Resource / Department sharing within Apex companies
  • Use off-shore labor to help scale operations

Organic Growth

  • Company to Company Referrals
  • Ensure quality services
  • Best in Class use of tools to build customer loyalty
  • Best in Class Marketing

Forum / Experience Sharing

  • Forum / Experience sharing with Apex company leadership and subcompanies

Implement Strong Tech Stack

  • Implement Strong Tech Stack

Leverage AI

  • New AI tools leveraged correctly to reduce costs and scale the business cheaply

Reporting and Accountability

  • EOS framework

Board of Directors

  • Board of Directors with industry experience for acquired companies

Sample Acquisition, Based on an Actual Acq. Held by AAF I

  • $4,485,000 Purchase Price (3.9x 2023 EBITDA of $1,150,000)
  • 70% SBA Debt = $3,139,500 @ 10% Interest
  • 10% Seller Debt = $448,500 @ 10% Interest
  • 5% Searcher Equity = $224,250 for 70% Entity Ownership
  • 15% AAF Equity = $672,750 for 30% Entity Ownership
  • 10% Preferred Return to AAF I, Annual Accrual
  • 2x Equity Step-Up for AAF I
Capital Waterfall
  1. 1SBA Debt Payment
  2. 2Seller Debt Payment
  3. 3AAF’s Preferred Returns of 10% annually
  4. 4200% of AAF’s Paid-in Capital
  5. 5Return of 100% of Searcher’s Paid in Capital
  6. 6Pro-rata Distributions per Cap Table (AAF receives 30% of distributions)

Expected Searcher Exit from Sample Acquisition

Assumptions
  • Growth from $1,150,000 to $2,684,556 in Year 5 EBITDA (18.5% CAGR).
  • Exit Multiple: 5x EBITDA = $13,422,780 Exit Valuation
Capital Waterfall at Exit
  • SBA Debt Balance, Seller Debt Balance, 3% Transaction Costs$2,634,320
  • Preferred Return to AAF (Accrued Return, Return of Capital x Step-up)$1,657,723
  • Capital Return to Searcher$224,250
  • Return to AAF per Cap Table$2,671,946.10
  • Return to Searcher per Cap Table$6,234,540.90
What We Do

At Apex Fund Group, our primary focus is on helping actively scale our LP’s portfolio to create generational wealth.

How We Do It
  • In our Acquisition Fund, we support Searchers in discovering, evaluating, negotiating, and acquiring profitable businesses within high-quality niches and industries.
  • When Searchers collaborate with Apex, they can trust that their acquisition meets our stringent criteria and is likely to yield positive results.
  • While Apex does not adopt a hands-on management approach (placing the Searcher in the lead role), we remain readily available via phone or email to offer assistance in diagnosing and addressing inevitable business hurdles.
  • Additionally, Apex assists in selecting and providing essential “shared services,” such as tax and accounting support.
  • Our network of Investors primarily comprises entrepreneurs—families and individuals equipped with extensive knowledge and networks—to aid portfolio companies in overcoming any business obstacle.
  • Moreover, Apex portfolio companies enjoy a sense of camaraderie, enabling them to leverage each other's expertise as they collectively embrace the transformative journey of entrepreneurship.

Why Us

Entrepreneurial Expertise

Our group is founded by entrepreneurs, for entrepreneurs. Apex Fund Group has a proven track record of not just managing investments, but actively scaling businesses.

Collaborative Wisdom

We believe in the collective power of knowledge, utilizing a community of investors to contribute diverse insights and an investment ecosystem that nurtures success.

Innovation through Excellence

We bring decades of hands-on experience as well as a unique perspective to private equity, leveraging our insights to guide investments and facilitate strategic growth.

Diverse Ventures, Singular Vision

Whether navigating the intricacies of real estate remodel financing or championing entrepreneurs through acquisitions, we tailor our investments for exceptional returns.

Thank you for your time and interest!

Feel free to contact us with any questions, comments, or concerns, we’re here to help.