How We’re Different

Characteristics
Founders Advantage Capital
Royalty Companies
Private Equity Funds
Investment Stage
Established middle-market companies with positive operating free cash flow and strong growth profile
Middle-market companies with positive operating cash flow
Wide-ranging; typically positive operating cash flow with capacity for leverage
Investment Structure
 Majority ownership / control position
Preferred or debt-like security instrument
Majority (typically 100% less management interest)
Common Equity Ownership Position
 Control Position
None (or limited)
100% ownership (less management interest)
Ownership Style
Passive
Passive
Active
Board Composition
Majority (>50%; <100%)
None (or minority)
Majority (up to 100%)
Compensation Structure
Management salaries; bonus plan based on performance metrics
Management salaries; bonus plan based on performance metrics
Annual management fee on capital deployed; carry on profits
Investment Horizon
Unlimited (permanent capital)
Unlimited
Limited to life of fund (must force liquidity event)
Investment Returns
Pro-rata share of distributable cash up to predetermined threshold plus a % of distributable cash above threshold
Preset annual rate; adjusted for specific operating metrics (typically capped
at 5% - 6%)
Distributable cash plus management fees; largely driven by liquidity (sale) event 
Leverage Structure (Borrower)
 Parent company
Parent company
Target company
Target Transaction Leverage
2-3x Debt/EBITDA at Founders Advantage Capital Parent Co.
Wide-ranging
4-7x Debt/EBITDA

* Please note Royalty and Private Equity characteristics are illustrative in nature; Royalty and Private Equity structures can vary from company to company

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