The Succession Fund: private equity financing for succession transactions, management buyouts, and shareholders looking for partial liquidity or wanting to “take chips off the table

New fund targets crisis in succession of Canadian family businesses

New fund targets crisis in succession of Canadian family businesses

December 1, 2000

More than half of the family businesses in Canada won’t be passed on to the next generation, several recent studies have found.

As a result, thousands of Canadian business owners will face a crisis at retirement hen there’s no family member willing or able to take over – and no company insider who can afford to buy the company. Many departing entrepreneurs will be forced to sell their business, often at below fair value, or compelled to close down their enterprise altogether. But now there’s a solution for business owners who want to preserve the company they’ve built and cash out at the same time – The Succession Fund.

"Put simply, we’re in the business of taking equity partnerships with the retiring owners of Canadian small businesses," says Richard Reid, founding partner of Argosy Partners Ltd., the private, Toronto-based Canadian investment partnership that has launched The Succession Fund. "We buy the shares of departing shareholders, providing the retiring entrepreneur with liquidity while strengthening the business."

Indeed, The Succession Fund, currently capitalized a $20 million, seeks to preserve the legacy of the retiring entrepreneur and maintain a continuity of leadership by making ownership of the company available to the people who helped build the company – its managers.

"We partner with long-term managers who can’t afford to buy the business on their own," says Jim Ambrose, Argosy’s Finance partner. "We foster a partnership, so that once the entrepreneur is gone, the business – along with its management and key employees – continues on."

The Succession Fund will focus on partnering with family-owned businesses in the manufacturing, distribution and service sectors. Companies considered for investment will have sales of more than $10-million annually – with an enterprise value exceeding $5-million. The Succession Fund will provide its partner companies with strategic, financial and operational expertise through its Advisory Board of seven senior Canadian business leaders.

"We’ll only invest where we believe we can make a real contribution to strategic growth," says Reid. "And when we do, everyone will benefit."

Argosy Partners Ltd. was established in 1994 to make strategic investments in small and mid-sized Canadian businesses. In addition to The Succession Fund, Argosy is also general partner of The Shotgun Fund, a specialized vehicle for financing the resolution of shareholder disputes.

For additional information, please contact: Jim Ambrose or Richard Reid.


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When owner-managers want some cash out

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Argosy Partners Brochure: The Succession Fund, Bridge Fund, and Shotgun Fund