Rollup funding strategy

Hi everyone,

I'm working on a rollup project focused on the clinical lab market in South Europe.
With my team, we've done 100+ lab acquisitions in the past for the companies we used to work for.
This is the first attempt to run our own show, but thanks to our experience and network we've come up with a compelling consolidation strategy and value proposition for sellers, that allowed us to build a nice pipeline in just a few weeks. 

Funding is probably the aspect we're struggling with the most at the moment.
We've received multiple proposals from different types of investors but the two main scenarios we see in front of us are:

Scenario 1
Investor type: Mid sized fund \ Club Deal groups that can fund the whole plan (around €50M)
Terms:  they want to invest at nominal value with a 20% carried interest for the founders
Pros: Funding won't be an issue and we could just focus on the execution.
Cons: We'd lose equity and control right away for that 20% profit split.

Scenario 2 
Investor type: Private, family office, Industrial that can cover an initial round of €10/15M
Terms: We're negotiating a pre-money valuation plus a clause to limit founders dilution to 35% (minimum equity ownership we'd like to have at exit)
Pros: founders can retain a higher value;
Cons: we'll need multiple rounds to implement the plan and I think we'll have to start slowly, maybe with a deal by deal approach, like with a fund-less sponsor model.

The ultimate goal for us, is to end up at the end of the game with a significant chunk of equity instead of the not very compelling 20% carry to split
among us founders. This is why we believe it could be healthier to negotiate with more structured investors after we've built an initial platform.

Securing enough funds to go fast right away while keeping 35% of the company would be ideal but doesn't seem likely, thus the idea of building the initial platform (around €10M turnover) with and then raising additional resources to speed up the process.

I'd really love to know your experiences and suggestions on how to identify the best options to pursue
Many thanks

2 Comments
 

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