By Shotgun Funds
Lawyers seeking funds for clients whose business partners have exercised shotgun clauses in buy-sell agreements will be interested in Argosy Partners’ new Shotgun Fund. According to an internal KPMG Corporate Finance Inc. memorandum, the “ideal target” for Shotgun Fund financing “will be a private company in business for at least three years with strong management, an enterprise value between $5 million and $25 million and sales between $10 million and $100 million.” Argosy principal James Ambrose says the Fund is the “only fund in North America specializing in shotguns.” Argosy will advance amounts between $1 million and $10 million on appropriate transactions, typically in the manufacturing, distribution or service sectors where applicants are “open to having an outside shareholder.”
From a laywer’s perspective, the fund offers a unique source of risk capital for clients with personal or financial constraints who are confronted with partners pulling the trigger on a low-ball offer. According to Reid, Argosy had been contacted about six transactions within four days of the Fund’s launch on October 14. “Every lawyer we’ve talked to likes the idea and can recall an instance when this type of capital would have been useful to a client,” Reid told Lexpert Magazine.
Reid also emphasizes his company’s responsiveness to the time-sensitive nature of shotguns: “We’ll respond with a rejection or a contingent offer within 48 hours of being contacted, and our due diligence process is geared to short time frames.” Argosy also promises to protect referring lawyers’ relationships with their clients.