Alaris offers private companies an alternative to traditional means of raising capital through leverage, private equity or public offerings. Alaris provides capital to private companies in a way that maximizes valuations and tax efficiency, and allows existing management to maintain 100% of control and common equity ownership. Our structure is designed for entrepreneurs who wish to raise capital for a partial exit, generational transfer, recapitalization, management buyout, or growth and who want to maintain control of their companies while not attracting the added risk that comes with high leverage levels.
Optimal Cash Flow
We provide cash financing to private companies at an agreed upon valuation, in exchange for a pre-determined distribution from such private companies. Our distribution is received monthly but is determined 12 months in advance in accordance with a mutually agreed upon performance metric. The metric is based on a "top-line" financial performance measure of the Private Company Partner; such as gross revenues, gross profit, same store sales or same clinic sales. Each year, our Distribution is adjusted based on the percentage change in the audited performance metric. The distribution paid to us by a Private Company Partner is made before applicable taxes, and therefore is very tax efficient to the Private Company Partner.
Our distributions are strictly based on organic growth and/or organic decline of the private company. As such, any growth or decline in the private company from acquisitions, new locations or margin improvements are not factored into the adjustment until such acquisitions, locations or improvements have been in the private company's system for at least a year. This allows us to maintain our overall objective of generating predictable, stable cash flows.
Alaris participates in the business of the Private Company Partner through the ownership of passive non-voting preferred equity. Our distributions on our preferred equity ranks in priority to the Private Company Partner's common equity, but our distribution is tax effective and principal payments of our financing are not required.
Non-Control Private Equity
Alaris has a significantly lower participation and influence in the growth of our Private Company Partners than traditional private equity. We do not have voting rights or the ability to exercise any significant influence or control over our Private Company Partners (provided there is no uncured event of default). We do not participate in management decisions and are not involved in the day-to-day operations that occur within the normal course of business of our Private Company Partners. We monitor our Private Company Partners through the receipt of monthly (unaudited) financial information and updates and we secure our position through protective covenants and consent rights on items that are outside the ordinary course of business.