|1||Offers on 2 plumbing/HVAC businesses with $2.3M of revenue and $1M of EBITDA in 2019.|
|2||Strong team track record with 8 successful exits in the last 3 years.|
|3||Targeting essential services (plumbing/HVAC) with a $130B industry market size.|
|4||COVID-19 has created a strong buyers market — as aging owners rush to exit their business.|
|5||Founding team includes private equity veteran from Goldman Sachs and multiple serial entrepreneurs.|
|6||Culture of delighting employees and customers is a superpower in this industry.|
|7||Each company in our portfolio has a mandate to give back to their community.|
|8||Clear path to exit via strategic sale or IPO.|
First and foremost, I invested in Kingmakers because of Deven. I've known Deven for over a decade and we worked together in venture capital. He is a brilliant entrepreneur who is passionate about traditional small businesses -- the ones that are part of our everyday life and are not served by venture capital.
The opportunity is tremendous. A generation of business founders is looking to transition ownership and retire, and at the same time there is a new generation of young, capable, and ambitious potential company owners. Kingmakers bridges the gap, making it possible for those companies to change hands, but most importantly, giving them the tools and support to thrive in the modern economy.
We Buy Great Businesses and Improve Them With Our Proprietary Playbook
We Focus on Residential Home Services Companies
We Acquire, Systematize and Grow Them
How Big Is This Market?
COVID-19 Has Increased The Need For What We Do
How We Help Business Owners
What We Do In Detail
- Systems & Training
- Hiring & Retention
- Serving Our Communities
These Efforts Make Our Businesses Resistant to Failure (Fireproof)
What This Looks Like For Customers
What This Looks Like For The Team
What This Looks LikeWith Technology & Marketing
Our Track Record
Exit Potential For Kingmakers Ops
Kingmakers Ops has financial statements ending March 31 2020. Our cash in hand is $10,000, as of April 2020. Over the three months prior, revenues averaged $0/month, cost of goods sold has averaged $0/month, and operational expenses have averaged $0/month.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes and other financial information included elsewhere in this offering. Some of the information contained in this discussion and analysis, including information regarding the strategy and plans for our business, includes forward-looking statements that involve risks and uncertainties. You should review the "Risk Factors" section for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
Kingmakers Ops acquires, systematizes and grows residential services businesses (with a focus on hvac & plumbing). The company is not an investment company because it wholly owns and operates the companies it acquires, rather than holding financial securities for investment purposes.
We train owners to optimize their business and step away from the day-to-day operations and in exchange get the right to acquire the business on favorable terms (with heavy seller-financing).
We focus on businesses with strong teams and a strong company culture. We then focus on improving the business systems, hiring and marketing.
In five years, we would like to (but can't guarantee):
1) Have a portfolio of recession-resistant small businesses that generate $20mm+ per year in EBITDA
2) Each portfolio company to be systematized, focused on growth, with a strong leadership team in place
3) Each of our portfolio companies to have made measurable improvements to the lives of their employees and community members
4) Be in the process of filing for an IPO or other arranging another liquidity event for unitholders
Given the Company’s limited operating history, the Company cannot reliably estimate how much revenue it will receive in the future, if any.
Kingmakers Ops LLC was incorporated in the State of Delaware in March 2020. Kingmakers Ops LLC is a subsidiary of Kingmakers, Inc. Kingmakers Inc. is the majority owner of Kingmakers Ops LLC - and will own ~85% of the company after the successful completion of the $1.07mm regulation CF round. Kingmakers Inc. will provide consulting and training services to Kingmakers Ops portfolio companies at the same rate that Kingmakers Inc. charges its third-party partners (a pre-defined rate of $150-$200/hr). In addition, Kingmakers Inc. will charge Kingmakers Ops a monthly allocation expense that covers any shared expenses (office space, software, accounting/bookkeeping services, etc). That will be the only overlap between the 2 entities.
Since then, we have:
Historical Results of Operations
Our company was organized in March 2020 and has limited operations upon which prospective investors may base an evaluation of its performance.
Liquidity & Capital Resources
To-date, the company has been financed with $10,000 in debt.
After the conclusion of this Offering, should we hit our minimum funding target, our projected runway is 3 months before we need to raise further capital.
We plan to use the proceeds as set forth in this Form C under "Use of Funds". We don’t have any other sources of capital in the immediate future.
We will likely require additional financing in excess of the proceeds from the Offering in order to perform operations over the lifetime of the Company. We plan to raise capital in 12 months. Except as otherwise described in this Form C, we do not have additional sources of capital other than the proceeds from the offering. Because of the complexities and uncertainties in establishing a new business strategy, it is not possible to adequately project whether the proceeds of this offering will be sufficient to enable us to implement our strategy. This complexity and uncertainty will be increased if less than the maximum amount of securities offered in this offering is sold. The Company intends to raise additional capital in the future from investors. Although capital may be available for early-stage companies, there is no guarantee that the Company will receive any investments from investors.
Runway & Short/Mid Term Expenses
Kingmakers Ops LLC cash in hand is $10,000, as of April 2020. Over the last three months, revenues have averaged $0/month, cost of goods sold has averaged $0/month, and operational expenses have averaged $10,000/month, for an average burn rate of $10,000 per month. Our intent is to be profitable in 2 months.
Since April 2020, we have instituted an outbound marketing campaign to identify potential sellers. This is at a cost of ~$1,000/mo. That is the only cost in the business apart from those associated with the financing itself ($10k of legal, marketing, administrative costs).
We are close to a letter of intent on 1-2 businesses and expect to close on at least 2 acquisitions within the next 6 months. Each business would generate ~$120k-$140k/mo in revenue and $50k-75k/mo in ebitda per month. Either transaction would get the company to profitability.
We expect that our average down payment per deal will be $200k. With the reg cf raise ($1.07mm) we expect to be able to acquire 4-5 businesses. The other financing we would use would typically be seller/debt financing or bank financing. We hope (but cannot guarantee) to raise another round of capital via a Reg A+ campaign in 2021, for a maximum of $10M.
The financial success of the Company may be sensitive to adverse changes in general economic conditions in the United States, such as recession, inflation, unemployment, pandemics, and interest rates. Management believes that the niche products and services they market will insulate the Company from excessive reduced demand, but Kingmakers has no control over these economic changes.
The Company’s operating results may fluctuate significantly from period to period as a result of a variety of factors, including purchasing patterns of customers, competitive pricing, debt service and principal reduction payments, and general economic conditions. Consequently, the Company’s revenues may vary by quarter, and the Company’s operating results may experience fluctuations.
While the Company believes it can develop a customer base through the marketing and promotion of the Company’s offerings, the inability of the Company to further develop such a customer base could have a material adverse effect on the Company. Although the Company believes that its offering mix offers advantages over competitive companies, no assurance can be given that KINGMAKERS products and services will attain a degree of market acceptance on a sustained basis or that it will generate revenues sufficient for sustained profitable operations.
While there does exist some current competition, Management believes that the KINGMAKERS product and services line is unique and the expertise of Management combined with the innovative nature of its products and services will set the Company apart from its competitors. There is the possibility that new competitors could seize upon KINGMAKERS business ideas and produce competing products and services. Likewise, these new competitors could be better capitalized than KINGMAKERS which could give them a significant advantage. There is the possibility that the competitors could capture significant market share of KINGMAKERS intended market.
If the Company incurs indebtedness, a portion of its cash flow will have to be dedicated to the payment of principal and interest on such indebtedness. Typical loan agreements also might contain restrictive covenants which may impair the Company’s operating flexibility. Such loan agreements would also provide for default under certain circumstances, such as failure to meet certain financial covenants. A default under a loan agreement could result in the loan becoming immediately due and payable and, if unpaid, a judgment in favor of such lender which would be senior to the rights of investors in the company. A judgment creditor would have the right to foreclose on any of the Company’s assets resulting in a material adverse effect on the Company’s business, operating results or financial condition.
The Company’s business plans may change significantly. Many of the Company’s potential business endeavors are capital intensive and may be subject to statutory or regulatory requirements. Management believes that the Company’s chosen activities and strategies are achievable in light of current economic and legal conditions with the skills, background, and knowledge of the Company’s principals and advisors. Management reserves the right to make significant modifications to the Company’s stated strategies depending on future events.
The net proceeds from this Offering will be used for the purposes described under “Use of Proceeds.” The Company reserves the right to use the funds obtained from this Offering for other similar purposes not presently contemplated which it deems to be in the best interests of the Company and its unitholders in order to address changed circumstances or opportunities. As a result of the foregoing, the success of the Company will be substantially dependent upon the discretion and judgment of Management with respect to application and allocation of the net proceeds of this Offering. Investors for the offering hereby will be entrusting their funds to the Company’s Management, upon whose judgment and discretion the investors must depend.
As of April 14, 2020, the Company’s officers and directors owned a majority of the equity in the business. Upon completion of this Offering, the Company’s Management will continue to own a majority of the outstanding equity and will be able to continue to control Kingmakers. Investors will own non-voting equity and will not have the ability to control either a vote of the Company’s Unitholders or Board of Directors.
In certain cases, the Company may rely on trade secrets to protect proprietary technology and processes which the Company has developed or may develop in the future. There can be no assurances that secrecy obligations will be honored or that others will not independently develop similar or superior technology. The protection of proprietary technology through claims of trade secret status has been the subject of increasing claims and litigation by various companies both in order to protect proprietary rights as well as for competitive reasons even where proprietary claims are unsubstantiated. The prosecution of proprietary claims or the defense of such claims is costly and uncertain given the uncertainty and rapid development of the principles of law pertaining to this area. The Company, in common with other firms, may also be subject to claims by other parties with regard to the use of technology information and data which may be deemed proprietary to others.
Purchasers of Units may experience dilution through additional Units issued by the Company at a later date.
An investment in the Company may be long term and illiquid. Prospective investors will be required to represent in writing that they are purchasing the securities for their own account for long-term investment and not with a view towards resale or distribution. Accordingly, purchasers of securities must be willing and able to bear the economic risk of their investment for an indefinite period of time. It is likely that investors will not be able to liquidate their investment in the event of an emergency.
There is no current market for the securities offered in this private Offering and no market is expected to develop in the near future.
The securities are being offered for sale in reliance upon certain exemptions from the registration requirements of the Securities Act, Investment Company Act, applicable Delaware Securities Laws, and other applicable state securities laws. If the sale of securities were to fail to qualify for these exemptions, purchasers may seek rescission of their purchases of Units.
The company being invested in is a subsidiary of Kingmakers Inc. This may limit the liquidity or exitability of the business. In addition, unitholders may have limited liquidity in the event of an exit or sale of the unitss of the parent company - Kingmakers Inc.
The company shares management, employees, expenses (marketing budget, software, contractors) with its parent company - KINGMAKERS INC. The allocation of costs of these resources across the parent and subsidiary will be based primarily on management judgement - and has the potential to be subjective.
The Company may never receive a future equity financing or elect to convert the Securities upon such future financing. In addition, the Company may never undergo a liquidity event such as a sale of the Company or an IPO. If neither the conversion of the Securities nor a liquidity event occurs, the Purchasers could be left holding the Securities in perpetuity. The Securities have numerous transfer restrictions and will likely be highly illiquid, with no secondary market on which to sell them. The Securities are not equity interests, have no ownership rights, have no rights to the Company’s assets or profits and have no voting rights or ability to direct the Company or its actions.
Our future success depends on the efforts of a small management team. The loss of services of the members of the management team may have an adverse effect on the company. There can be no assurance that we will be successful in attracting and retaining other personnel we require to successfully grow our business.
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