Our Client is a self-made billionaire starting a revolution in the tech industry. His startup is all about giving the people what they want and what they need, at a price they can afford. The company offers not just a connection to a better world, but easily accessible and affordable quality communication, because he believes having basic necessities is a right, not a privilege, and he wants to make health and security easily accessible to everyone. From Smartphone’s and Wi-Fi-calling to entertainment to healthcare and insurance to vaporizers that attach to your phone, he’s got you covered for every part of your life (the not so fun and the fun parts).
The client had never used debt or leveraged finance to grow any of his businesses.
Specifically, our client required a solution capable of:
- Accessing affordable capital with the minimum dilution
- Providing him with a long term structure without penalty that won’t put an undo burden on the company.
- Put him in a position where he won’t be compromising his payment schedule with his major supplier, WalMart.
Blackhawk Partners Solution
Blackhawk developed an optimal financing structure for the client, along with a 15-year term at a very competitive rate of 5.5% allowing him to access capital markets on terms that had been unattainable before.
Blackhawk also provided continuous advice on how to position the product in the market to reach customers who simply can’t afford higher-end products, but want a quality product that approaches similar performance standards.
Blackhawk provided advice throughout the process allowing the client to showcase the product as high quality at a reasonable price.
With a gross margin on cost of goods sold (including shipping costs) of 35%, and projected annual sales of 5MM units by year-end 2020 and 7MM units by year-end 2021, Blackhawk advised the company how to be cash flow positive by year-end 2019. EBITDA is projected to reach $350 million for 2020 and over $750MM for 2021 in the US alone.
By following our concepts and with funding to the tune of $250 million, we were able to bring his new startup to life and to be a massive player in the industry right from the beginning.
With access to Blackhawk funding, and just with the US market, EBITDA in 2023 is expected to reach $2.1 billion. Assuming a 6 times EBITDA multiple, this would translate to a terminal value of over $12 billion. On the initial $200MM investment, this translates into an IRR of over 280% per annum.