At Cardiff Lexington, we provide business owners the funds needed to expand and grow their business, as well as an equity exit and liquidity strategy for the owner, heirs, and/or investors. Our acquisitions become standalone subsidiaries that gain the advantage of the power of a public company without losing their independent management control.
Management enjoys the advantage of improved valuation, liquidity, synergies and support, along with diversification and asset appreciation through collective subsidiary performance. Diversification and pooled resources leverage value and mitigate risk.
Our focus isn’t geographic-specific, it’s opportunity oriented. Our growth focus through perpetual acquisitions centers on serving the successful business owner in three main categories, financial services, healthcare, and real estate. Our target composition of holdings over time are targeted to represent:
Established Healthcare Companies
Small to Mid-Sized Privately Held Healthcare and Financial Services Companies
In order to ensure our investors are protected, we require all acquisitions to meet the following requirements:
Healthcare Sector
Be Profitable
Be in Business 5+ Years
Maintain Moderate to Low Debt
Possess a Great Management Team
Our acquisition evaluations begin with 3 M’s: Market, Management and Margin.
Market: We evaluate the market for each company’s product or service, positioning, penetration, barriers to entry and maturity.
Management: We look for great management, such as hands- on, accomplished, driven and growth oriented.
Margin: We evaluate current results and look for opportunities to improve and create the Cardiff effect.
Once a potential acquisition meets our requirements, we begin the acquisition process.
We enter the valuation stage of the business and its assets. This leads to discussions of value and deal structure.
We issue an LOI (Letter of Intent) to broadly outline the key elements of the transaction.
Once the LOI is in place, we enter the due diligence period which leads to drawing up a comprehensive forward
Lastly, we review all required audits, and Preferred shares are issued under IRS Section 368(a)1(B) guidelines, (if appropriate).
According to the IRS Section 368(a)1(B), there is a process in which all parties involved in an acquisition are free from reporting a Capital Gain or a Capital Loss, thus being a Tax-Free Exchange. This process requires us to exchange our “qualified” Preferred Stock that is voting for control of the newly acquired company. We acquire 100% of the “vote and value” of the company’s stock. Each company is awarded an exclusive series of Preferred Stock. We authorize and issue this Preferred Stock to the new company thus completing the acquisition. In addition, we authorize a sub-class in the same exclusive series of Preferred Stock that is non-voting for the purpose of raising working capital. Once the Company becomes a wholly owned subsidiary, they will receive their own class of Preferred Stock. This preferred class becomes their platform to raise the necessary capital to expand their business All acquisitions are added to our consolidated balance sheet creating tangible value for everyone. Acquisition assets are not co-mingled and operational autonomy is maintained.
Contact us to begin the acquisition review process. We will help you reach your business goals.
Our whitepapers are available to help you better understand our investment strategy.
