Executive Summary

At tKW Capital, we specialize inacquiring cash-flowing businesses that provide attractive returns for our investors. Our investment structure is designed to offer steady income, long-term growth, and liquidity options. This whitepaper outlines the benefits and details of our investment strategy, highlighting why it makes sense for investors seeking stable and lucrative opportunities.

Investment Strategy

Our investment strategy focuses on acquiring well-established, cash-flowing businesses. These businesses provide a reliable income stream and possess strong growth potential. Here’s how our investment structure benefits our investors:

1. Preferred Monthly Interest
   • Investors receive an 8% preferred monthly interest on their investment. This ensures a steady and predictable income stream from the outset
2. Distribution of Free Cash Flows
   • Initial Phase: Investors receive 75% of the business’s free cash flows until their principal is fully returned. This accelerated return structure ensures that investors can recoup their initial investment in a timely manner.
   • Long-Term Phase: Once the principal is returned, investors continue to receive 50% of the free cash flows indefinitely. This provides a sustained and substantial return on investment.
3. Exit Strategy
   • If the business is sold, investors benefit from a waterfall distribution that follows the same allocation: 50% of the proceeds after the return of the principal.
4. Annual Dutch Auction
   • To provide liquidity, we conduct a Dutch auction every year. This allows investors who wish to liquidate their interests to do so in a structured and efficient manner.

Why Our Investments Make Sense

1. Steady Income with Capital Preservation
   • The 8% preferred monthly interest provides a regular income stream while ensuring capital preservation. This is particularly attractive for investors seeking low-risk, income-generating investments.
2. Accelerated Principal Return
   • By allocating 75% of the free cash flows towards returning the principal, we ensure that investors can quickly recoup their initial investment, reducing their exposure and risk.
3. Long-Term Growth Potential
   • After the principal is returned, the 50% share in free cash flows provides substantial long-term growth potential. This structure aligns the interests of both the investors and the business, fostering continuous growth and profitability.
4. Liquidity Options
   • The annual Dutch auction offers a unique liquidity option for investors, providing flexibility and the opportunity to exit the investment if needed. This feature enhances the attractiveness of our investment strategy, addressing one of the main concerns of private equity investors.
5. Aligned Interests
   • Our investment structure ensures that our interests are aligned with those of our investors. We are committed to maximizing the free cash flows and ensuring the long-term success of the businesses we acquire.

Conclusion

tKW Capital’s investment strategy is designed to provide a balanced mix of steady income, capital preservation, long-term growth, and liquidity. Our unique structure ensures that investors receive attractive returns while minimizing risk. We believe that this approach makes our investments a compelling choice for those seeking stable and lucrative opportunities in the private equity space.

For more information or to discuss investment opportunities, please contact us at [contact information].

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Appendices

Appendix A: Example Investment Timeline

• Year 1-3: 8% preferred monthly interest and 75% of free cash flows towards principal return.
• Year 4 onwards: 50% of free cash flows after principal is fully returned.
• Annual Dutch Auction: Option to liquidate investment.

Example Investment Model: $100,000 Investment

Let’s walk through a potential model of what this investment would look like with a $100,000 investment.

Assumptions

• Annual free cash flows: $40,000
• Initial investment: $100,000

Yearly Breakdown

1. Years 1-3 (Initial Phase)
   • Preferred monthly interest: 8% of $100,000 = $8,000 per year (or $666.67 per month)
   • Investor receives 75% of free cash flows: 75% of $40,000 = $30,000 per year
   • Total yearly return: $8,000 (interest) + $30,000 (free cash flows) = $38,000
   • Principal returned over 3 years: $100,000 / 3 = $33,333.33 per year
2. Years 4+ (Long-Term Phase)
   • Principal fully returned by end of Year 3
   • Investor receives 50% of free cash flows: 50% of $40,000 = $20,000 per year
   • Total yearly return: $20,000
3. Exit through Sale or Dutch Auction
   • If the business sells, investors receive their share according to the established allocation.
   • Dutch auction provides liquidity option annually.

Cash Flow Summary

• Year 1-3:
  • Annual Return: $38,000
  • Total Principal Returned by End of Year 3: $100,000
• Year 4+:
  • Annual Return: $20,000 (continuous)

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This whitepaper is intended for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any securities. Investments involve risk, and past performance is not indicative of future results.