Five Birds is an independent sponsor: there is no fund and no capital committed in advance. Each company is presented and syndicated separately, with its documentation and price already closed.
Investors
Decisions are made deal by deal, not fund by fund
Each acquisition is syndicated separately and you join the ones you choose. This is a long-term hold: the company is not sold, it is bought to be kept, and investors are paid through dividends year after year. The debt is bullet and at maturity it is refinanced for the same amount, which is what allows the company to be kept and the dividend to keep flowing.
1.5x + coststhe investor's equity, on a price of four times EBITDA
8%annual preferred return, cumulative and compounding, paid first
Day 1investors start receiving dividends
6 yearspayback: capital is recovered through dividends
How it works
No blind pool and no fees on capital that hasn't been invested
Nothing is charged for managing committed, uninvested capital. Compensation is tied to what actually closes.
The 8% preferred return, cumulative and compounding, is paid before any distribution to the sponsor. The capital itself is not returned ahead of that: it stays invested while the company is held.
Sourcing and a preliminary Due Diligence are done in advance by the firm's team, before any capital is raised, and the firm only earns its fee at closing. External supervision of that Due Diligence and the setup costs are covered by the investors, with each cost paid as it falls due.
Deals closed, capital deployed and board seats held: we prefer to be measured by what gets done, not by the volume under management.
By the time a deal reaches investors, the price is agreed, the due diligence done and the bank financing committed. Capital is never asked for against an idea.
Capital structure
Four times EBITDA: 1.5x of debt, 1.5x of equity and 1x from the seller
Each deal is structured on a price of four times normalized EBITDA. Indicative split of who puts in each part.
1.5x · Bank debt
1.5x · Equity
1x · Seller
37.5% of the price. One and a half times EBITDA, at Euribor plus 3% and over eight years. It is bullet debt: only interest is paid and the principal is refinanced in full at maturity, which is what allows the company to be kept and the dividend to keep flowing.
Another 37.5% of the price, contributed by investors at closing. Adding the origination fee and the setup costs, their outlay comes to around 43%. It is preferred capital: it collects before any distribution to the sponsor and accrues 8% a year, cumulative and compounding.
The remaining 25%, financed by the seller over three years, interest free and backed by a bank guarantee, tied to their staying on. It is both financing and guarantee: it stands behind pre-closing contingencies.
Indicative structure. The split is adjusted in each deal according to the company's balance sheet and the bank's final terms.
Key terms
The sponsor collects once investors have collected
| Term | Provision |
|---|---|
| Investor instrument | Preferred equity, with absolute payment priority over any other distribution |
| Preferred return | 8% a year, cumulative and compounding, accruing from disbursement |
| Split after the preferred | 75% to the investor syndicate and 25% to the sponsor, from year one |
| Dividend policy | Each year all the cash the bank allows is distributed, keeping a reserve of six months of debt service. Distributions require a DSCR, available cash divided by debt service, of at least 1.2x |
| Origination fee | 2% of enterprise value, payable once the transaction closes: it covers, among others, deal sourcing, the preliminary Due Diligence, the design of the capital structure and the negotiation through to closing |
| Due Diligence and setup costs | 3.5% of enterprise value, borne by the investors and paid as each cost falls due: it covers the external supervision of the preliminary Due Diligence and the deal's setup costs. If the deal does not close, they remain as broken deal costs |
| Management fee | 4% of annual EBITDA, for managing the stake. It ranks ahead of debt service |
| Guarantee on the deferred price | 1.5% a year, the cost of the bank guarantee backing the seller's deferred price |
Our golden rule is not to lose the shareholder's money.
Indicative terms. The binding detail is set out in each deal's shareholders' agreement. The model each company is assessed with is deliberately conservative: it assumes almost no growth and is run under fully stressed scenarios.
Next step
We'll let you know when a deal is on the table
Write to us and we will explain how syndication works and what documentation you receive before deciding on each company.
Contact us