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Pre-consolidation Investment

Newcastle invests approximately $500,000 to $1M over 12-18 months in each SEM project prior to consolidation. It owns 100% of the Portfolio Company prior to consolidation. At consolidation NCC is diluted to a 7-20% equity position in the Portfolio Company as the small businesses exchange their company’s stock for equity in the Portfolio Company. Newcastle is granted contractual controls and investor rights to protect its equity position and to retain certain control mechanisms in the Portfolio Company. Controls resulting from pre-consolidation investment include but are not limited to:

  • Contractual management oversight and advisory fees
  • Contractual board seat(s)
  • Voting, registration & piggyback rights
  • Right of first refusal on private debt and equity funding
  • Performance based incentives/penalties built into constituent employment agreements including claw-back and buyout provisions