The Shotgun Fund

First Transaction A Classic

First transaction a classic

September 2000

Argosy Partners' Shotgun Fund has just completed its first transaction.  And it was classic example of what can happen in a shotgun situation — and how the Shotgun Fund can help.

The company in question is a $25 million electronic manufacturing business located in Southern Ontario.  Two equal partners had been running the business successfully for more than 10 years.  But they had come to a fundamental disagreement about the company's future direction.  Suddenly, the day before one of the partners was to leave for his summer vacation, the other partner served notice that he was triggering the shotgun clause in their shareholders' agreement.

It was a low-ball offer.  It was July 13.  Fortunately, it wasn't a Friday.

The partner who had received the notice already knew about the Shotgun Fund and so knew who to call.  Within 48 hours, the Fund had issued a commitment letter and the offer was put back to the triggering partner.

On August 30 the transaction closed.  Thirty-three business days from telephone call to advance of funds.

It was hard work.  These kind of transactions always are.  But everything about this situation speaks to the value of a dedicated fund, the advantage of a specialized due diligence process and the importance of knowing who to call.