The Shotgun Fund

Our clients win even when we lose

Our clients win even when we lose

December 2000

Argosy Partners' Shotgun Fund was not successful in its recent bid for a major player in the hospitality business. But our partner/client was a big winner nonetheless.

Here's how it went:

A prolonged shareholder dispute between two partners eventually led to a court-ordered buy/sell agreement (a shotgun clause). If the shotgun was not exercised within 40 days, the court would impose a wind-up order on the business.

The Shotgun Fund was approached by the operating partner who faced three very significant risks. He risked losing the business to his financial partner at an oppressive price. If he lost his stake, he was certainly going to lose his job. And if the shotgun was not exercised, he was exposed to a protracted wind-up process, which almost certainly would have depleted the value of the underlying assets.

We sat down with the manager/shareholder on a Thursday morning and began our specialized due diligence process. Our offer was crafted over the weekend. And by Wednesday we had an agreement to proceed with a bid of just under $6 million — a very fair price and far more than the opposing shareholder dreamed could have been committed in such a short time.

At the end of the day, the financial partner exercised his option to acquire the balance of the business at the price we had offered. So while the Shotgun Fund was not the winner in the traditional sense, we earned a reasonable fee for our services and earned our client a fair value for his shares.

Our dedicated funding and focussed process helps significant shareholders protect their equity. Whether we acquire the business or not, our clients get what they believe is the fair price. And while we may not have saved our client's job, we certainly helped him get a big parachute open.