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Business Loans as an investment can offer higher yields and lower volatility than traditional fixed income. Investors should consider this investment alternative, especially in a new era of rising interest rates. “The hunt for yield” has become a dominant theme for today’s fixed-income manager, with bond yields near historic lows and the reality of rising rates creating the potential for significant capital losses on existing portfolios.
One solution to this issue is to utilize shorter duration and/or higher yielding bonds. However, while these instruments have the potential to raise returns, they also come with higher associated credit risks that may not align with the more conservative profile
expected from a fixed-income portfolio. An alternative that has been gaining considerable traction for many fixed income investors is Business Loans, which can offer a higher yield with a credit risk profile that is more closely aligned to traditional fixed income. The yield benefit relative to bonds is a
result of the private nature and relative illiquidity of Business Loans.
What is the Total Addressable Market (TAM)?
The Total Addressable Market (TAM), also referred to as total available market, is the overall revenue opportunity that is available to a product or service if 100% market share was achieved. It helps determine the level of effort and funding that a person or company should put into a new business line.
The concept of total addressable market is important for startups and existing
businesses because the estimates of effort and funding required allow them to
prioritize specific products, customer segments, and business opportunities. Where
there are potential investors and buyers of the business, company executives can use
TAM to provide a viable value proposition.
The current total addressable market for business lending was approximately
$614 Billion in 2016 according to the US Small Business Administration.
A business lending fund is a pool of private capital dedicated to investing in loans that are collateralized
by business loans. Borrowers may need short-term capital for a number of different reasons, including
business acquisition, construction, ground-up developments, or refinancings.
As banks cut back on
lending after the 2008 Global Financial Crisis, private lenders stepped into the void and have since
grown in both number and size. They have become the go-to capital providers as their operations
ramped up and gained efficiency, and also a staple of investor portfolios which seek attractive yields
with uncorrelated beta to public markets.
Most funds tend to focus on a single strategy – whether on a particular asset type, type of security, or perhaps geography. As investors contemplate various options, it is pertinent to examine the competitive advantages of each fund, and how these may impact their personal risk / return profile.
Position in the Capital Stack A property’s capital structure is the combination of the different sources of capital used to fund the purchase and/or improvement of a real estate asset. The figure
to the right shows the most commonly used sources of capital, with each source having seniority over all the other sources above it. In other words, in the case of foreclosure, the senior debt investors have claim on the assets ahead of equity and mezzanine debt investors. Because mezzanine debt is typically riskier than senior debt, it often offers higher returns to investors, just like equity investors should theoretically be offered the highest returns for taking the most risk. Debt funds may focus on one or more tranches of debt.
Investors in business lending serve as lenders to business owners to help purchase, renovate or
repurpose a business . An investor’s return is largely driven by the interest income paid on the loan (or
other form of debt) and retains a degree of insulation if the business continues to generate sufficient
net operating income. That is, business lending investors are paid ahead of business owners, which is
important if there is a change in the amount of income a business generates or the value of a business.
• Auto care is an essential business, recession-resistant and demonstrating proven stability during economic downturns.
• From the engine cavity to the wheel well, Midas stores support multiple, sustainable revenue streams including: automotive services, tire installation and sales, and fleet services.
• With more cars on the road each year and the average lifecycle of vehicles now averaging 12 years, many vehicles are exceeding manufacturer warranty periods and 90% of vehicles do not return to the dealer for service.1
• When you focus on tires, you gain access to the wheel well, in addition to the engine compartment, where $0.80 of every maintenance dollar is spent.2
1 Auto Care Factbook, published by Auto Care Association, 2021
2 Auto Care Factbook, published by Auto Care Association, 2021
Market overview – United States automotive service
market – growth, trends, COVID-19 impact, and
forecast (2022 – 2027)
The United States automotive service (USAS) market was valued at USD 64.41 billion in 2021, and it is
expected to reach USD 76.91 billion by 2027,
registering a Compound Annual Growth Rate (CAGR) of
around 3% during the forecast period (2022 - 2027). The COVID-19 pandemic compelled about 95%
of all automotive-related companies to put their workforces on hold during the lock downs in the year
2020. However, compared to other countries worldwide, the United States witnessed a lock-down
for only a few weeks. Therefore one could say that USAS is Amazon Proof and Recession/ Pandemic
Resistant.
Competitive Landscape
The United States automotive service market is fragmented with market players, such as Midas
International, LLC, Firestone Complete Auto Care, Jiffy Lube International, Inc., Meineke Car Care
Centers, LLC, Monro, Inc., and Safelite Group, who hold the most significant shares.
Acorn Automotive Group (AAG) serves as a comprehensive network within the automotive sector, primarily known for its strong affiliation with Midas, a leader in auto repair and maintenance. This collaboration has positioned AAG entities as key Midas franchisees and managers of Midas franchisees, a role that not only enhances their service offerings but also aligns them with the high standards of quality and customer service associated with the Midas brand. Through this partnership, accessible via their website www.acornauto.com, AAG leverages Midas’ vast expertise, technology, and marketing strategies. This ensures the delivery of superior auto repair and maintenance services across Michigan, making them a primary choice for automotive needs. The entities MI Auto Serv Portfolio Holdings, LLC (MASPH), Acorn Auto Services, Inc., Acorn Tire and Auto, LLC, and Phoenix Auto Specialists, Inc., MASPH GR, LLC, MASPH Southgate, LLC, alongside several management-focused firms such as MASPH Management Co, LLC, and MASPH Management Warren, LLC, highlighting AAG’s expansive capabilities and its strategic focus on automotive management and operations.
Secondary to its role as a Midas franchisee, AAG also includes Acorn Towing, LLC, an entity that extends towing services across various Michigan locations. Detailed information about their towing services can be found at www.acorntowing.llc, underscoring AAG’s commitment to providing a full suite of automotive solutions. The inclusion of towing services complements AAG’s primary focus on auto repair and maintenance, ensuring a holistic approach to automotive care that addresses both immediate and long-term needs of vehicle owners. Midas Advisors, LLC, unique within the group, acts not just as a manager but as the sole Class B member of the Company, orchestrating the integration of Midas’ operational excellence across AAG’s spectrum of services. The strategic decision to lend capital to Acorn Automotive Group is a testament to its potential for further expansion and its pivotal role in delivering high-quality, comprehensive automotive services that resonate with the values and efficiency of the Midas brand.
Now more than ever, Midas is a leader in the auto repair industry. Automotive retail is one of the fastest-growing technology market and as a Midas franchisee leveraging a proven business model that’s at the heart of our robust and recession-resistant opportunity!
• Best-in-class operational support
• National Fleet accounts
• Real Estate site search and lease negotiation
• Marketing resources
• Midas has been in business for over 60 years
• Franchisee learning and development is ongoing: It’s not an event
Many Midas franchisees are proud to feature certified technicians, making us a top destination in the auto care industry for urgent auto repairs as well as routine maintenance and quick service oil changes. Your Midas franchise will become a go-to resource for your community to turn to time and time again.
The Midas brand is part of the TBC Corporation umbrella of companies.
TBC Corporation is jointly owned by two of the world’s most respected
mobility solution providers: Michelin North America Inc. (MNAI) and
Sumitomo Corporation of Americas (SCOA). In 2018, each company
agreed to a 50-50 stake of TBC Corporation.
When you choose TBC, you gain access to an unparalleled distribution
and supply chain network, with more than 100 distribution centers
across North America. TBC also owns other brick-and-mortar service
centers brands like Big O Tires, National Tire and Battery (NTB) and
Tire Kingdom, and online retailer tireamerica.com.
You are wrong if you think that the electric vehicle will be the end of the independent shop. You
might be losing spark plugs, air filters and timing chains. But, you are gaining and retaining many
service opportunities.
Batteries
Even a Tesla has a 12-volt battery used to power a number of systems on the vehicle like the ABS,
Cooling Systems
Battery packs, inverters and motors need to be cooled and heated. The coolants are nonconductive glycol-
Tires
EVs can be hard on tires due to the instant torque of the electric motor. Also, the weight of the
vehicle’s battery pack can add extra weight that can wear tires faster.
The tires for some electric vehicles are engineered for specific performance characteristics.
The first consideration is load.
A tire might be the correct size for an EV, but it might not have the
same load and speed ratings as the original.
The other consideration is friction and rolling resistance. Some tire manufacturers use compound
and tread designs that minimize rolling resistance to increase the range of the vehicle. Some
replacement tires could have better handling at the cost of rolling resistance.
The last consideration is noise. Since electric vehicles do not have internal combustion engines to
drown out tire noise, a lower quality tire might be noticed by the driver.
TPMS
Electric and hybrid vehicles must be equipped with a tire pressure monitoring systems. The majority
Suspension
EVs travel on the same roads as conventional vehicles. They are not immune to curbs and
Steering
Since there is not an engine to drive a hydraulic power steering pump, electric power steering is
mandatory for EVs. Electric power steering comes in three styles. Nissan uses electro-hydraulic
units with an electric motor to drive a hydraulic pump. Other manufacturers use systems that
mount the motor to the column or rack. These units typically use the 12-volt architecture of the
vehicle.
Wheel Bearings
Electric vehicles have the same wheel bearings as other vehicles. Just like the suspension, wheel
Brakes
EV vehicles recharge the high-voltage battery with regenerative braking under most conditions.
With regenerative braking, the motor turns kinetic energy into electrical energy.
Alignment
All EVs need chassis alignment. The benefits of an alignment for EVs are two-fold. An alignment
Diagnostics
All vehicles require diagnostics to find the cause of a customer complaint or drivability issue.
Inspection
The more cars change, the more they stay the same. No matter if it is a diesel or EV,
inspections with a checklist will still uncover service opportunities.
Reprogramming, Calibration and Reflashing
Good news! All the skills you learned about J2534 relearns also apply to EVs! If a battery pack,
steering rack or other module is replaced, you will have to program the module. Also, EVs tend
to have more updates as the engineers refine the software to get more range.
Matthew Abell is an accomplished professional with a robust background in both the automotive and real estate industries. His career began at Sanwa Business Credit, where he started as a Credit Analyst in 1992, meticulously reviewing financial data to assess credit risk. By January 1995, Matt transitioned to a Lease Administrator role within the same company, honing his client servicing and business development skills. He also completed his Bachelor of Arts in American History at Oakland University the same year, establishing a strong educational foundation for his future endeavors. Professionally, Matt’s trajectory continued upward as he moved into the role of Regional Sales Manager at GreenTree Financial in 2002, where his exceptional relationship-building skills drove sales and company growth. He later excelled as a Real Estate Broker at Cushman & Wakefield, managing critical real estate transactions until April 2010. Matt’s strategic insight into the real estate market flourished during his tenure as the Senior Vice President of Real Estate at Skyline Property Group, a role he held for over a decade. Currently, as the President of Acorn Tire and Auto since March 2022, Matt leverages his industry expertise and innovative leadership to maintain a portfolio of auto repair facilities and towing, ensuring the highest service quality and customer satisfaction.
Holdings, LLC, MASPH Management Co., LLC. The aforementioned entities are owners or managers of a total of eleven (11) MIDAS franchises in the State of Michigan. For over ten years Mr. Abell has held the title of Vice President of Sales for Skyline Property Group, a commercial real estate brokerage and investment company located in Troy, Michigan.
Forward-Looking Statements Disclosure and Disclosures:
In reviewing the information provided herein, we want to draw your attention to the possibility of encountering certain statements that should be approached with caution. While we strive for transparency and accuracy in all communications, there may be instances where statements are made that require careful consideration.
Specifically, we acknowledge the potential presence of statements regarding advantages in relationships and information, past successes, challenges, and industry positioning. These statements may not always be accompanied by specific examples, historical data, or detailed fund information. Additionally, there may be an emphasis on returns without sufficient discussion of associated risks or an overly optimistic view without adequate warning of potential downsides.
Furthermore, claims of industry leadership or excellence, such as being a ‘top auto repair franchise’ or a ‘leader in the industry,’ may be included without immediate substantiation. In the documents and communications pertaining to this offering, including but not limited to the prospectus, promotional materials, and public statements, the term “unique” is used to describe aspects of our products or services that we believe distinguish them from those offered by competitors. It is important for prospective investors to understand that “unique” refers to features, configurations, or attributes that we consider to be distinctive within the marketplace. However, this does not imply that similar features, configurations, or attributes do not exist elsewhere in the market, nor does it guarantee exclusivity in perpetuity. The use of “unique” should not be construed as a statement or guarantee that the product or service possesses characteristics that are entirely unmatched globally or that no other product or service can replicate or approximate these characteristics. Investors are advised to conduct their own due diligence and review additional product documentation, market analysis, and competitor assessments provided in this offering to fully understand the context and scope of the term “unique” as used herein.
The Midas Fund CF, LLC is an independent entity and is not affiliated with, endorsed by, or in any way associated with Midas Fund, which trades under the ticker symbol MIDSX and can be found online at www.midasfunds.com. Any references to “Midas Fund” within the context of The Midas Fund CF, LLC’s operations, communications, or marketing materials pertain solely to The Midas Fund CF, LLC and should not be interpreted as relating to the Midas Fund (MIDSX) or its associated web presence.
The Midas Fund CF, LLC is an independent entity and is not affiliated with, endorsed by, or in any way associated with Midas International Corporation, which can be found online at www.midas.com.
Any references to “Midas” within the context of The Midas Fund CF, LLC’s operations, communications, or marketing materials pertain solely to The Midas Fund CF, LLC and should not be interpreted as relating to Midas® or its associated web presence.
This communication may also contain forward-looking statements that are subject to risks and uncertainties, including but not limited to those relating to future performance, industry trends, and market conditions. These statements are based on current expectations, assumptions, and projections and may involve inherent risks and uncertainties that could cause actual results to differ materially from those anticipated. We caution readers not to place undue reliance on these forward-looking statements, as they speak only as of the date of this communication. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by applicable law.
As a responsible provider of information, we urge all stakeholders to exercise due diligence and critical thinking when assessing the content provided. While we endeavor to present accurate and relevant information, it’s essential to recognize that forward-looking statements inherently involve uncertainties and risks that could cause actual results to differ materially from those expressed or implied.
Therefore, we encourage you to consider the context of each statement, seek additional information where necessary, and consult with appropriate professionals before making any decisions based on the information provided herein.
Your understanding and cautious approach to the information presented are greatly appreciated as we continue to strive for transparency and accountability in all our communications.
Past Performance and Future Results Disclaimer: TheMidasFundCF.com wishes to remind investors that past performance of our investment strategies and individual loans is not indicative of future results. Each investment opportunity we present carries its unique set of risks and potential rewards, and historical data should not be relied upon as a predictor of future performance.
Risks Associated with Business Loans: Investments in business loans through TheMidasFundCF are inherently risky. These risks include, but are not limited to, the potential default by borrowers. Loan agreements are legal documents that carry obligations and rights for both parties, and it is essential for investors to understand these documents thoroughly before committing capital. While we conduct due diligence to assess the creditworthiness of borrowers, we cannot guarantee the performance of our loans.
Risk Factors and Fund Strategies: Our fund strategies are designed to balance risk and reward, but it is important for investors to recognize that all investments come with the risk of loss. Specific risk factors may include market volatility, economic downturns, changes in interest rates, and other external events that can affect the performance of business loans. We encourage investors to review these risk factors carefully when considering an investment.
Diversification Disclaimer: Diversification is a key element of risk management; however, it does not ensure a profit or protect against loss in declining markets. Investors should be aware that diversification alone does not remove all risk from investing. In our offering documents and associated materials, including the prospectus and marketing collateral, the term “diversification” is used to characterize the business model of certain potential clients. This term is intended to describe strategies employed by these clients to mitigate risks and enhance potential returns through the distribution of business activities across multiple products, services, geographic regions, or customer segments. It is important for investors to understand that “diversification” in this context does not guarantee business success or profitability. While diversification can potentially reduce exposure to single-market volatility or sector-specific downturns, it cannot eliminate the risk of loss. The effectiveness of a diversification strategy in a business context depends on factors including market conditions, competitive dynamics, and managerial execution. Investors are advised to consider the specific details of the diversification strategies employed by our potential clients as outlined in this offering. Additional research and consultation with financial and business advisors are recommended to fully assess the viability and implications of these strategies within the broader market and economic environment.
Leverage Risks: The use of leverage within TheMidasFundCF’s investment strategies can amplify both gains and losses. Leverage involves borrowing capital to enhance the potential return of an investment. While this can lead to increased returns, it also increases the potential for significant losses, especially in volatile or declining markets.
Balanced Risk Disclosure: We strive to present a balanced view of investment opportunities, highlighting both the potential rewards and risks. It is critical for investors to understand that investments are not guaranteed and that achieving expected returns is not assured. Market conditions, borrower performance, and other factors can influence the outcome of any investment.
Investment Risk Disclaimer: Investing in business loans and other financial instruments involves a high degree of risk, including the possible loss of principal. Investors should consider their financial capability to bear the risks of investment, including the potential loss of their investment. We recommend consulting with a financial advisor to ensure that any investment aligns with your financial goals and risk tolerance.
Conclusion: By investing with TheMidasFundCF.com, you acknowledge and accept the risks associated with business loan investments and other financial instruments. It is our goal to manage these risks through careful strategy and diligent oversight, but it is important for investors to perform their own due diligence and fully understand the risks involved.
This disclosure does not encompass all the risks associated with investing and is meant for informational purposes only. Investors should conduct their own research or consult with a financial advisor before making investment decisions.
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