Asset Management
Pilot Fund — Headway Communities
The Opportunity
A historic wave of small and midsize business (SME) ownership transfers is approaching amid ongoing uncertainty in U.S. markets. With yields and capitalization rates compressing across equities, bonds, and real estate, alternative investments are a logical area to evaluate.
Home and commercial services are foundational to local economies and benefit from resilient, non-discretionary demand built over decades.
In New England, more than half of SME owners are 55+, and many plan to sell in the coming years—expanding supply and potentially putting downward pressure on acquisition prices.
Headway Communities — Fund Overview
- Status:Raising Capital
- LP/GP Split:82% / 18%
- Management Fee:0.5%
- Equity Contribution:$11–25M
- Acquisition Value:$14-25M (aggregate)
- Objective: Acquire mature, stable, cash-flowing SMEs and actively manage the day-to-day
- Reinvestment Angle: Internal AI research & trading platform supports reinvestment
- Acquisitions: 2 Total with synergies or significant discout realtive to present value of future cashflows
- Acquisitions Time Frame: 1-3 years
- Target Markets: Northeast U.S. (NY, MA, VT, CT, NJ, VA,PA,NC) willing to expand for highly discounted opportunities (> 25% annual capitalization)
- Targets: Service businesses Companies with Non-discretionary cash flows, a local pressence
- Screening: ≥25% cap rate, 5+ yrs of relatively stable inflation adjusted cashflows and 15+ years of operating; assess brand/culture/key personnel. Ideal seller is a retiree without succession plan.
Overview & Potential Financial Metrics
- Equity Contribution$11–25M
- Target Combined Cashflows$4–8M
- DividendsPreferred: 10% • Annual: 18%
- Holding Period10 YRS
Projections are illustrative and not guarantees. Actual results depend on acquisitions, operations, market conditions, and other risks.
Potential/Sourced Acquisitions
| On-Market (with price) | Report Download | |
|---|---|---|
| Structural Restoration Firm(VA) | CF ~$2.1M · Ask ~$6.0M · Cap ~36% · Established - NA | |
| Underground Utility(NY) | CF ~$5.0M · Ask ~$20.0M · Cap ~25% · Established - NA | |
| Asphalt Services (CT) | CF ~$1.5M · Ask ~$7.0M · Cap ~21% · Established ~ 1995 | |
| Landscaping | CF ~$2.4M, · Ask ~$9.0M · Cap ~27% · Established ~ 1994 | SME Report |
| Industrial Construction(PA) | CF ~$5.1M · Ask ~$16.3M · Cap ~31% · Established - 1975 | SME Report |
| On-Market (price TBD) | Report Download | |
|---|---|---|
| Commercial HVAC(PA) | CF ~$4.47M · Established - NA | SME Report |
| Specialty Pool Contractor(PA) | CF ~$3.25M · Established - NA | |
| Machine Shop (MA) | CF ~$2.34M · Established - 1980 | SME Report |
| Disaster Remediation (CT) | CF ~$1.82M · Established - NA | |
Illustrative; subject to diligence, availability, and final underwriting.
How We’re Different
- Low Fees: Our 0.5% management fee is to ensure incentive alignment with investors. Enforcing us to focus on maximizing share-holder value.
- Diversification: Portion of cash flows re-invested to improve profits, diversify risks, and provide investors exposure to global markets.
- Management: Hands-on operators involved in day-to-day business — Investment is structured as a operator led holding company.
Note: terms subject to final docs; not an offer of securities.
Strategy & Target Industries
Strategy
| Acquire 2–3 SMEs | Licensed trades & essential services with recurring revenue, strong client retention, and long-history of success. |
| Active management | Principals remain internal employees focused on continuity, culture, and measured operational improvements. |
| Strategic re-investment | Allocate a portion of profits to diversified strategies to enhance ROI and lower portfolio risk over time. |
| Internal Promotions/Partners | After management sucessfully integrates into the SMEs internal team, evaluation of key personnel for partnering and overtaking some responsibilities of the holding company managers |
Priority Sectors & Investment Themes
| Electrical Contractors | Licensed trade businesses providing installation, service, and upgrades for power and controls; benefit from building electrification, code-driven upgrades, and recurring maintenance contracts. |
| General Contractors | Light commercial and infrastructure contractors focused on repair, retrofit, and small-capex projects for municipalities, HOAs, and commercial owners; work is typically awarded on multi-year programs with stable backlogs. |
| HVAC / Plumbing Contractors | Providers of essential heating, cooling, ventilation, and plumbing services; non-discretionary replacement and service cycles, with demand reinforced by comfort, safety, and energy-efficiency regulations. |
| Home Services | Route-based and seasonal services for residential and small-commercial properties (e.g., landscaping, snow, pools, tree care) sold on recurring contracts, creating sticky customer relationships and predictable cash flow. |
| Specialty / Contract Manufacturing | Niche manufacturers supplying components and assemblies to primarily domestic customers; revenue is driven by long-term relationships, repeat orders, and scheduled production backlogs. |
Timeline (First 2–3 Years)
- Pre-Acquisition 1 (0–6 mo): Screen candidates with a focus on businesses with 3-5 Million USD in CF; build pipeline; collect financials; preliminary valuation; prep LOIs; line up Quality of Earnings(after internal audit)/legal/insurance.
- Acquisition 1 (6–9 mo): Close and begin active management; stabilize transition; implement 30/60/90 day plans; cash & payroll controls; customer/vendor communications; compliance checks.
- Stabilization 1 (9–18 mo): Optimize ops; identify and mobilize on potential value-add channels.
- Pre-Acquisition 2 (9–18 mo): Identify a smaller second company, with 1-3 Million USD in CF; clearly identify synergies if there are any; go through the due diligence process; Create company integration plan into the holding company(Headway communities)
- Acquisition 2 (18–24 mo): Close and integrate shared services (Accounting/HR/IT); dual-operation amongst management, with the primary opertor established day one; as most of the discounted companies available for sale are retirees without succession planes, one of our internal managers will either be the principal manager(i.e. CEO), or number 2 manager(i.e. CAO, Mnanging Director)
- Growth & Re-Investment (24–36 mo): Partially delegate internal management to interanl employees; continue strategy R&D and reinvestment; automate reporting.
Screening
- Capitalization Rate: Target ≥ 25% ROTA(return on total assets) with ≥ 10 years of stable inflation adjusted cash flows.
- Leverage: Target companies who historically have been less reliant on debt to finance operations.
- Cash-Flow & Liquidity: Evaluate distinctions between Free-Cash Flows and EBIT; Watch A/R cycles and client leniency (can mask liquidity risk).
- Client Retention: Low churn on recurring contracts; diversified book i.e. the smaller the contract/trasactions the larger the required customer base
- Long-Term Assets: High level of employed capital; Land/equipment with limited depreciation; assets that provide barriers to entry and stabilize operations.
- Step 2 — Intangibles: Brand strength; key-client mapping; culture, team chemistry; workforce systems & efficiency; personnel motivation. Additionally does the company function well with generalist managers or require specialist managers.
- Step 3 — Value-Add: Where can we cut cost, Increase efficiency, Pursue practical business development? Examples of this could be georaphical expansion to near towns, investment into technology or equipment, that will boost margins, and diversifyication of marketing to target new demographics.
Re-Investment Strategy / Software Development
| Long-Term Global Portfolio | Emerging Market focused strategy, with reinvestment guided by macro indexes and long-term economic growth forecast. and AI-based stock ranking/allocation. Focused on companies/economies with with sound accounting standards(GAAP) and limited earnings managmenet. |
| Traditional + Quantitative | Prioritize firms with prudent balance sheets (moderate leverage), durable free-cash-flow generation, and credible, organic growth paths—ideally operating in markets with stable or appreciating currencies. Emphasize value-oriented stocks and broad indexes that trade with ample liquidity and sufficient market capitalization to reduce execution, volatility, and single-name risk, while avoiding thinly traded or speculative micro-caps. |
| Opportunistic/Risk-Hedging | 0–10% to derivatives for hedging main long-portfolio risk or take advantage of market timing; additionally allocations to other alternative trading strategies i.e. HFT, commodities, crypto. |
| Platform | Web-based system for testing, modifying, and deploying AI + more traditional trading strategies. Long-term goal of raising institutional capital, or opening to retail investors, with our niche being the modern quantitative approach combined with a focus on global markets. |