arcee-ai/sec-data-full · Datasets at Hugging Face

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businesses also depends on the respective management teams of those businesses because we intend to operate our businesses on a stand-alone
basis, primarily relying on their existing management teams for day-to-day operations. Consequently, their operational success, as well
as the success of any organic growth strategy, will be dependent on the continuing efforts of the management teams of our businesses.
We will seek to provide these individuals with equity incentives and to have employment agreements with certain persons we have identified
as key to their businesses. However, these measures may not prevent these individuals from leaving their employment. The loss of services
of one or more of these individuals may materially adversely affect our financial condition, business and results of operations. We may experience difficulty as we evaluate,
acquire and integrate businesses that we may acquire, which could result in drains on our resources, including the attention of our management,
and disruptions of our on-going business. We acquire small businesses in various industries.
Generally, because such businesses are privately held, we may experience difficulty in evaluating potential target businesses as much
of the information concerning these businesses is not publicly available. Therefore, our estimates and assumptions used to evaluate the
operations, management and market risks with respect to potential target businesses may be subject to various risks and uncertainties.
Further, the time and costs associated with identifying and evaluating potential target businesses and their industries may cause a substantial
drain on our resources and may divert our management team’s attention away from the operations of our businesses for significant
periods of time. 41 In addition, we may have difficulty effectively
integrating and managing acquisitions. The management or improvement of businesses we acquire may be hindered by a number of factors,
including limitations in the standards, controls, procedures and policies implemented in connection with such acquisitions. Further, the
management of an acquired business may involve a substantial reorganization of the business’ operations resulting in the loss of
employees and customers or the disruption of our ongoing businesses. We may experience greater than expected costs or difficulties relating
to an acquisition, in which case, we might not achieve the anticipated returns from any particular acquisition. We face competition for businesses that
fit our acquisition strategy and, therefore, we may have to acquire targets at sub-optimal prices or, alternatively, forego certain acquisition
opportunities. We have been formed to acquire and manage small
businesses. In pursuing such acquisitions, we expect to face strong competition from a wide range of other potential purchasers. Although
the pool of potential purchasers for such businesses is typically smaller than for larger businesses, those potential purchasers can be
aggressive in their approach to acquiring such businesses. Furthermore, we expect that we may need to use third-party financing in order
to fund some or all of these potential acquisitions, thereby increasing our acquisition costs. To the extent that other potential purchasers
do not need to obtain third-party financing or are able to obtain such financing on more favorable terms, they may be in a position to
be more aggressive with their acquisition proposals. As a result, in order to be competitive, our acquisition proposals may need to be
aggressively priced, including at price levels that exceed what we originally determined to be fair or appropriate. Alternatively, we
may determine that we cannot pursue on a cost-effective basis what would otherwise be an attractive acquisition opportunity. We may not be able to successfully fund
acquisitions due to the unavailability of debt or equity financing on acceptable terms, which could impede the implementation of our acquisition
strategy. In order to make acquisitions, we intend to raise
capital primarily through debt financing, primarily at our operating company level, additional equity offerings, the sale of equity or
assets of our businesses, offering equity in our company or our businesses to the sellers of target businesses or by undertaking a combination
of any of the above. Because the timing and size of acquisitions cannot be readily predicted, we may need to be able to obtain funding
on short notice to benefit fully from attractive acquisition opportunities. Such funding may not be available on acceptable terms. In
addition, the level of our indebtedness may impact our ability to borrow at our company level. The sale of additional shares of any class
of equity will also be subject to market conditions and investor demand for such shares at prices that may not be in the best interest
of our shareholders. These risks may materially adversely affect our ability to pursue our acquisition strategy. We may change our management and acquisition
strategies without the consent of our shareholders, which may result in a determination by us to pursue riskier business activities. We may change our strategy at any time without
the consent of our shareholders, which may result in our acquiring businesses or assets that are different from, and possibly riskier
than, the strategy described in this report. A change in our strategy may increase our exposure to interest rate and currency fluctuations,
subject us to regulation under the Investment Company Act of 1940, as amended, which we refer to as the Investment Company Act, or subject
us to other risks and uncertainties that affect our operations and profitability. If we are unable to generate sufficient
cash flow from the anticipated dividends and interest payments that we expect to receive from our businesses, we may not be able to make
distributions to our shareholders. Our primary business is the holding and managing
of controlling interests our operating businesses. Therefore, we will be dependent upon the ability of our businesses to generate cash
flows and, in turn, distribute cash to us in the form of interest and principal payments on indebtedness and distributions on equity to
enable us, first, to satisfy our financial obligations and, second, to make distributions to our common shareholders. The ability of our
businesses to make payments to us may also be subject to limitations under laws of the jurisdictions in which they are incorporated or
organized. If, as a consequence of these various restrictions or otherwise, we are unable to generate sufficient cash flow from our businesses,
we may not be able to declare, or may have to delay or cancel payment of, distributions to our common shareholders. In addition, the put price and profit
allocation will be payment obligations and, as a result, will be senior in right to the payment of any distributions to our
shareholders. Further, we are required to make a profit allocation to our manager upon satisfaction of applicable conditions to
payment. See Item 1 “ Business—Our Manager—Our Manager as an Equity Holder ” for more information about
our manager’s put right and profit allocation. 42 Our loans with third parties contain certain
terms that could materially adversely affect our financial condition. We and our subsidiaries are parties to
certain loans with third parties, which are secured by the assets of our subsidiaries. The loans agreements contain customary
representations, warranties and affirmative and negative financial and other covenants. If an event of default were to occur under
any of these loans, the lender thereto may pursue all remedies available to it, including declaring the obligations under its
respective loan immediately due and payable, which could materially adversely affect our financial condition. See Item 7
“ Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital
Resources ” for further discussion regarding our borrowing activities. In the future, we may seek to enter into
other credit facilities to help fund our acquisition capital and working capital needs. These credit facilities may expose us to additional
risks associated with leverage and may inhibit our operating flexibility and reduce cash flow available for payment of distributions to
our shareholders. We may seek to enter into other credit facilities
with third-party lenders to help fund our acquisitions. Such credit facilities will likely require us to pay a commitment fee on the undrawn
amount and will likely contain a number of affirmative and restrictive covenants. If we violate any such covenants, our lenders
could accelerate the maturity of any debt outstanding and we may be prohibited from making any distributions to our shareholders. Such
debt may be secured by our assets, including the stock we may own in businesses that we acquire and the rights we have under intercompany
loan agreements that we may enter into with our businesses. Our ability to meet our debt service obligations may be affected by events
beyond our control and will depend primarily upon cash produced by businesses that we currently manage and may acquire in the future and
distributed or paid to us. Any failure to comply with the terms of our indebtedness may have a material adverse effect on our financial
condition. In addition, we expect that such credit facilities
will bear interest at floating rates which will generally change as interest rates change. We will bear the risk that the rates that we
are charged by our lenders will increase faster than we can grow the cash flow from our businesses or businesses that we may acquire in
the future, which could reduce profitability, materially adversely affect our ability to service our debt, cause us to breach covenants
contained in our third-party credit facilities and reduce cash flow available for distribution. We may engage in a business transaction
with one or more target businesses that have relationships with our executive officers, our directors, our manager, our manager’s
employees or our manager’s operating partners, or any of their respective affiliates, which may create or present conflicts of interest. We may decide to engage in a business transaction
with one or more target businesses with which our executive officers, our directors, our manager, our manager’s employees, our manager’s
operating partners, or any of their respective affiliates, have a relationship, which may create or present conflicts of interest. Regardless
of whether we obtain a fairness opinion from an independent investment banking firm with respect to such a transaction, conflicts of interest
may still exist with respect to a particular acquisition and, as a result, the terms of the acquisition of a target business may not be
as advantageous to our shareholders as it would have been absent any conflicts of interest. The operational objectives and business
plans of our businesses may conflict with our operational and business objectives or with the plans and objective of another business
we own and operate. Our businesses operate in different industries
and face different risks and opportunities depending on market and economic conditions in their respective industries and regions. A business’
operational objectives and business plans may not be similar to our objectives and plans or the objectives and plans of another business
that we own and operate. This could create competing demands for resources, such as management attention and funding needed for operations
or acquisitions, in the future. If, in the future, we cease to control and
operate our businesses or other businesses that we acquire in the future or engage in certain other activities, we may be deemed to be
an investment company under the Investment Company Act. We have the ability to make investments in businesses
that we will not operate or control. If we make significant investments in businesses that we do not operate or control, or that we cease
to operate or control, or if we commence certain investment-related activities, we may be deemed to be an investment company under the
Investment Company Act. Our decision to sell a business will be based upon financial, operating and other considerations rather than a
plan to complete a sale of a business within any specific time frame. If we were deemed to be an investment company, we would either have
to register as an investment company under the Investment Company Act, obtain exemptive relief from the SEC or modify our investments
or organizational structure or our contract rights to fall outside the definition of an investment company. Registering as an investment
company could, among other things, materially adversely affect our financial condition, business and results of operations, materially
limit our ability to borrow funds or engage in other transactions involving leverage and require us to add directors who are independent

businesses also depends on the respective management teams of those businesses because we intend to operate our businesses on a stand-alone

basis, primarily relying on their existing management teams for day-to-day operations. Consequently, their operational success, as well

as the success of any organic growth strategy, will be dependent on the continuing efforts of the management teams of our businesses.

We will seek to provide these individuals with equity incentives and to have employment agreements with certain persons we have identified

as key to their businesses. However, these measures may not prevent these individuals from leaving their employment. The loss of services

of one or more of these individuals may materially adversely affect our financial condition, business and results of operations. We may experience difficulty as we evaluate,

acquire and integrate businesses that we may acquire, which could result in drains on our resources, including the attention of our management,

and disruptions of our on-going business. We acquire small businesses in various industries.

Generally, because such businesses are privately held, we may experience difficulty in evaluating potential target businesses as much

of the information concerning these businesses is not publicly available. Therefore, our estimates and assumptions used to evaluate the

operations, management and market risks with respect to potential target businesses may be subject to various risks and uncertainties.

Further, the time and costs associated with identifying and evaluating potential target businesses and their industries may cause a substantial

drain on our resources and may divert our management team’s attention away from the operations of our businesses for significant

periods of time. 41 In addition, we may have difficulty effectively

integrating and managing acquisitions. The management or improvement of businesses we acquire may be hindered by a number of factors,

including limitations in the standards, controls, procedures and policies implemented in connection with such acquisitions. Further, the

management of an acquired business may involve a substantial reorganization of the business’ operations resulting in the loss of

employees and customers or the disruption of our ongoing businesses. We may experience greater than expected costs or difficulties relating

to an acquisition, in which case, we might not achieve the anticipated returns from any particular acquisition. We face competition for businesses that

fit our acquisition strategy and, therefore, we may have to acquire targets at sub-optimal prices or, alternatively, forego certain acquisition

opportunities. We have been formed to acquire and manage small

businesses. In pursuing such acquisitions, we expect to face strong competition from a wide range of other potential purchasers. Although

the pool of potential purchasers for such businesses is typically smaller than for larger businesses, those potential purchasers can be

aggressive in their approach to acquiring such businesses. Furthermore, we expect that we may need to use third-party financing in order

to fund some or all of these potential acquisitions, thereby increasing our acquisition costs. To the extent that other potential purchasers

do not need to obtain third-party financing or are able to obtain such financing on more favorable terms, they may be in a position to

be more aggressive with their acquisition proposals. As a result, in order to be competitive, our acquisition proposals may need to be

aggressively priced, including at price levels that exceed what we originally determined to be fair or appropriate. Alternatively, we

may determine that we cannot pursue on a cost-effective basis what would otherwise be an attractive acquisition opportunity. We may not be able to successfully fund

acquisitions due to the unavailability of debt or equity financing on acceptable terms, which could impede the implementation of our acquisition

strategy. In order to make acquisitions, we intend to raise

capital primarily through debt financing, primarily at our operating company level, additional equity offerings, the sale of equity or

assets of our businesses, offering equity in our company or our businesses to the sellers of target businesses or by undertaking a combination

of any of the above. Because the timing and size of acquisitions cannot be readily predicted, we may need to be able to obtain funding

on short notice to benefit fully from attractive acquisition opportunities. Such funding may not be available on acceptable terms. In

addition, the level of our indebtedness may impact our ability to borrow at our company level. The sale of additional shares of any class

of equity will also be subject to market conditions and investor demand for such shares at prices that may not be in the best interest

of our shareholders. These risks may materially adversely affect our ability to pursue our acquisition strategy. We may change our management and acquisition

strategies without the consent of our shareholders, which may result in a determination by us to pursue riskier business activities. We may change our strategy at any time without

the consent of our shareholders, which may result in our acquiring businesses or assets that are different from, and possibly riskier

than, the strategy described in this report. A change in our strategy may increase our exposure to interest rate and currency fluctuations,

subject us to regulation under the Investment Company Act of 1940, as amended, which we refer to as the Investment Company Act, or subject

us to other risks and uncertainties that affect our operations and profitability. If we are unable to generate sufficient

cash flow from the anticipated dividends and interest payments that we expect to receive from our businesses, we may not be able to make

distributions to our shareholders. Our primary business is the holding and managing

of controlling interests our operating businesses. Therefore, we will be dependent upon the ability of our businesses to generate cash

flows and, in turn, distribute cash to us in the form of interest and principal payments on indebtedness and distributions on equity to

enable us, first, to satisfy our financial obligations and, second, to make distributions to our common shareholders. The ability of our

businesses to make payments to us may also be subject to limitations under laws of the jurisdictions in which they are incorporated or

organized. If, as a consequence of these various restrictions or otherwise, we are unable to generate sufficient cash flow from our businesses,

we may not be able to declare, or may have to delay or cancel payment of, distributions to our common shareholders. In addition, the put price and profit

allocation will be payment obligations and, as a result, will be senior in right to the payment of any distributions to our

shareholders. Further, we are required to make a profit allocation to our manager upon satisfaction of applicable conditions to

payment. See Item 1 “ Business—Our Manager—Our Manager as an Equity Holder ” for more information about

our manager’s put right and profit allocation. 42 Our loans with third parties contain certain

terms that could materially adversely affect our financial condition. We and our subsidiaries are parties to

certain loans with third parties, which are secured by the assets of our subsidiaries. The loans agreements contain customary

representations, warranties and affirmative and negative financial and other covenants. If an event of default were to occur under

any of these loans, the lender thereto may pursue all remedies available to it, including declaring the obligations under its

respective loan immediately due and payable, which could materially adversely affect our financial condition. See Item 7

“ Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital

Resources ” for further discussion regarding our borrowing activities. In the future, we may seek to enter into

other credit facilities to help fund our acquisition capital and working capital needs. These credit facilities may expose us to additional

risks associated with leverage and may inhibit our operating flexibility and reduce cash flow available for payment of distributions to

our shareholders. We may seek to enter into other credit facilities

with third-party lenders to help fund our acquisitions. Such credit facilities will likely require us to pay a commitment fee on the undrawn

amount and will likely contain a number of affirmative and restrictive covenants. If we violate any such covenants, our lenders

could accelerate the maturity of any debt outstanding and we may be prohibited from making any distributions to our shareholders. Such

debt may be secured by our assets, including the stock we may own in businesses that we acquire and the rights we have under intercompany

loan agreements that we may enter into with our businesses. Our ability to meet our debt service obligations may be affected by events

beyond our control and will depend primarily upon cash produced by businesses that we currently manage and may acquire in the future and

distributed or paid to us. Any failure to comply with the terms of our indebtedness may have a material adverse effect on our financial

condition. In addition, we expect that such credit facilities

will bear interest at floating rates which will generally change as interest rates change. We will bear the risk that the rates that we

are charged by our lenders will increase faster than we can grow the cash flow from our businesses or businesses that we may acquire in

the future, which could reduce profitability, materially adversely affect our ability to service our debt, cause us to breach covenants

contained in our third-party credit facilities and reduce cash flow available for distribution. We may engage in a business transaction

with one or more target businesses that have relationships with our executive officers, our directors, our manager, our manager’s

employees or our manager’s operating partners, or any of their respective affiliates, which may create or present conflicts of interest. We may decide to engage in a business transaction

with one or more target businesses with which our executive officers, our directors, our manager, our manager’s employees, our manager’s

operating partners, or any of their respective affiliates, have a relationship, which may create or present conflicts of interest. Regardless

of whether we obtain a fairness opinion from an independent investment banking firm with respect to such a transaction, conflicts of interest

may still exist with respect to a particular acquisition and, as a result, the terms of the acquisition of a target business may not be

as advantageous to our shareholders as it would have been absent any conflicts of interest. The operational objectives and business

plans of our businesses may conflict with our operational and business objectives or with the plans and objective of another business

we own and operate. Our businesses operate in different industries

and face different risks and opportunities depending on market and economic conditions in their respective industries and regions. A business’

operational objectives and business plans may not be similar to our objectives and plans or the objectives and plans of another business

that we own and operate. This could create competing demands for resources, such as management attention and funding needed for operations

or acquisitions, in the future. If, in the future, we cease to control and

operate our businesses or other businesses that we acquire in the future or engage in certain other activities, we may be deemed to be

an investment company under the Investment Company Act. We have the ability to make investments in businesses

that we will not operate or control. If we make significant investments in businesses that we do not operate or control, or that we cease

to operate or control, or if we commence certain investment-related activities, we may be deemed to be an investment company under the

Investment Company Act. Our decision to sell a business will be based upon financial, operating and other considerations rather than a

plan to complete a sale of a business within any specific time frame. If we were deemed to be an investment company, we would either have

to register as an investment company under the Investment Company Act, obtain exemptive relief from the SEC or modify our investments

or organizational structure or our contract rights to fall outside the definition of an investment company. Registering as an investment

company could, among other things, materially adversely affect our financial condition, business and results of operations, materially

limit our ability to borrow funds or engage in other transactions involving leverage and require us to add directors who are independent