The terms of a royalty payment are tied to your revenue, (typically 1% –5%), and unlike equity, our upside is capped, so you reap the rewards of your hard work.
Temperance Capital is a services and investment company that helps to finance the retirement and transitions of small and medium sized business owners. We provide consulting and capital to facilitate the purchase of these companies.
We don’t buy companies directly, and we also don’t provide term loans. Instead we use a preferred royalty structure that is paid for from the revenue generated in the businesses.
The investments we facilitate range from $5 million to $20 million, although investments outside of this range might be considered.
We prefer to work with low volatility companies, in stable, established industries that generate a minimum of $1 million in earnings per year. Stable, consistent, you might even call them boring. We call them predictable.
What is a Royalty?
Royalty financing has been used extensively in mining, oil & gas and the pharmaceutical industry for decades. Now, this unique form of financing is available to small and medium sized businesses.
A royalty is an investment into a company in exchange for a return based on a small percentage (typically 1%- 5%) of revenue. The royalty payment is adjusted on an annual basis to match the annual change in revenue.
WHY CONSIDER A ROYALTY?
A royalty is investment capital for your company which combines the best characteristics of debt and equity.
A Royalty is a non dilutive solution that let’s you keep 100% ownership of your company.
A royalty investment is passive, non-voting, and non-disruptive. We have no requirements for a board seat or other intrusive restrictions. You built your company and we believe you know best how to keep building it.
A royalty can be a permanent source of capital with no obligation for repayment, or, can be repaid at your option. You are in control.
Whether you need growth capital, project financing, acquisition financing, or capital to support a generational transfer or a partner/management/investor buyout, royalty capital has few restrictions and can usually be arranged much faster than equity or debt alternatives.
Unlike other sources of capital, we do not require an exit or principle repayment, so we let you run your business as you want without a looming deadline for our liquidity.
When you grow, we grow, if you stumble, we feel it as well. Our royalty payment is tied to your revenue, so unlike debt with a fixed payment, if your revenue declines, so does the royalty payment.