Here is a look behind the curtain at what we're building.
No time for the full video? We’ve got you covered.
Skip straight to the 2-minute breakdown below.
Also Coming Up: In a few weeks, I’ll be hosting a live session with our incoming cohort of interns. We will be building out live valuation models (Comparable Companies, Precedent Transactions, and DCFs) and breaking down case studies in real time. Stay tuned.
And feel free to start your due diligence by…
From Fund to HoldCo
This project marks the culmination of a decade in the trenches. After starting as an intern in 2014 and moving up to manage a family office portfolio, handle full due diligence at an M&A boutique, and run a Spanish hedge fund with an audited 16% annualized return, everything has converged onto this moment.
We are expanding. We started with 13 partners in the fund; today, we are a community of over 35+ committed backers. The ultimate roadmap? Hit 100 stakeholders and take this entity public via a reverse merger.
Note: This breakdown is recorded rather than live-streamed to protect the privacy of an active, confidential transaction.
Capital Allocation Engines
We have structured a UK-based operating company (OpCo) designed to acquire 100% of unsexy, cash-generative micro-caps and manage them from a centralized head office.
This centralized framework will handle all heavy lifting, including due diligence, legal, auditing, HR, etc. Unlocking operational efficiencies, but most importantly, efficiently allocating capital.
Our Reallocation Strategy
Instead of hitting capacity constraints, we will dynamically shift capital across independent, decentralized engines based on where the best valuations sit:
Engine #1 (Private Ops): Sourcing private small businesses at rock-bottom multiples to compound capital at 20% to 25%.
Engine #2 (Public Markets): Opportunistic allocations in listed equities and monetary funds when public markets misprice assets.
Engine #3 (The Accelerator): Unlocked at £30m. Led by a specialized 4-man team, this engine will take 20% stakes in tech companies doing ~$1m in recurring revenue and scale them to $3m within 12-14 months.
Engine #n: There are a few additional teams we’d love to set up once we exceed £50m. More on these once we get there.
Key Terms & Structure
Share Classes: Divided into A (voting) and B (non-voting) shares for maximum early-stage flexibility, merging fully upon public listing.
The Window: All core legal architecture (Shareholders & Subscription Agreements) is finalized. The initial capital subscription window officially runs from June 1st to July 31st.
Leadership & Alignment
Joining me on the board are two powerhouse M&A corporate veterans with over 10 years of experience across the Big Four and Spain’s top advisory firms.
They are actively aiding the due diligence on our pipeline and will transition to full-time, autonomous management of Engine 1 once we cross 5 to 6 portfolio companies.
Anchor Deal: Elderly Care Facility
Our first proprietary deal is a textbook cash cow. A regional leader in the elderly care space operating at near 100% capacity.
Rough Numbers: Generating roughly €2.8m in revenue with stellar 29% EBIT margins (conservatively modeled at 20%), zero debt, and zero required organic CAPEX.
Arbitrage: We are buying this business at a low single-digit multiple of free cash flow via a structured earn-out and vendor financing, making it largely self-funding. Because we mark our book at a constant, conservative 8x free cash flow, this triggers an immediate, near triple-digit paper gain upon closing.
The .gov Moat: Massive regulatory barriers to entry (strict square-meter mandates, staffing ratios, and union hurdles) mean building a competitor from scratch is a bureaucratic nightmare. Meanwhile, revenues are effectively guaranteed, tied directly to inflation-protected public pensions.
Next Steps: The founding CEO is locked into a 5-year contract. He will spend the first 2 years mentoring a younger, internal successor, and the final 3 years acting as our regional expert to spearhead accelerated due diligence on additional sector-related acquisitions.
Next Steps
To perfectly balance our public and private pipelines, our current target is an initial £10 million capital raise.
Our framework is fully visible across two years of granular, weekly performance updates dating back to June 2024, focusing heavily on circle-of-competence sectors: oil & gas, asset-backed healthcare, and cyber defense.
If you have any questions or are ready to explore joining the holding company, let’s set up a time to talk.
alejandro@hermit.es
See you next Wednesday!
- Alejandro Yela — CEO, Hermit Ventures Ltd
