MINORITY RIGHTS

Q: What rights does North River Group require as a minority shareholder?
“Tag along” rights in any sale to a third party.
Agreement with majority shareholder on any company debt increases / executive compensation increases above a certain threshold.
A “put right” (ability to sell our shares back to company) exercisable typically at the earliest of 5 years from closing. While we would never make an investment with the intent to exercise such a put right, we do require such a liquidity mechanism as a non-controlling minority shareholder. The following provisions make this put right more palatable to the business owner:
Valuation: typically set at the same time as our original investment at a “discount” to our original investment “multiple” of earnings.
Payment: once notified of our intent to exercise the put right, the business owner has the option of either: i) opting to sell 100% of the company or ii) paying out the put right valuation over a period of 3 years.