Cardiff Acquisition Overview

Acquisition Criteria

 

Cardiff acquisition evaluations begin with the 3 M’s: Market, Management and Margin. 

  • Market – We evaluate the market of each company’s product or service, positioning, penetration, barriers to entry and maturity. 
  • Management – Great management. Hands on, accomplished, driven. Growth oriented. 
  • Margin –  Current results.  Opportunities to improve and create Cardiff effect. 

It is very important that our relationship with each acquisition be one of respect, trust and mutual benefit. It is also very important that all investors are protected, therefore all acquisitions must meet the following requirements:

 – Profitable
 – In Business 5+ Years
 – Moderate to Low Debt
 – Great Management

Acquisition Process

 

Once the potential acquisition meets the above requirements, the first step in our process is to enter the valuation stage of the business and its assets. This leads to discussions of value and deal structure. The next step would be the issuance of a LOI (Letter of Intent) to broadly outline the key elements of a transaction. Once the LOI is in place, we enter the due diligence period which leads to drawing up a comprehensive forward acquisition agreement, to be agreed to, and then executed. This is followed by required audits and finally Preferred shares are issued under IRS Section 368(a)1(B) guidelines.

A Tax-Free Exchange occurs when the transaction involves a STOCK FOR STOCK Acquisition. 

According to the IRS Section 368(a)1(B), there is a process in which all parties involved in the acquisition are free from reporting a Capital Gain or a Capital Loss, thus being a Tax-Free Exchange. This process requires that Cardiff exchange its “qualified” Preferred Stock that is voting for control of the new acquired company. Cardiff acquires 100% of the “vote and value” of the company’s stock. Each company is awarded an exclusive series of Preferred Stock. Cardiff authorizes and issues this Preferred Stock to the new company thus completing the acquisition. In addition, Cardiff authorizes a sub-class in the same exclusive series of Preferred Stock that is non-voting for the purpose of raising working capital. Once the Company becomes a wholly-owned subsidiary, they will receive their own class of Preferred Stock. This preferred class becomes their platform to raise the necessary capital to expand their business. 

All acquisitions are added to the Cardiff consolidated balance sheet creating tangible value for everyone. Acquisition assets are not co-mingled, and operational autonomy is maintained.

Acquisition Examples

 

Romeo’s Pizza:
Established in Paterson, New Jersey in 1945. Romeo’s NY Pizza makes authentic NY pizza, making their dough in-house, using the finest cheese and ingredients available. No soggy crust or watered down pizza sauce, only the best. They also serve Chicken Wings, Philly Steak Subs, Calzones and Salads. Romeo’s NY Pizza is currently in negotiations to open a “quick serve” Romeo’s location in the Hartfield International Airport in Atlanta.

Edge View Properties:
Edge View Properties consists of 30 prime acres of land; 23.5 acres zoned MDR (Medium Density Residential) with 12 lots already platted and 48 lots zoned HDR (High Density Residential), 4 acres of dedicated river front property zoned for recreation on the Salmon River, Idaho’s premier whitewater river and 2.5 acres zoned for commercial use. Current plans call for a Storage Facility and RV/Cabin timeshare units.

Affordable Housing Initiative (AHI):
AHI is located in Maryville, Tennessee. AHI acquires both mobile homes and mobile home parks offering an alternative to traditional housing. Their mobile home business is a popular option for a homeowner wishing to avoid large down payments, expensive maintenance costs, monthly mortgage payments and high property taxes. 

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