MCA Investment for your Family Office

October 21, 2023

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As a family office, your primary concern is the preservation of wealth. You need to protect the capital of your clients to ensure legacy plans can come to fruition, charitable giving and philanthropy goals are met, and tax efficiency is achieved.

Merchant Cash Advances (MCAs) can be an especially good fit for family offices that are looking for trustworthiness, efficiency, and expertise in the management of their client’s portfolios.

This article will give an overview of MCA investments and offer clarity on how they might fit into a family office portfolio. Whether you’re familiar with MCAs or just getting started, this guide will provide the essential insights every family office needs to know.

Digital rendering of balance sheet, credit card, and coins for ‘Decoding MCA Investment Benefits: What Every Family Office Needs to Know’
Protection of capital if a family office’s first consideration. Photo by crazy motions.

What is an MCA?

Merchant Cash Advances (MCAs) offer a distinctive approach to growth, especially attractive as an investment for family offices.

At its core, an MCA provides businesses with a lump-sum payment in exchange for a share of future sales. This structure contrasts with traditional loans where fixed monthly payments are mandated.

What sets MCAs apart as a viable investment for family offices is their potential to yield attractive returns in a low-correlation alternative asset class for a broader overall risk spread.

Our own results speak for themselves: Our Q2 reports show that both our short-term 10% note and our mid-term 12% note achieved 100% of their target ROI for investors.

You can read a step-by-step breakdown of exactly how an MCA works here.

Digital rendering of a stack of coins for ‘Decoding MCA Investment Benefits: What Every Family Office Needs to Know’
MCAs offer unique advantages to family offices. Photo by crazy motions.

Key Benefits of MCA Investments

MCAs stand out as an attractive addition to client portfolios for family offices. Here’s why:

Predictable Returns: MCAs offer a potential addition to stable cash flow investments. The payback is tied to daily business sales, which means that family offices can also take advantage of compound velocity. Our 10% note pays out monthly, and our 12% note pays out quarterly.

Compound Velocity: Merchant cash advances are effectively a supercharged dividend reinvestment program because investors are getting capital returned to them every day that they can quickly put back out into new deals at a similar return.

Low Correlation with Stock Markets: Unlike traditional equities, MCAs offer a low correlation with stock market volatilities. This characteristic bolsters portfolio stability, especially crucial for family offices seeking resilience in the face of volatile micro and macroeconomic shifts.

High Potential Returns: When juxtaposed with traditional fixed-income sources, MCAs often present a more lucrative ROI. This elevated return potential underscores their appeal as a strategic component in family office portfolios.

MCAs: An Ideal Investment for Family Offices

Family offices constantly seek innovative avenues to maximize returns and manage risk. Given this, Merchant Cash Advances emerge as an alternative asset to seriously consider for family office investments. Here’s why:

Portfolio Diversification & Asset Allocation: MCAs, distinct from conventional assets, enrich a family office’s portfolio, ensuring a strategic spread of investments. This diversification not only boosts potential returns but also cushions against market uncertainties.

Risks vs. Rewards Tailored for Family Offices: While all investments come with inherent risks, MCAs offer a unique balance. Their returns combined with minimized market correlation make them appealing to family offices looking for stable but potentially lucrative additions to their portfolios.

The 5% Exposure Cap – Safeguarding Interests: Our 5% exposure cap feature ensures that a limited portion of the family office’s investment is exposed to a single MCA. This means you get both diversification and enhanced protection of your client’s capital.

Discover the MCA Difference

If you want top-tier investment for your family office, get in touch with our sales team and enjoy a no-obligation demo.

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