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Lynx Equity Income Trust

Investor Eligibility : Registered Plan Eligible
Minimum Investment : $10,000
Total Target Return : Target 8.25% base yield, paid quarterly
January 2024 : Active Online
Compliance : 20230926IA

Lynx Equity Income Trust : Who We Are and What We Do

#478

On the Financial Post 500

$591M

Revenue (1)

$47M

EBITDA (1)

2000+

Employees

4

Institutional Investors

1600+

Individual Investors

(1) Fiscal year ended 2022-07-31

We Buy Small and Medium-sized Businesses From Retiring Owners

  • Buy and hold. No intention of ever selling.

  • Buy companies with $1M to $5M in EBITDA

  • 16 years in business

  • Operate over 50 businesses in Canada, the United States, the United Kingdom, Denmark, and the Netherlands

  • Lynx Equity Income Trust is backed by our 16 U.S. companies

We Only Buy Strong Stable Businesses Run by Quality People

  • Strong, stable, low risk, profitable businesses

  • No turn arounds. No “challenges”.

  • Good long-term industry fundamentals

  • Committed and experienced management

  • 2 year plus owner transition period

  • Industry agnostic but no resource related, technology, or real estate

Based on management's opinion and history of buying companies.

Lynx Equity Income Trust

Flooring Group

5 Companies

Revenue $194M

EBITDA $14M (1)

Construction and Industrial Distribution

2 Companies

Revenue $33M

EBITDA $5M (1)

Retail and Related

5 Companies

Revenue $20M

EBITDA $1M (1)

Business Services

2 Companies

Revenue $21M

EBITDA $2M (1)

1For the fiscal year ended 2022-07-31.

Lynx Equity Income Trust (in a Nutshell)

Any Financial Advisor who places private credit investments should consider the Lynx Equity

Income Trust because it is structured for capital preservation.


The Trust is the private credit arm of Lynx Equity Limited one of Canada’s largest and most

successful private equity firms.

Just like a traditional private credit fund, the Trust has:

  • Substantial yield,

  • Diversification,

  • Liquidiity

  • Significant track record

However, unlike a traditional private credit fund, the Trust is structured for capital preservation. It is not a NAV fund, where losses, if any, reduce NAV and are therefore 100% borne by investors. The Trust is participating corporate debt. Losses, if any, are first borne by Lynx owners’ equity. The $38 million in Trust assets are senior to $134 million in Lynx owners’ equity. Lynx owners would have to incur a $134 million equity loss before investors are affected.

Therefore, the Trust can be considered a lower risk investment, compared to traditional private credit funds investing in similar assets.

Summary

Attractive Historical and Target Return Which Rewards Long Term Investors

8.25% new Investors to 9.77% oldest 2016 investors

Significant Free Cash Flow Backs Distribution

$4.10 in free cash flow for every $1.00 due to investors (1)

Structured for Capital Preservation

62% owners’ equity backs

18% investor capital

20% bank debt1

Lynx Equity Income Trust : Overview and Summary

Lynx Equity Income Trust : A Robust Business Model

Why Do Owners Sell to Us?

  • We pay a fair price on fair terms

  • We take care of the owner’s employees

  • We aren’t seeking to remake the company

  • We respect the owner’s legacy with employees, customers, suppliers, and the community

  • We are a buy and hold investor, we aren’t going to flip the company to another buyer

  • We have a history of delivering on our promises

Based on management's opinion and history of buying companies.

We are Careful Buyers

  • 50+ acquisitions over 16 years.

  • Lots of deal flow means we can be picky.

  • Careful due diligence investigations. We don’t rush.

  • Quality of Earnings/Red Flag reports by audit firms.

  • Customer surveys by outside marketing firms.

  • Acquisitions structured to reduce risk: long transitions, hold back payments, Earn Outs versus VTBs.

  • No big acquisitions. Smaller is safer.

Based on management's opinion and history of buying companies.

We are Careful Managers

  • We generally own local businesses, without national or international competitors.

  • Competitive yes, but not hyper-competitive.

  • We seek to maintain, not chase risky growth.

  • 6 operations managers, onsite when necessary.

  • Human resources always a priority.

  • We know the warning signs and we act fast.

Based on management's opinion and history of buying companies.

A Robust Business Model

A hypothetical investment example, for illustrative purposes only.

Implications for Investors

  • Lynx doesn’t have to stretch to pay investors an attractive return.

  • Our businesses don’t need to chase growth. It’s nice but not necessary.

  • Significant debt is not necessary to generate a superior return.

  • Significant free cash flow and significant owners’ equity protects investor distributions and capital.

Based on management's opinion and history of buying companies.

Lynx Equity Income Trust : Preferred Return and Potential Participation in Growth

  • Trust invests in Lynx’s U.S. portfolio

  • Target 8.25% base yield, paid quarterly

  • Possible yield upside: growth interest calculated every June

  • Annual yield increases, if any, reward long term investors

  • Registered plan eligible

  • Redeemable, subject to certain conditions

  • $10,000 minimum investment (CAD or USD)

Lynx Equity Income Trust : Disclaimers and Appendix

RISK FACTORS

Investment in securities of the Fund involves a degree of risk and is suitable only for investors who can withstand the loss of their investment. No assurance, representation, or warranty can be given that the Fund’s investment objectives will be achieved or that investors will receive a return of their invested capital.

Legal Notice Please read the offering memorandum which gives a full description of this investment opportunity. This presentation is a summary and may leave out information that is critical to your decision to invest in Lynx. This document may contain statistical data, market research and industry forecasts that were obtained from government or other industry publications and reports or based on estimates derived from such publications and reports. Government and industry publications and reports generally indicate that they have obtained their information from sources believed to be reliable, but do not guarantee the accuracy and completeness of their information. While Lynx Equity Income Trust believes this data to be reliable, market and industry data is subject to variations and cannot be verified with complete certainty due to limits on the availability and reliability of raw data, the voluntary nature of the data gathering process and other limitations and uncertainties inherent in any statistical survey. Lynx Equity Income Trust has not independently verified any of the data from independent third-party sources referred to in this document or ascertained the underlying assumptions relied upon by such sources. This document includes forward-looking information and forward-looking statements (collectively, “forward-looking information”) with respect to Lynx Equity Income Trust. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases including, but not limited to, “expects”, “does not expect”, “is expected”, “anticipates”, “does not anticipate”, “plans”, “estimates”, “believes”, “does not believe” or “intends”, or stating that certain actions, events or results may, could, would, might or will be taken, occur or be achieved) are not statements of historical fact and may be “forward-looking information”. This information represents predictions and actual events or results may differ materially. Forward-looking information contained in this document include, but are not limited to, statements with respect to: the initial investment of Lynx Equity Income Trust; Lynx Equity Income Trust’s investment objectives and strategy; the making of preferred royalty investments consistent with Lynx Equity Income Trust’s investment strategy and criteria; the structure and terms of preferred royalty investments; timing, payment, and rate of distributions; Forward-looking information is based on a number of factors and assumptions which have been used to develop such information but which may prove to be incorrect. Although Lynx Equity Income Trust believes that the expectations reflected in the forward-looking information is reasonable, it cannot guarantee future results, levels of activity, performance or achievement since such expectations are inherently subject to significant business, economic, competitive, political and social uncertainties and contingencies. Assumptions have been made by Lynx Equity Income Trust as set forth in the offering memorandum of Lynx Equity Income Trust Income Trust, including those factors and assumptions set out under the heading “Cautionary Statements – Forward Looking Information”. Forward-looking information is based on the current expectations, estimates and projections of Lynx Equity Income Trust and involve a number of known and unknown risks and uncertainties which would cause actual results or events to differ materially from those presently anticipated, including those risks described under Item 10 - Risk Factors in the offering memorandum of Lynx Equity Income Trust Income Trust, many of which are beyond the control of Lynx Equity Income Trust. Readers are cautioned that Item 10 - Risk Factors in the offering memorandum of Lynx Equity Income Trust is not exhaustive. Lynx Equity Income Trust’s actual results, performance or achievement could differ materially from those expressed in, or implied by, this forward-looking information and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking information will transpire or occur, or if any of them do so, what benefits Lynx Equity Income Trust will derive therefrom. The forward-looking information contained herein is made as of the date of this document and Lynx Equity Income Trust does not assume any obligation to update or revise such information, whether as a result of new information, future events or otherwise, except as required by law.
Investment Risks There are risks associated with an investment in the Lynx Equity Income Trust. They are detailed in the offering memorandum. Read them and discuss them with your financial advisor. Investment Risks - Blind Pool, No Guaranteed Return, Nature of Investment, Distributions, Distributions may Consist of Proceeds of Offerings, Sale of Additional Trust Units and/or Securities of Investco, Trust Units Not Insured, Lack of Marketability of Preferred Trust Units and Common Trust Units, No Voting Rights, Nature of Trust Units, Redemption of Trust Units, Substantial Redemption of Preferred Trust Units, Tax Risks. • Issuer Risks - Possible Failure to Complete the Initial Investment, Achievement of Investment Objective, Limited Operating History, Insufficient Funds under the Offering, Reliance on the Trustees and the Administrator, Operational Dependence, Conflicts of Interest of Trustee, Administrator and Management, Status of the Trust, Mutual Fund Trust Status, SIFT Trust Status, Risks Associated With the Level of Foreign Ownership, Changes in Applicable Law, Lack of Independent Counsel Representing Unitholders, Recourse to the Trust’s Assets, Indemnification, Liability for Return of Distributions, Unitholder Liability. • Risks Associated with Preferred Royalty Investments - Investment Timing, Return on Preferred Royalty Investments, Limited Information Regarding Target Companies, Agreements with Target Companies, Lack of Liquidity, Future Preferred Royalty Investments. • Business Risks - General Economic Conditions, Fluctuations in Foreign Currency Exchange Rates, Interest Rate Fluctuations, Competitive Marketplace, Financing Risks, Need for Follow-On Investments, Reliance on Management, Inability to Attract and Retain Employees with Skills, Debt Related Risks, Use of Leverage, Ability to Recover from Target Companies for Defaults May be Limited, Target Companies Have Repurchase Rights Which May be Exercised, Third Party Credit Risk, Management of Growth, Uninsured and Underinsured Losses, General Litigation Risk, Inability to Win or Maintain Contracts with Existing Customers, Failure or Delay in Successful New Product or Service Development, Energy and Commodity Price Increases, Expansion of Manufacturing Capacity, Equipment Risks, Product Liability, Seasonality, Compliance with Applicable Environmental Laws and Regulation. • Refer to Item 10 – Risk Factors of the OM for more details.

Pinnacle Wealth Brokers Inc.

Internal Compliance Audit : Lynx Equity Income Trust 20230926IA : 2,3,6,7,8,24,32,33,36,37,38,39,43

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