Promoters’ call option
From year 20, the promoters may buy the stake at the agreed multiple. This is the model’s reference case.
Investor economics
Illustrative metrics from the current model. Corporate structure, distribution and exit valuation are negotiable.
Term sheet assumptions
- Economic stake
- 40%
- Reserve fund
- 10% · every year, up to the fund ceiling
- Reserve fund ceiling
- €400,000
- Distribution of the remainder
- 100%
- Year the options become exercisable
- Year 20
- Call option multiple
- 5.5×
- Put option multiple
- 4.0×
Corporate structure and land
The land does not enter the company
The three parcels stay in the promoters’ names. The company farms them under a 40-year free-use agreement. That avoids tying up capital in buying land — which at this scale would be the single largest line — and keeps the investment concentrated in the planting and productive infrastructure.
Why the split is 60/40
The investor puts in almost all the cash capital and takes 40 % of the economics. The difference corresponds to what the promoters contribute in kind and which never appears in the CAPEX: the use of the three parcels for 40 years, the development work, the public funding application and execution on the ground.
Note
For this split to be auditable rather than merely agreed, two steps are missing: formalising the land arrangement in a registered contract, and putting a value on that use and on the development work. Without them, the 60/40 rests on an understanding between the parties.
Because the land is not owned by the company, what changes hands at exit is the farming operation and the remaining right of use, not the freehold. At year 20 there are 20 years of the agreement left — more than the orchard’s remaining productive life — but the valuation must reflect that the asset is the orchard, not the land.
How the stake ends
The stake does not lapse. If neither option is exercised, the investor keeps it and carries on receiving distributions to the end of the horizon.
Investor’s put option
From the same year, the investor may require the purchase at a lower multiple. It is the floor of the return, paid in instalments so as not to strain cash.
Neither option is exercised
The stake remains and distributions continue. A buyer failing to appear stops being a loss.
A reserve fund topped up every year
Before any distribution, 10 % of cash flow feeds a reserve fund, up to its ceiling. The fund covers the gap between paying costs through the year and being paid at harvest, the renewal of irrigation, abstraction and power that the planned reinvestments do not fully cover, and a buffer for a bad year. What remains is distributed in full, and the fund is added to the exit value.
A gentle, continuous retention beats a heavy one that stops early: it releases more cash in the first producing years, which carry the most weight in the return, and keeps building for the later renewals.
| Outcome | Proceeds at year 20 | IRR | MOIC |
|---|---|---|---|
| Promoters’ call option | €748,525 | 9.65% | 4.14× |
| Investor’s put option | €578,125 | 9.17% | 3.76× |
| Neither option is exercised | — | 9.07% | 4.39× |
Scenario comparison
Preferred scenario
Scenario A — with PEPAC
Capital invested 450.0 k€
IRR 9.65%
MOIC 4.14×
- Exit proceeds
- €748,525
- Cumulative to exit
- €1,412,052
- Investor payback
- Year 13
Independent scenario
Scenario B — without PEPAC
Capital invested 650.0 k€
IRR 6.94%
MOIC 2.86×
- Exit proceeds
- €748,525
- Cumulative to exit
- €1,212,052
- Investor payback
- Year 15
Cumulative investor cash flow
Year 20 EBITDA and exit valuation
| Gross revenue | €420,000 |
|---|---|
| Farming costs | -€60,000 |
| Overhead costs | -€16,000 |
| EBITDA | €344,000 |
| Exit valuation (5.5×) | €1,871,313 |
| Investor share of the exit | €748,525 |
Investor cash flows
Annual distributions and exit proceeds under the selected scenario. — Scenario A — with PEPAC
| Year | Project cash flow (€) | Distribution to investor (€) | Exit proceeds (€) | Investor cash flow (€) | Cumulative (€) |
|---|---|---|---|---|---|
| 0 | -418,236 | 0 | — | -450,000 | -450,000 |
| 1 | -40,076 | 0 | — | 0 | -450,000 |
| 2 | -40,076 | 0 | — | 0 | -450,000 |
| 3 | -40,076 | 0 | — | 0 | -450,000 |
| 4 | -40,076 | 0 | — | 0 | -450,000 |
| 5 | -40,076 | 0 | — | 0 | -450,000 |
| 6 | 23,924 | 8,613 | — | 8,613 | -441,387 |
| 7 | 103,924 | 37,413 | — | 37,413 | -403,975 |
| 8 | 183,924 | 66,213 | — | 66,213 | -337,762 |
| 9 | 208,831 | 75,179 | — | 75,179 | -262,583 |
| 10 | 229,491 | 82,617 | — | 82,617 | -179,966 |
| 11 | 197,091 | 70,953 | — | 70,953 | -109,013 |
| 12 | 291,891 | 105,081 | — | 105,081 | -3,932 |
| 13 | 197,091 | 70,953 | — | 70,953 | 67,021 |
| 14 | 291,891 | 105,081 | — | 105,081 | 172,102 |
| 15 | 167,611 | 60,340 | — | 60,340 | 232,442 |
| 16 | 282,411 | 101,668 | — | 101,668 | 334,110 |
| 17 | 187,611 | 67,540 | — | 67,540 | 401,650 |
| 18 | 282,411 | 101,668 | — | 101,668 | 503,318 |
| 19 | 187,611 | 67,540 | — | 67,540 | 570,858 |
| 20 | 257,411 | 92,668 | 748,525 | 841,193 | 1,412,052 |
| 21 | 183,220 | 0 | — | 0 | 1,412,052 |
| 22 | 278,020 | 0 | — | 0 | 1,412,052 |
| 23 | 183,220 | 0 | — | 0 | 1,412,052 |
| 24 | 278,020 | 0 | — | 0 | 1,412,052 |
| 25 | 173,740 | 0 | — | 0 | 1,412,052 |
| 26 | 268,540 | 0 | — | 0 | 1,412,052 |
| 27 | 173,740 | 0 | — | 0 | 1,412,052 |
| 28 | 268,540 | 0 | — | 0 | 1,412,052 |
| 29 | 173,740 | 0 | — | 0 | 1,412,052 |
| 30 | 268,540 | 0 | — | 0 | 1,412,052 |