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Casual Articles - Private Equity and Venture Capital Financing Structures
The 7 steps to 7 figuresLet’s look today at one of the seven steps you’ll need to take to achieve seven figure earnings. The bad news is you need to take them all no matter how much you desire to earn so you might as well go for the 7. Right?If you could plug into the power of an Internet and Networking system that will train your team to become serious marketers while you are on the golf course, would your handicap come down?The best kept secret in Network Marketing and Internet Marketing is that it
You are more likely to get this kind of financing from Angel investors. Maybe even family and friends would even provide this type of financing if the amount is not too large and you have good cashflow. Say you feel $200,000 can get you over the hurdle and profitable. Structure the $200,000 as a 3 to
Let's not get confused here.Databases and technology are tools that we can use in our businesses. There has been a lot of emphasis on Customer Relationship Management recently which is very much about using this technology. But what has this got to do with customer service? Absolutely nothing. Not unless the people running that business are motivated and passionate enough to use that information in the right way.I see fabulous examples of customer service from all over the world. And the amazing thing is that, in m
1. A Common Stock. Common Stock funding structures are pretty simple. The company and investor agree on a dollar amount to be funded and the percentage of stock, also called the equity position, the investor will receive. Most private companies, however, will find they have very little bargaining power with private equity funds. Usually, it is the money that dictates the terms of the financing structure. Part of the reason is that if you don’t like the deal terms you don’t have to take the money. Another reason is that Private Equity firms know which structures work for them and which ones don’t.
2. Preferred Stock. Private Equity firms use Preferred Stock structures the most. The Preferred Stock is convertible into Common Stock, usually anytime at the option of the holder. The convertible Preferred Stock can be convertible into either a fixed number of shares of Common Stock or a certain percentage of the Common Stock outstanding on a future date. Most Preferred structures also have a built in dividend. The dividend could range from 6% to 12%. This allows the Private Equity firm to receive some return on its investment before the Exit Strategy is used.
3. Debt Financing with an Equity Kicker. Another possible structure, if your company is already operating and profitable, or close to it, is debt financing with an equity kicker. Although this structure will be difficult to get from a Private Equity firm, it is worth exploring.
You are more likely to get this kind of financing from Angel investors. Maybe even family and friends would even provide this type of financing if the amount is not too large and you have good cashflow. Say you feel $200,000 can get you over the hurdle and profitable. Structure the $200,000 as a 3 to
In Australia in 1860, two men, Burke and Wills, led an expedition as ambitious as the Lewis and Clark expedition in North America. But this one ended in tragedy.After weeks of exploration, the main expedition arrived back at the base camp only to find that it was deserted. There was a sign carved on a tree that read “DIG 3FT NW”. The sign meant that they should dig three feet northwest from the tree to find the provisions that were buried there.The provisions were there, the signs were there, but Burk and Wills
1. A Common Stock. Common Stock funding structures are pretty simple. The company and investor agree on a dollar amount to be funded and the percentage of stock, also called the equity position, the investor will receive. Most private companies, however, will find they have very little bargaining power with private equity funds. Usually, it is the money that dictates the terms of the financing structure. Part of the reason is that if you don’t like the deal terms you don’t have to take the money. Another reason is that Private Equity firms know which structures work for them and which ones don’t.
2. Preferred Stock. Private Equity firms use Preferred Stock structures the most. The Preferred Stock is convertible into Common Stock, usually anytime at the option of the holder. The convertible Preferred Stock can be convertible into either a fixed number of shares of Common Stock or a certain percentage of the Common Stock outstanding on a future date. Most Preferred structures also have a built in dividend. The dividend could range from 6% to 12%. This allows the Private Equity firm to receive some return on its investment before the Exit Strategy is used.
3. Debt Financing with an Equity Kicker. Another possible structure, if your company is already operating and profitable, or close to it, is debt financing with an equity kicker. Although this structure will be difficult to get from a Private Equity firm, it is worth exploring.
You are more likely to get this kind of financing from Angel investors. Maybe even family and friends would even provide this type of financing if the amount is not too large and you have good cashflow. Say you feel $200,000 can get you over the hurdle and profitable. Structure the $200,000 as a 3 to
When applying for a job in a service company you might be surprised what types of things will propel your application to the top of the pile. Believe it or not if you worked at McDonalds or Starbucks as a teen this is something that is of value to service businesses. It is amazing that these sorts of things are looked at, but they are.If you worked as a Valet for hotel, restaurant or exclusive parties, be sure to list this too. If you have ever worked as a Caddy this is golden and should be listed even if it was one summe
2. Preferred Stock. Private Equity firms use Preferred Stock structures the most. The Preferred Stock is convertible into Common Stock, usually anytime at the option of the holder. The convertible Preferred Stock can be convertible into either a fixed number of shares of Common Stock or a certain percentage of the Common Stock outstanding on a future date. Most Preferred structures also have a built in dividend. The dividend could range from 6% to 12%. This allows the Private Equity firm to receive some return on its investment before the Exit Strategy is used.
3. Debt Financing with an Equity Kicker. Another possible structure, if your company is already operating and profitable, or close to it, is debt financing with an equity kicker. Although this structure will be difficult to get from a Private Equity firm, it is worth exploring.
You are more likely to get this kind of financing from Angel investors. Maybe even family and friends would even provide this type of financing if the amount is not too large and you have good cashflow. Say you feel $200,000 can get you over the hurdle and profitable. Structure the $200,000 as a 3 to
Back in days gone by, many small retailers would sell the same products in roughly the same quantities, week in and week out. This was especially true in some outlying areas where there was just one ironmonger, one jeweller, one butcher etc etc. Everybody had their role and trade was steady, if not sometimes a little boring, perhaps? Nowadays, things are a little different in most western economies and many elsewhere too, where retailing is increasingly a battle of the fittest, and for the minnoes, often a struggle for surviva
3. Debt Financing with an Equity Kicker. Another possible structure, if your company is already operating and profitable, or close to it, is debt financing with an equity kicker. Although this structure will be difficult to get from a Private Equity firm, it is worth exploring.
You are more likely to get this kind of financing from Angel investors. Maybe even family and friends would even provide this type of financing if the amount is not too large and you have good cashflow. Say you feel $200,000 can get you over the hurdle and profitable. Structure the $200,000 as a 3 to
Common Answering Service Services Your Business Can Benefit FromAre you a small to medium size business owner? If so, has your business expanded alongside with the increase in your customers or clients? Unfortunately, many business owners are unprepared for the success that their business brings. You are urged not to be one of those business owners. If you are unable to hire additional staff or you do not want to at this current point in time, you are advised to seek assistance elsewhere. This assistance could come f
You are more likely to get this kind of financing from Angel investors. Maybe even family and friends would even provide this type of financing if the amount is not too large and you have good cashflow. Say you feel $200,000 can get you over the hurdle and profitable. Structure the $200,000 as a 3 to 5 year loan and give the investor 10% of your company in common stock. The number of shares and percentage you give the investor/lender is based on the size of the loan and the value of your company. I only used 10% as an example.
4. Convertible Debt.Some investors will structure their funding as a convertible note or convertible debenture. This security is convertible at their option into Common Stock of the company. Usually they will not convert until the Common Stock is trading and they can get out of their position.
Smart investors will also use what is called a "4.9% Clause". I have used this many times for my private investor and hedge fund clients. Certain securities laws require investors that own 5% of more to make certain filings with the U.S. Securities & Exchange Commission (SEC). This allows investors to get around that requirement since the 4.9% Clause does not allow the investor to own more than 4.9% of the company at one point in time.
Also, if an investor owns more than 10% of a company they are deemed an "Affiliate" and a number of other rules kick in. An investor can remain more nimble with his investment without having to comply with these regulations. The 4.9% Clause also benefits the Management Team. If the investor can't own more than 4.9% of the company it is very difficult for the investor to take over the company or make management changes.
5. Reverse Mergers. A Reverse Merger is when an existing private company merges into an existing public company with a stock symbol, which is usually a “shell company”. A shell company is a public company that although still in existence and having a stock symbol, is no longer operating a business. The business plan obviously failed and that company went out of business, but the public entity or shell
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