Q1 2019

Wealth & Finance International - Q1 2019 19 the Emerge process begins. When you attract an interested investor they will move very quickly. If you are not ready to respond immediately they will move on to the next opportunity in their funnel. Dedicate executives’ time and be prepared to schedule personal meetings to answer questions and close the deal. Most turnaround specialists will have a list of investors and lenders who are looking for deals, some have longer more quality lists than others. These specialists can help the process of preparing the solicitation documents, perform the Emerge to locate investors, and negotiate the transaction. The process of raising money is complex and time consuming. The U. S. Securities and Exchange Commission has rules governing how ‘Finders’ and ‘Broker/Dealers’ can operate, and what each can or cannot do. Working with a Broker is very expensive for small and mid-size companies and you lose some control. Working with a Finder is much less expensive; you maintain control, and prepare the documents. An outside director, as part of the company, can be a Finder to introduce you to investors and /or lenders – you then negotiate a deal that you can live with. When an outside director has a large database to utilize during this introduction process, measured in thousands of contacts, you can be in front of many investors. The key is to prioritize the flow of introductions and manage the diligence process. Compensation for the money raising process varies by specialist, but there will be retainer and fees for preparing the process and a Finder’s Fee upon completion of the transaction. Most specialists will use a Modified Lehman Formula geared to the size of the deal. One example of a Modified Lehman Formula might be 7.5% fee for first $1.5 million involved in the transaction, 6.0% for next $1.5 million, 4.5% for next $1.5 million, 3.0% for next $1.5 million, and 1.5% fee for the remainder of the transaction. Because there is a similar amount of work to locating financing for smaller deals as there is for larger ones expect the percentage fee to be higher for smaller deals. It is not hard to raise money if you put the right tools in place and the deal is investable. There is money available, just be the ‘good deal’ and you will raise capital. About the Author John M. Collard is Chairman of Annapolis, Maryland-based Strategic Management Partners, Inc., a turnaround management firm specializing in asset and investment recovery, outside director governance, and investing in and rebuilding underperforming distressed troubled companies, John is a Certified Turnaround Professional (CTP), Certified International Turnaround Manager (CITM), who brings over 35 years senior operating leadership, $85M+ asset and investment recovery, 45+ transactions worth $1.2B, and $80M fund management expertise to advise companies. John is Past Chairman of the Turnaround Management Association, Past Chairman of Association of Interim Executives, Senior Fellow of the Turnaround Management Society, serves on public and private boards of directors, is a frequent author, speaker, and advisor to companies, and private equity investors, and governments. John is inducted into the Turnaround Management, Restructuring, Distressed Investing Industry Hall of Fame. John is a Founder of TMA. John is honored as Prince Georges Business Leader of the Year. John is honored with the Interim Management Lifetime Achievement Award from the Association of Interim Executives. John is honored as Most Admired CEO in Maryland by Daily Record. John is honored with SmartCEO Distinguished Leadership Award. He can be reached at 410-263-9100, www.StrategicMgtPartners.com Author: John M. Collard, Chairman Company: Strategic Management Partners, Inc. Address: 522 Horn Point Drive, Annapolis, Maryland 21403 Telephone: 410-263-9100 Facsimile: 410-263-6094 Website: www.StrategicMgtPartners.com Email: [email protected] or [email protected] Raising Money in Tough Times: There is Capital for the Good Deals