This morning while I was sipping my coffee Jon Stoddard’s Mergers & Acquisitions Podcast was referred by a Attorney and Im convinced it’s the best damn M&A show online. 100%! No kidding everyday I spend 2 hours after I wake up on study time learning and training for new skills. For the last month I began learning Python coding, and it seriously takes time to learn how to code. But when I opened Youtube I had a message from a New York Attorney that read? “Thought this would be helpful for you to watch in the morning as you train.” This is what I found when I clicked the link. Jon Stoddard’s Mergers and Acquisitions Youtube Show. Since I am in this small Business community I immediately stopped what I was doing and watched the video. Click picture to watch his channel.
What is Youtubes Best M&A Podcast?
According to Entrepreneur Investment Group Partner Sharp J? Jon Stoddards Youtube show about Mergers and Acquisitions is the most informative online.
Christopher Wick M&A Entrepreneur
The first video I watched was the Talented and high energy Mr. Christopher Wick who has a growing and profitable track record of making one Transaction a year. Bravo Good Sir. This is fantastic. I was immediately drawn in because the language and struggles, challenges faced by this good man was exactly the same I am facing. But in a different industry. LOL If you have not watched this youtube show with Jon and Christopher? Do it now.
There is a entire community out there that has the experience that I have been looking for. As I watched this amazing interview? I suddenly found it was if a vail of obscurity was lifted. Matters of financing transactions, finding deal flow, and more was shared generously.
Patch Baker – 100 plus Acquisitions
My second video I began devouring was Patch Baker, interestingly Patch is a former Marine veteran and has completed over one hundred Mergers and Acquisitions Transactions. Plus Patch’s company MOBIUS marketing and media is a former client and partner of juggernaut Black Rifle Coffee Company who just went public.
https://youtu.be/GLb_uAwVP2o
All this content is so valuable and helps the Entrepreneurs who are out doing exactly what they are doing begin asking the right questions. And start pursuing the right answers. Path Baker’s entire conversation on conversion rates and mathematics behind advertising and paid ad spend was eye opening. I had a inkling that this was the case. But he just confirmed to me why so many small businesses fail when placing ads on Facebook and Google. It’s truly fascinating how he went into and shared how Sir. Richard Branson quietly took over the British Virgin islands using strategy that seemed completely natural. It makes sense. I would highly suggest you check out Patch and watch his interview in it’s entirety.
Mergers and Acquisitions Stories and Experience Goldmine
In conclusion for today’s post? I would love to share that there is a entire eco system of content out there if you know where to find it. Patch Baker was saying in his conversation that going super niche is sometimes not the right play. Look at Blockbuster. In the 1990’s everybody was lining up for a chance to go super niche like this failed American brand. Evolution and change happen daily. If you don’t change and don’t keep evolving as a entrepreneur trying to improve growth and create better value in the market? It’s likely you as a entrepreneur probably won’t succeed. The lesson’s learned from this show are truly unique. So I would highly suggest if your are in the Mergers and Acquisitions space and are researching the eco system as a entrepreneur? You will one hundred percent need to watch this fantastic Youtube show by Mr. Jon Stoddard.
If your a serious Speculative Investor? You will definitely want to read todays post on the Eight Investing Principals Wall Street Hedge Fund Manager Bill Ackman uses as a foundational Business strategy.
Most Wall Street Investors do lack depth of strategy and emotional Temperament. So it’s vital you study successful Fund Managers and reengineer or use their strategies. Mohnish Pabrai is always laughing while saying “He is a Shameless Copier in Business.”LOL I admit that’s insightful.
Members of Congress has a incredible investing Track Record. Is it because they have inside knowledge? Or are their Advisors doing shady business on the side? Who knows? However If you haven’t been paying attention to their investments that are publicly listed? You maybe in for a surprise. Be sure to check them out here! If you haven’t know about ValueInvesting.IO? You may want to go check them out. They keep up to date with Congressional Members Investments. And you may reach the conclusion that I have. Something just doesn’t add up. If they are using Material Inside information? That’s highly illegal.
If you think about the members trading strategies? It’s a great example of missed opportunity and I see many people on Twitter copying their trades. It’s surprising how incredible how they often receive above 20 to 30, to 50 percent returns annually. Its almost too good to be true. However I digress. Today I am sharing amazing value. From the Mr. Baby Buffett of Wall Street and the King of Activists Investors, The talented and always respectful Mr. BIll Ackman.
Before I continue, I should share: Even though my name is not known in hardly any Wall Street Investment Firms? My crazy entrepreneurship story is certainly gaining traction. It certainly is unique. How many entrepreneurs do you know who just said screw it and began studying the moves and strategies of Fund Managers like Bill Ackam? After all Professional Investing is something one can learn from just reading and being in the Market. Passion and grit are absolutely required. Most Big Firm Partners value a young guys working incredibly hard and demonstrating results that benefit their future success at the firm. Meritocracy comes to mind. When you put others interests and success first? You make friends an alliances quickly. But sometimes you can make enemies fast and jealous. That’s a Fact.
The basis of most value investors I know? Is to be curious and keep asking questions. If you just keep asking questions a someone who doesn’t know a subject or topic? Your curiosity takes you on a journey of discovery. And sometimes that journey of discovery? Is extremely profitable. Just keep asking questions. And learning as you move forward as a Value Investor. Benjamin Ghraham is a Man you should research if your interested in learning to become the next Bill Ackman. Watching everything Warren Buffett and Charlie Munger has said on video helps as well. The intrinsic value of being among Value Investors does pay massive dividends. But its all up to you! Do the work. And your do your Due Diligence.
So what are the Eight principals Ackman and follow when targeting companies?
Simple Predictable, Free cash flow regenerative dominant companies, With large barriers to entry That earns high returns on capital, With limited exposure to intrinsic risk we can’t control? Strong Balance Sheets Don’t need access to capital to survive, Excellent Management, and Good Governance
Pershing Square Capital Management
– Bill Ackman
What are Bill Ackman's Eight Investing Principals?
Simple Predictable, Free cash flow regenerative dominant companies, With large barriers to entry That earns high returns on capital, With limited exposure to intrinsic risk we can’t control? Strong Balance Sheets Don’t need access to capital to survive, Excellent Management, and Good Governance
In conclusion for today’s post? It’s very sensible to believe that if you adhere to and strictly follow these basic guidelines and principals while investing? You are surely going to be in great shape. If you go back in time and look at the trades or positions Bill and his team has made in the past that failed to perform or wiped out half his Hedge Fund? The principals were not followed. Leaving them exposed. And that is a lesson on keeping true to your education as a Value Investor.
Thank you for reading and I do wish you all Investment success. Godspeed
Yesterday I found myself chatting with a local Kansas City VC Attorney and he shared some personal experiences that really shared a few challenges Entrepreneurs face when seeking Venture Capital Partnerships. These insider secrets and failures really snapped a few things into perspective. The VC’s must be very selective and use strategic selections to keep and sort the deal flow that is not a waste of time.
If you really think about it? Venture Capitalists are bombarded with so much junk? Often real opportunities must be challenged and sorted. And the only way to accurately find the real opportunities? Is to create impossible standards and a crucible of challenges. The following is common things Venture Capitalists say to Entrepreneurs who are seeking Capital Partnerships or Investments.
Investor, Partner, or Venture Capitalists
Are you seeking a Partner or Money Investor? Is a question VC’s will likely directly ask you. However if you don’t know what your seeking? Your going to end up disappointed and likely roadkill. Fair warning. When a VC say’s they are Value investors? That means they like to fix things and make money.
However some will add money and other things like connections, guidance for improving operations and more. Some just give you money and say go get busy without guidance or mission support.
Often times when your in the Boardroom with a VC you should already know what you want, how much money your asking for and a laundry list of other details. If your there and unprepared? It’s likely your going to be disappointed like I shared earlier and roadkill. You should always be prepared and have a battle plan that is at least 6 months out.
Impossible Odds and Certain Rejection
2. Thank you for coming in and presenting your vision and business. However my partners just won’t let us move forward right now. (They say this because you weren’t convincing or exciting. They were just curious.)
How to handle this?
I would Thank them for your time. And leave. All things considered? Your going to face lots of rejection. Thousands of people who reject you and your business vision. However it’s likely you will work for face to face meet for over a year. And when you get in that boardroom with a Investment Committee? It was all for nothing. You fail and you move on. Your value process should be creating a huge pipeline. That’s your edge in a market filled with rejection and time wasters.
Scheduling Problems and Impossible Follow Up?
3. Trouble Scheduling a Meeting? Ok. So your a Entrepreneur your working hard and your finding it nearly impossible to have a meeting scheduled with Investors. What is happening? Well two things are happening. A. The Investment Team is watching you and looking at your background and your business vision. They also won’t tell you they are doing this. But expect it to be happening covertly behind your back. B. They want to see if your easily distracted and they want to test your mettle so to Speak. Don’t give up. Be polite. Be Confident. And under no Circumstances be a jerk or look weak.
People in general will watch your behavior and read in detail your communications. If your nice and sincere and completely committed? It will show in your perseverance. To many people call once or twice and are frustrated and never call back or follow up. This is the game they are playing. And it’s ridiculous at times. There is always a reason they don’t answer. It’s been my experience. People will Lie, deceive, and play games. However playing games and protecting their portfolios is how they stay above the fray in the business world.
How are you treated when your invited for a interview?
4. Are you meeting a Vice President of Development or are you meeting in a Board room with a Committee of Partners and Principals? This will gauge the level of interest the Private Equity Firm, Venture Capitalists will have in you as the entrepreneur or new business team.
A. If they place you in a small room with a VP of Development and a smile? This means it’s likely your not very attractive. B. If they invite you in to a large nice board room with coffee and a team of Partners and Principals? Your deal is fucking HOT!!! Act accordingly.
Is the Equity and Finance Structuring Trustworthy?
5. We are going to be fair with structuring Debt, and equity positions. (Unless your good good trust worthy friends? Don’t trust this whatsoever.) You should be taking steps to protect your interests and your equity. Have your own personal corporate Attorney negotiate the structures and equity positions that are best for you. If they threaten to walk away? You walk away first. You don’t want to beg or plead for anyone to ever be your capital partner or be the reason you wasted 20 years on a business that ended up not paying you a healthy equity piece.
The business world is extremely unfair at times. Make sure you know that the Attorneys for the VC will rob you without a gun. Or try to freeze you out as slave labor. Act accordingly. Your welcome.
The Lie Of Performance Based Equity Buy Back
6. Based on Performance you can earn back more equity down the line. ( Meaning if you perform at impossible levels? You will earn back equity in the company.) This should be pretty obvious. You want to do your background checks and put in the effort of interviewing previous successful and unsuccessful Venture Capitalists partners or entrepreneurs. You always want to work with well known names and Business leaders known for integrity and know for taking care of their people.
You don’t want to find out later you are on your own with a ship that is sinking. And your investment partners don’t care either way. They will just come in with corporate raiders and destroy the sinking ship. Leaving you with a failed experiment and a new sad life story. Be smart.. Be prepared, Be vicious in your approach for success.
Control Your Expectations
7. Our procedures for getting our partners funding as VC’s takes a month or two. ( This should be suspect) If you are lucky enough to sit down with a Venture Capital fund? It’s likely that they level of interest is moderate. But based on most of the experiences you should already have from others who have worked with them? You should know that its more likely that your in for a 1 year wait. Or longer. Prepare and keep a full pipeline. Often times after a few month’s they may call you back and follow up. Just to dig and see if your still interested for a sit down or if you have quit. More than likely your in for a year or two wait with VC’s. Be prepared to survive and fill up your VC Pipeline.
Feigning Interest as Investors
8. OH YA WE ARE INTERESTED!!! ( Honestly it’s more likely they are interested in your product or Intellectual property. Can they replicate it? Can they be the first knock off?) Be informed the game is largely rigged for Entrepreneurs. The only hope you have at fairness is from a Banker and someone you know treating you well. Don’t expect VC’s to invite you in and automatically partner and write you a check. Or work with you for the success of the project. Often they are not well organized and are ver opportunistic. Make sure your professional deck is clean, clear, concise with a time line. Don’t wait around. Be proactive and never ever get excited just because they called you back. Lower your expectations. But be pragmatic. You will thank me later.
Financial Modeling, Number Charts, and BS Statistics
9. You think all the financial models and assumed projections will impress their Accountants. WRONG! It will be dissected, interrogated, your math will be questioned for all failures. And you will have to answer slick impossible questions. But the good news is if you happen to have a CPA worth their salt? You can avoid the interrogation and punt to the Accountant or Analyst on your team.
Start at Failure and Build up from there
10. Just expect everything to be almost impossible with downsides and failures around every corner. If your able to prepare and research and interview all possibilities before hand? You may just have a fighting chance. Thank you for reading. I know this post seems impossible. As it was meant to be this way. Honestly most entrepreneurs need to not only change their expectations. But also settle in for a long, disappointing ridiculous ride. That is my experience and you should be aware the world of business is a cruel and unfair place. Make sure you are prepared for certain failure. And do prepare a mindset of certain failure. Armor your expectations and this will ensure your success one day.
Since your likely in business, a Business professional, or a Entrepreneur who is researching to find more information about the meaning or differences between CAP EX and Maintenance Capital Expenditures? I have great news for you. I am willing to help answer this question for all you Google Searchers. Today’s lesson will be directly about a particular line on your Investing activities cash flow statement, Operating Expenses details, and Balance sheets.
So everybody if you have not yet taken basic Accounting classes? Your likely like me and studying as you go. It’s a ongoing challenge. However you have no excuse in todays online information super highway and access. So in the spirit of sharing cool new Accounting information I discover? And for the fact I find myself implementing this new knowledge in cool ways. Let’s talk about today’s latest topic I discovered while researching what is Intrinsic Value in Investing . Which by the way is an entirely different topic in it’s own right. Now on to the main event. Maintenance Capital Expenditures.
What is this “Maintenance Capital Expenditures or CAP EX”?
You don’t need to be an Accountant or business superstar to run a small time Lemonade Stand in your neighborhood. So as you begin to sell lemonade? You will likely have cashflow on the balance sheet. This is where things become interesting.
Today we are talking about financials? I would love to detail what the line on your Financial Statement that say’s Maintenance Capital Expenditures.
When we look at a company’s cash flow statement which you should know “ENTREPRENEURS!” you will be looking for the line CAP EX or Maintenance Capital Expenditures.
Please don’t overcomplicate the info here. However when reading a Cash flow statement you will see a line called Capital Expenditures. It’s the exact same thing as a Maintenance Capital Expenditure. Cap Expenditures and Maintenance Capital Expenditures are the same thing. Often times I do see people who confuse CAP EX with Maintenance Capital Expenditures. Don’t let this confuse you. It’s the same.
Here are the two classifications that capital expenditures can fall under.
When
Maintenance CapEx: Is the required ongoing expenditures of a company to continue operating in its current state (e.g., repair broken equipment, periodic system updates) Operating Expenses.
Growth CapEx: Is the discretionary spending of a company related to new growth strategic plans to acquire more customers and increase geographic reach
According to a friend at a local Regional Law Firm and as TAX Attorney and Accountant,
An income statement reflects operating expenses incurred during a period of time.
Capex is considered a long-term investment, rather than an operating expense, because it has an economic life greater than a year (unlike operating expenses).
In conclusion in today’s lesson if you are running a Lemonade stand during the summer while teaching your kids the proper way to expense a business? I hope you would now clearly see? That Capital Expenditures and Maintenance Capital Expenditures are the same and they are for all the little things the business needs to operate and create free cash flow in the simplest of terms. Stay hungry, stay curious and be fearless when walking among Captains of Industry.
I received a question directly from the awesome searching entrepreneurs on Google Search today, So its with great privilege I get to share, explain, and answer this fragmented question to help all the future professional Entrepreneurs, Bankers, Accountants, and Corporate Attorneys out there. At the risk of sounding insensitive this question is slightly off base. So let’s dissect the elements and answer some facts.
“Who controls the United States Money Supply?”
The United States Treasury manages all of the money coming into the government and paid out by it. The Federal Reserve’s primary responsibility is to keep the economy stable by managing the supply of money in circulation. The Department of the Treasury manages federal spending.
So since we go this out of the way. Let’s move on to another question that creates value. Natuarlly we are going to want to ask the Question, “What makes the money valuable in business?”
“What makes the Money Supply valuable in Business.”
The value of any good is determined by its supply and demand and the supply and demand for other goods in the economy. A price for any good is the amount of money it takes to get that good. Inflation occurs when the price of goods increases—in other words when money becomes less valuable relative to those other goods.
If you have never watched the 2007 Business Movie that won all kinds of awards please watch this evil cruel film. It tells a disturbing story about a Oil Magnate mad man willing to go extreme lengths to use, abuse, and use dishonesty measures in business strategy in California in the early 1900’s.
There will be Blood “MOVIE”
“How does money get it’s value?”
The value of money is determined by the demand for it, just like the value of goods and services.
Business Landscape & Business Environment
Take a look at the volatility of the current Business market? It’s constantly changing second by second. It’s been my experience that in order to really look at company’s worth an acquisition development effort you must look at the long term future. Several questions come to mind. “Is the company easy and simple to understand?” “Does the business have a bright future because of the products it sells?”
Warren Buffett is always sharing that the business he looks for are the products and companies we love like Coca Cola. It’s the most recognizable brand in the world. And its future is certainly guaranteed to dominate most beverage shelves in nearly all stores and restaurants. So we can be pretty certain that investing in Coca Cola will be fruitful for investors. Coke is always looking at competition and alway’s buying up the best performing brands. If you did not catch the Coca Cola Acquisition of Body Armor last October? Please read about this Acquisition here. I mention this because I was contacted by a International Business News TV Station in Asia to comment on the transaction.
Acquisition Strategy in the Market
I would love to share a interesting view from the one and Only Mr. Bill Ackman who is the CEO and Founder of New York City powerhouse Activist Investment Firm Pershing Square Capital. At the expense of sounding like a Fanboy of Bill’s investment career? Which I am by the way. Bill personally is a sincere and just all around great guy. I really look up to his career as an example of where I am headed. He too was a Entrepreneur with a really tough road filled with hardship, adversity and impossible rejection. So I take comfort in his story that I am where I need to be.
This may sound ridiculous and surprising to some people who read this. But I am good with criticism I will receive sharing this next bit. Interestingly I will be going fly fishing with him sometime in the near future. But that is another story for another time. Let’s get back to business.
Research The Market For Acquisition Target Opportunities
Bill always said that when a downturn in the Market happens. He and his team of Analysts and researchers at Pershing look for opportunities by looking at Companies stock price that are trading for values lower than it should be. Meaning its undervalued stock price is an opportunity.
Activist Investing Strategy
Bill and his team shocked the Investment world during a market downturn when they made a trade off four hours of research making the Investment Fund Four Billion dollars in profit. Here is the short story.
If Wachovia wealth management company was trading at $1.84 and we look at the annual reports and the Debt on the books, and all the financials during a Due Diligence research session? And we decide the company is undervalued from the free cash flow and then look at the Stock price? We know there is opportunity for profit on this trade.
In doing this we look at the stock price and over all company valuation and decide is the company undervalued? Bill Ackman and his team mate Mick made a trade after 4 hours of research. And bought the Stock at $1.84 and later sold at around $9-$10 dollars a share. They bought 42 percent of the Company stock volume over 4 days. And made 4 billion dollars in profit just days after. Anyways all things considered? Bill’s Pershing Square Investment Fund made out like Bandits into the night. LOL Just incredible story.
Acquisition Consolidation
Before we move on? We must define Consolidation in Business Acquisition strategy? Consolidation in the most simplest of terms? “Is when a entity or a group of Investors Buys one Holding company, then buys other smaller companies or its competitive companies and folds these companies into it’s portfolio of companies creating value plus synergistic dominance in the selected industry.”
Professional Advisory Services with a proven track record to keep you safe during Acquisitions
I sincerely hope this complex post has given you a huge bang for your buck by clicking on my blog post on Google Search? This took me some time to write and rewrite. I won’t be winning any awards with my business blog. But at least I am able to share some basics in finance, business strategy, M&A and Entrepreneurship. If you would like to personally pick my brain and save time and weeks of research time? And if your a Senior Executive who would like a value based second opinion before accepting someones opinion you don’t value or trust? Myself and my team of Professional Advisors would be happy to Schedule a sit down and learn more about your mission.
If your team decides you would like to work with us? We can do the heavy lifting for you. We are also professionals for Executives and Business owners who require sensitive private secure services to protect all your teams professional reputations, leadership positions, and keep your Shareholders happy with your decisions and Job performance. My partners have built and operate company’s you see in the Wall Street Journal. I am lucky to have such wonderful mentors and partner advisors. And they can be yours as well.
Have you ever got the feeling your missing something critical before moving forward with a Position on Wall Street? I had that feeling as well. And since I did I did some basic research on the Media reports on TV. And what I found was interesting and concerning. I found the Media Wall Street rely’s on is incorrect most of the time. So we need to do some Due Diligence on Wall Streets Media Machine. And I can share with certainty. Those who are Hedge Fund managers and Active Traders will find these resources very useful. Check out this amazing little research group. Muddy Waters Research.
HEDGE FUND MANAGERS & DAY TRADERS RESOURCES
If your like most Day Traders and Hedge Fund Managers or Analysts you don’t have time to monkey around. Time is money, money is time. So you get busy! LOOK Before you stop and take that TV Report on a Public Company serious? I would stop and do some basic research. And this research group I was introduced to by Mr. Bill Ackman at Pershing Square Management is complete and utter gold. Link Below.
Ok, here is another resource for you guys that need it. Check out these guys as Wolfe Research Group.
Wether you need Research and Market Insights or Intelligence? This firm won’t disappoint. If they do? Well nothing is without risk. But we would highly suggest looking and meeting Market Research Teams.
If you found value on my little corner on the Web?
All I ask from you is to copy a link and paste it onto your blog or website or social media directing visitors my way as a thank you for the value listed here.
If your interested? Why is Wall Street losing traders? Watch the report or story on CNBC Youtube below.
The Kansas Public Employees Retirement System (KPERS) holds $35.9 million in Russian securities, the Missouri State Employee Retirement System (MOSERS) about $9 million. The Missouri Local Government Employees Retirement System (LAGERS) has $8.3 million in Russian holdings.
Read more at: https://www.kansascity.com/news/politics-government/article258931603.html#storylink=cpy
Buckle Up this is gonna be a fast course in how and what you can do superficially when raising money as a new Fund and some basic level rules. You are not gonna want to miss this.
Investment Funds Regulations SEC Regulation D
The one thing you must know about a Regulation D filing is you as a Investment Fund Manager can Fundraise “UNLIMITED” amounts of money.
It’s likely most Business Entrepreneurs won’t understand the difference between a Regulation A vs. Regulation D? Well to put things into basic perspective Cardone Capital is a Real Estate Fund that is Regulation A, and he has a Fund that is a Reg D 506(C). Typically Regulation A Funds are generally geared to Crowdfunding. Meaning you can advertise, do all the online marketing to attract non accredited and other qualified investors to your fund.
But unlike Reg D funds? Reg A funds need to have all the legal documents Paperwork and more set up and prepared before opening the fund to investors.
Public Companies have quarterly and yearly statements, yearly audits, and lots of transparency because the SEC requires a level of public scrutinization that Reg D 506(b) and Reg D 506(c) funds do not.
SEC Regulation D 506(B) Investment Fund
Here are some basics that need to be accounted for, under Regulation D 506(b)? This allows a new Fund to accept investments from an unlimited number of Accredited Investors and 35 non-accredited investors. (SIDE NOTE) Say you are going to accept investments from non-accredited investors this will be a ton of additional work. If you remember from other sections? A person who meets SEC guidelines of Accredited investor has a net worth of 1 million dollars or make at lease 250,000 a year income. If you accept Non Accredited Investors there is more disclosures. Most of the SEC guidelines and Federal Laws are written to protect the little guy who does not make over 250,000 a year and is not Financially Sophisticated enough to negotiate risk averse actions of Investments. So the Securities and Exchange Commission does require Investment Fund Manager and Professionals to know who your Investors are.
Usually its generally accepted by Financial Investment Fund Managers and Entrepreneurs that not accepting non accredited investors to invest in your new fund is easier for the new Fund Managers who are building their first fund. If you do accept non accredited investors? There will be more paperwork, statements, and you must over disclose to make sure the Non Accredited investor understand what they are getting themselves into.
Details of a Reg D 506(b)
If you are fundraising for a Regulation D 506(b) Fund? The accredited Investor must self verify themselves by checking a box on the forms provided. Declaring they are indeed a Accredited Investor. However for a Reg D 506(c) fund? The Fund accredited investor must provide a letter from a Financial Advisor, Accountant or Attorney, or some sort of proof they are indeed an Accredited Investor. But on a Reg D 506(b) they only need to “self verify” they are indeed a accredited investor. But what if they fudge or lie on the form? Yes they absolutely could. But you should be covered. The investor has verified they are sophisticated enough and understand the rules of investing in your 506(b) fund.
So how does a Reg D 506(b) Fund manager acquire investors? Well it’s important first to share that if you do in fact begin fundraising money for a 506(b) Investment Fund? According to SEC Guidelines and Mandates you are “NOT” allowed to mass advertise to attract and acquire clients. This is why you never see the Top firms in Private Equity publicly advertising for business.
This is important to point out. There is a difference for a Regulation D 506(c) Investment Fund? You can Advertise for a Regulation D 506(c) Investment Fund to Attract Accredited Investors ONLY.
RAISING CAPITAL FOR BOTH REG D 506(B) and 506(C) FUNDS
You will need to File your FORM D with the SEC. (15days after receiving a Check from a Investor)
Your Form D should be filled by your Securities Attorney – NO EXCEPTIONS
You are allowed to Raise Unlimited amounts of Funds for both Red D – 506 Funds
You must follow and file with the State as well
506(C) Funds Managers need to Verify the Investor is an Accredited Investor by w2 or Tax docs.
506(C) Funds Managers are allowed under SEC Guidelines to Mass Advertise
506(B) Funds are not allowed to advertise. Your only allowed word of mouth referrals. And allowed to accept individuals who are personally already known to you. No Exceptions.
Kansas Insurance Agency Forms for Investment Funds and Professionals (CLICK HERE)
However for Reg D 506(B) and 506(c) Investment Funds Fund managers are required by SEC guidelines to only pitch investment fund opportunities to individuals they already have met. So the next time your at the country club and a Dentist begins chatting me up as a Entrepreneur and learns I am starting a Fund? I am not allowed to pitch the Dentist this first time meeting. The rules are strict. But that is how this world works.
Regulation A Investment Funds
This article is not about SEC Regulation A Investment Funds. However I would like to expand just a bit more on this interesting topic. One of the downsides of REG A Funds is you must have them Filed and prepared before going out into the market to raise funds for this type of Fund. This includes your Attorneys and your all the accounting prep and much more. And honestly if your a Entrepreneur that can be simply out of reach. Plus the transparency is much more strict. Meaning you will need to have reports publicly published every quarter or more to Investors and the Public.
With Reg A Investment Funds you are allowed to Advertise on a Mass Scale to attract Investment Capital LP’s. This is good for the person who does not make 250,000 a year and for those who are not sophisticated enough to leverage having nearly no experience with risk in Investing. The SEC does want to protect Grandma or John who do not have a net worth over 1 million dollars.
In closing? I would love to take the time to share a Big and warm Thank you to my buddies in Utah for always hooking me up and putting me on the right path. And to the rest of you? I genuinely hope you leave with a better understanding and some guidance about SEC Reg D 506(B) and Reg D 506(C) Investment funds.
Keep checking back soon enough I am learning just a ton on my journey and I hope to share a small piece with others out there who would love to know more. If you are a Executive who wants to take the next step of starting a fund and learn how I have been so successful making headway in Financial Circles? And want to know how you can fundraise easily and smoothly? Please Email me below for a few hours of One on One Coaching. Click the Button.
