Strategic-Planning
What's The Better Deal: On Making Successful Corporate Choices
In 2005, your private NON-US company grosses $1 million. Your Fairy Godmother will give your company $10 million. You won't have to repay the money. You'll keep 100% equity in your company.
Your alternative is to have our associate take your NON-US company public. They'll raise money for your company and train you in the corporate game of controlling your stock. The process will cost you a small percentage of your company. Your insiders will retain the majority and of your company's stock and complete operating control.
In either case, you'll use the money wisely to build your company along the lines he will teach you. In five years, you'll want to sell your company. At the time of your company's sale, your company's profit is $3 million/year.
Which offer should you have taken five years earlier to get the best price for your company?
The Fairy Godmother offer leaves you with 100% ownership of your private company. Your private company should sell for 1.5 times its annual profit. Your golden parachute is worth $4.5 million.
Our associate?s programme assumes a public company merger in five years. Your stock should trade over $20/share. Your insider shares will be worth over $100 million.
Which was the better deal?
The moral of this story is take your operating company public. The money you'll raise from your equity financing isn't as much as the money you'll earn from the sale of your stock.
Mr. Eric Barnes is President & General Manager of Capital Funds Group Ltd., a Canadian based consulting firm specializing in Putting Companies and Money Together. They also work with non-US companies to take them public rapidly and inexpensively, then getting them funded. Visit our Web Site Email Him
Eric P. Barnes
Tags: going public, merger, stock, non US, golden parachute, equitySimilar articles
Understanding The True Cost Of Corporate Office Space
How do I assess my true office accommodation costs?We have been asked by a number of clients to help them identify the true cost of an office or location. Read more →Vision Statements that Confuse and Bemuse
Since the 1970's vision statements have adorned the walls of most organisations, being used to communicate the direction in which an organisation is heading. Read more →When Politics Dominate Your Organization
There are many resemblances between politics and management. One of them is that they both share the development of Policies. Where should your company differ from a political institution in order to be successful? Read more →Why Sign Up for Business Coaching
Business coaching is not solely about fixing broken businesses. Business coaches also work with business owners who are already successful. These business owners sign up for business coaching to help them achieve even greater successes. Read more →Aphorism
How do you decide which active funds to select?
William Sharpe