One of the most important areas of the Online Resource Center, and the first step in our process, is the Pre-Offering Structuring section. As with the process section - this section is specific to the type of transaction that you have.
Setting your transaction structure properly is critical to developing an offering that investors will find attractive. In an equity transaction our structuring guidance includes such items as: which Regulation D Offering program to use, how much of your company's stock or membership units should be sold, stock and unit pricing, essential materials needed for developing the offering, business plan analysis in relation to investment, setting corporate share/unit structure, determining how many shares or units management should own pre-offering, and setting the minimum and maximum offering amounts. It is critical to set the share/unit structure properly. Too little total authorized shares/units may hamper the ability to conduct additional rounds of funding. Setting share/unit price can also vary depending upon the transaction and the needs of the client.
One of the main questions asked by clients in equity transactions is "how much of my company do I need to sell?" While each deal has different parameters - this answer to this question is typically based on the projected profit of the company or project. We guide clients through a "Projected Income Model" to allow them to model investor returns. This mathematical formula allows you to accurately model how an investor will receive a return based on your profit assumptions. You can then adjust how much of the company is being sold to increase or decrease the anticipated return.
If preparing a debt offering you would be guided through such items as how to set up the debt offering structure, how many notes to sell, note amounts, rate of return per year, maturity date (term of loan), etc.
The structuring phase is the very first step in our program which ensures that when the documentation preparation phase begins that all needed decision items have been completed and the transaction structure is properly formulated. The structuring phase is where a great deal of our one-on-one consulting takes place.
Most of our clients are surprised at the amount and type of data that is needed to be decided upon to properly structure a transaction. They are all critical elements that will impact the success of your fund raising efforts.
