| Most of us would love to capitalize on the sweat
equity in our business. Most often it is part of the intangible assets and
doesn't even show up on the balance sheet. And, we all know that our simple
Book Value or Net Asset Value (NAV) is way too low! |
| All the intangibles within Big Business get valued
within price/earning multiples -- usually beginning around 6x -- they're hot
over 100x earnings. So, what Steve Watkins is doing is shaping a P/E for
privately-held businesses! |
| With the advance of the Internet, not only is this
possible, but it really has to be done. If we can take even 20% of the people
in group #1 and move them into this group or any of the others above, a major
small business revolution will have begun. We will begin reversing the failure
at the end to transfer the most important assets of a business, its knowledge
base. |
|
Topic for Discussion: What is preventing us
from being a little more creative? |
Answer:
1. We're doing our
business. Too many of us are working in our business and not working on the
business. We can all get so involved with the details of day-to-day that we
just don't pull away to look at the strategic and long-term pictures.
|
| 2. It is too much work. The learning curves
are too steep. And it all costs too much! In the public market and IPO/DPO
markets, it seems like every time you turn around, the market makers want
another $30,000, so we ask, "If I were to take that $30,000 and $18,000 for
maintenance and put it into a mutual fund, would I be ahead in ten years?" It
is a legitimate question. |
| 3. Our idea is not big enough. Especially
among the sole proprietors, millions of our businesses are lifestyle business.
We have a body of work we do as an independent agent for a select group of
clients and much of it is based on who we know and how well they know us. It is
not a transferrable asset as it stands. We are not going to let this answer or
the first two answers stand. This web site and the television show are focused
on the learning curves and the infrastructure so you can more readily exercise
one of the last three key ideas. |
|
Topic for discussion: Why haven't we seen a
dozen companies like Entrex? |
| Answer: We have. They've come and they've
gone. Many people have tried doing what Steve has done and they failed. Steve
has had the history and depth (money) to carry his vision forward so Entrex is
real and they are doing deals. |
| This is what they say on their web site: "Entrex
works through an SEC sanctioned market to create a "public shareholder
marketplace". Collectively we serve as a PUBLIC MARKET for PRIVATE COMPANY
SHAREHOLDERS. By creating a central information platform for this market we
help to provide liquidity options for stockholders beyond the traditional route
of IPOs, mergers and/or aquisitions. Through an SEC sanctioned exchange, your
company stock can be listed, traded and even distributed on financial tickers
out to the financial brokerage and investment banking community." |
| Some of the advantages to participants in this
market can be: |
- Trade existing shareholders publicly -- without a
public offering. Raise private capital with planned liquidity for investors.
- Give existing shareholders and founders a new exit
opportunity. Founders can potentially cash out as part of the program.
- Increase the earnings multiple for your company
when being valued for potential merger/acquisition opportunities.
- Use your company stock as a currency for
acquisitions
|
| Individually, it could work for you if you are
able to provide the investor with a return, e.g., a proposed dividend schedule
and an exit strategy. The investor's exit is tied to yours. Ultimately, do you
intend to sell the company? Go public? The investor will require answers to
these important questions and a timetable to evaluate the investment
opportunity. |
| Topic for discussion: What does it take to
execute a SCOR? |
| Answer: Unlike the initial public offering
(IPO) under the Securities and Exchange Commission (SEC), a complicated,
expensive process, the SCOR is under your state's Securities Commissioner; and
by comparison, it is a fairly inexpensive and straightforward way to go public.
|
| David Porter said you need an attorney, an
accountant and a stock broker. Tom Stewart Gordon estimated a total cost of
about $30,000. The IPO process costs well over $1 million in underwriting,
legal and accounting fees. If you are interested in investigating a SCOR
further, start by obtaining the downloadable SCOR issuer's manual, SCOR, Small
Corporate Offering Registration, How to Complete the Question and Answer
Disclosure Document for Your SCOR or Reg. A Filing from the website of the
North American Securities Administrators Association at http://nasaa.org.
|
| This 100+ page manual has a soup-to-nuts
description of what you need to know about the application process. Here's an
excerpt from the beginning of the issuer's manual: "Part I of this Manual
informs you of the general requirements to use and file the Form U-7, called
the "SCOR Form." |
| Part II of the Manual provides specific directions
on how to fill out the SCOR Form. Once completed, the SCOR Form may be filed as
the main disclosure document for offerings being registered in all states
accepting SCOR." Part II has a separate section for each of the 50 questions of
the Form U-7, making it a user friendly document when a number of different
people contribute to the preparation of the prospectus. You could answer some
of the questions yourself while employees and/or outside consultants answered
others. That way you could minimize your cost and still produce a high quality
disclosure document. At the same site, you can obtain the necessary forms for
filing in MS Word, further facilitating the document preparation. |
| You think about it: Can you imagine having
shareholders? What would you do with the money you could raise with a SCOR?
|
