by Bruce Smith When I first began thinking about investing, it was easy to get excited about start-ups (not that it isn’t any longer, but I’ve had my share of broken bones along the way). The chance to get in on a Google, an Apple or an Amazon stock while in its infancy is everyone’s catnip. But here’s a cautionary tale that explains what I’ve learned the hard way. I spent over a decade at a...
Some investors react with concern when a company pledges its assets as collateral. If the company can’t rely on its cash flow to get bank financing, they think the company must be in danger. ”Asset-based” financing (or ABL) to these folks suggests a company is close to failing and, thus, a bank will reject it. After all, a bank wants a well-performing portfolio – one with few failures –...
Look in any finance primer – you’ll see how highly structured and proscribed the public securities process is. Not so for private company securities. That’s why we spend so much time and effort up front on a deal doing our due diligence if for no other reason than to help our investors succeed. Some red flags are self-evident. Here’s an example that nearly derailed a deal entirely. We were...
In the evening of June 5, 2019, the Securities and Exchange Commission approved its final rule regarding Regulation Best Interest and Form CRS. How will that impact you? The new rules are designed to enhance investor protections while preserving retail investor access and choice in: (1) the type of professional with whom they work, (2) the services they receive, and (3) how they pay for these...
If you’re an accredited investor, you’ve probably heard about Qualified Opportunity Zones (“QOZ”). Here’s a short guide to outline the what’s, why’s and who might consider this investment strategy. What opportunities and challenges do QOZs address? Opportunity zones were created to spur economic development in distressed communities across the nation by the Tax Cuts and JOBS Act on December 22,...
If you’re thinking of crooning “Blue Skies,” you’d be in the right state of mind. That’s because each state has its own state Securities laws, or “Blue Sky” laws, that further protect Investors from Securities fraud. Here’s a brief overview of what those laws do for you. In other articles, we’ve discussed federal Securities laws - the Securities Act of 1933 and the Securities Exchange Act of...
You’re considering an equity investment in a private company with exciting prospects… Great, but do you really know what your “equity” investment in the company will get you? Investment characteristics of one type of private equity investment can be very, very different from another. This guide can help you understand better what’s being offered to you. There are 5 basic questions...
What should you look for when making a private loan to a business? It’s very important that you understand the standard commitments a business Borrower should be making to you… and that they are part of your loan documentation! A Summary of Terms (often called a Term Sheet) like the one described below, should be created and agreed to before you privately lend to a business. This...
In the interest of accessibility, here are some terms that any investor should be familiary with.
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