Posted on: 02 July, 2004
Author: William Cate
SpinoffsBy William CatePublished August 1999[http://home.earthlink.net/~beowulfinvestments/] [http://home.earthlink.net/~beowulfinvestments/globalvillageinvestmentclubwelcome/] Doing a spinoff is ten ... SpinoffsBy William CatePublished August 1999[http://home.earthlink.net/~beowulfinvestments/] [http://home.earthlink.net/~beowulfinvestments/globalvillageinvestmentclubwelcome/] Doing a spinoff is ten times better than buying a shell. Your spinoff willbe clean. You'll retain a higher percentage of your stock. It costs youless. If you doubt me, send me a self-addressed stamped envelope and I'llsend you my spinoff articles from "Time" and "American Venture." I work with two public companies willing to spinoff private companies.1. Company A will spinoff almost any sound company with competent andhonest management. They'll consider a well-designed startup. They are mydefault solution for private companies seeking to buy a shell. The cost is $25,000 less the payment by the public company for your stock.You should add legal and accounting costs. I would recommend this company's auditors who usually charge less than $20,000 for their audit. I would recommend my California Securities Attorney who will want a $25,000retainer against a $75,000 flat fee. This will bring your total costs tounder $115,000. You'll be responsible for stock support and finding yourPrivate Placement financing.2. Company B is selective. They require that the company have at least twomillion dollar gross revenues with at least five hundred thousandreinvested pretax profit. The company must have an international market fortheir product or service. They arrange up to a $10.4 million OffshorePrivate Placement financing for their clients. They'll pay your legal costsand your brokerage costs for the Private Placement. They'll supplysupplemental funds for your Stock Support Program. They want to be involved with your company for at least five years. They'll want a seat on your Board of Directors. You must be willing to pool and vault the insider stock for five years. They charge $225,000 with a $60,000 retainer and 100,000 shares of yourstock. It's a cost effective turnkey service for companies that meet theirrequirements. Doing a spinoff allows your insiders to retain 90% of the issued shares ofyour company. If you accept the Company B Offshore Private Placementfinancing, you'll still have over 56% control of your company. Compare thatto the usual 60% control you get with a shell, WITHOUT A FINANCING. Compare costs with buying a shell. The shell will cost you $150,000. Youmust add the costs of an audit, cleanup costs and legal costs. If youarrange a financing, you must add the underwriter's cost to the cost ofbuying your shell. Which makes more sense? Pay $25,000 or pay $150,000. To contact the author: Visit the Beowulf Investments website: [http://home.earthlink.net/~beowulfinvestments/] Or, visit the Global Village Investment Club Website:[http://home.earthlink.net/~beowulfinvestments/globalvillageinvestmentclubwelcome/] Source: Free Articles from ArticlesFactory.com