Raising Capital & Funds | 5 Step Procedure - Equity Capital Solutions (ECS)

ECS has considerable "hands-on" experience and practical know-how in regard to sourcing funds and our methodology has evolved over several years. Our not-negotiable 5-step procedure may be summarised as follows:

Free Confidential Consultation and Review
Meeting with Mr McDonald
Retainer
Offer Document
Face to Face Presentations

1. Free Confidential Consultation and Review

Privacy and/or confidentiality in business are usually desirable and often essential. Clients may be concerned at the outset about revealing sensitive or confidential information and ECS is always prepared to execute a Confidentiality Undertaking without obligation and before any discussion takes place. ECS is available to initially consult with the Client by telephone without obligation and is also prepared to review project information and conduct in-house research and due diligence at no cost. ECS favours fundraising projects and investments with "above-average" financial and/or environmental and/or humanitarian merit. If the findings from our review are positive Mr McDonald will visit the Client for an in-depth meeting and site inspection (if applicable).

2. Meeting with Mr McDonald

The meeting with Mr McDonald is designed to thoroughly investigate every aspect of the proposed or existing project. Meetings usually take one or two days and participation by the Client's colleagues, associates, attorneys, accountants, etc., is encouraged. Matters to be discussed include: financial structure, valuations, cash flows, Board composition, management, listing, investor exit, the method(s) of fundraising to be employed, the steps required to achieve a successful result, timetable, etc. Mr McDonald may be accompanied by a Representative at this initial meeting especially if language is a factor. ECS prepares both a Letter of Offer and Fee Mandate in draft form for consideration and approval at the meeting. The Fee Mandate is a legally binding Agreement between ECS and the Client setting out the role to be performed by ECS and fees payable by the Client once the required funds are raised. A Travel Contribution ("TC") is imposed to reduce Mr McDonald's travelling, accommodation and visa (if applicable) expenses and amounts to AU$1,000 for visits within Australia & New Zealand and US$2,000 for visits outside Australia & New Zealand. The TC is not negotiable and non refundable.

3. Retainer

ECS is primarily success-based however in order to recoup initial expenses incurred including office overheads, research costs, costs of rewriting project material, photographic costs, printing costs, costs of syndication, costs of Offer Document distribution, etc., ECS imposes a Retainer. ECS has succeeded in reducing the Retainer by increasing Success Fees. Our minimum Retainer is US$10,000 and maximum US$50,000 and payment may be made by equal monthly instalments (albeit at a 20% premium). Clients may choose one of five Options. The following matrix is provided only as a hypothetical example:-

Option	Retainer	Success Fees
Option	Retainer	Equity Funds Sourced	Debt Sourced	Share of Project
A	US$10,000 (OR 3 payments of US$4k pm)	14%	6%	10%
B	US$20,000 (OR 4 payments of US$6K pm)	12%	5%	8%
C	US$30,000 (OR 6 payments of US$6k pm)	10%	4%	6%
D	US$40,000 (OR 6 payments of US$8k pm)	8%	3%	4%
E	US$50,000 (OR 6 payments of US$10k pm)	6%	2%	n/a

The Success Fee percentage is based on actual gross funds raised directly or indirectly by ECS. The first Success Fees column concerns equity or risk capital raised, the second Success Fees column concerns debt raised and the third Success Fees column is that percentage of the project awarded to ECS for successfully sourcing the required funds.

Clients should carefully consider their choice of an Option especially if the amount of funds sought exceeds US$5M because once an Option is selected and legally mandated it cannot be changed. The following examples highlight the ultimate disparity in the eventual cost of funds due to Option selection.

EXAMPLE 1

Using the above hypothetical matrix the eventual total cost to source US$5M in equity funds using Option A would be US$712,000* PLUS a 10% share in the project whereas by selecting Option E the cash cost is less than half or US$354,000 with no share foregone in the project. The significant difference between these Options is US$358,000 PLUS 10% of the project.

*US$2,000 (TC) + US$10,000 (Retainer) + US$700,000 (Success Fees Equity) = US$712,000

EXAMPLE 2:

Using the above hypothetical matrix the eventual total cost to source US$50M in say, equity of US$30M plus debt of US$20M using Option A would be US$5,412,000** PLUS a 10% share in the project whereas by selecting Option E the cash cost is less by 58% or US$2,254,000 with no share foregone in the project. Thus the very significant difference between these Options is US$3,158,000 PLUS 10% of the project.

**US$2,000 (TC) + US$10,000 (Retainer) + US$4,200,000 (Success Fees Equity) + US$1,200,000 (Success Fees Debt) = US$5,412,000

EXAMPLE 3

Using the above hypothetical matrix the eventual total cost to source US$500M in say, equity of US$150M plus debt of US$350M using Option A would be US$42,012,000*** PLUS a 10% share in the project whereas by selecting Option E the cash cost is less by 62% or US$16,054,000 with no share foregone in the project. The huge difference between these Options is US$25,958,000 PLUS 10% of the project.

***US$2,000 (TC) + US$10,000 (Retainer) + US$21,000,000 (Success Fees Equity) + US$21,000,000 (Success Fees Debt) = US$42,012,000

4. Offer Document

Many seekers of funds do not place sufficient emphasis on the importance of professional documentation and fail because of it. Often the information supplied is too voluminous and/or poorly arranged so that those contemplating investment simply give up. ECS undertakes research and due diligence and authors and illustrates a professional document ("Offer Document") specifically for the fund sourcing project which may take various forms such as a registered Prospectus or Information Memorandum, etc. The completed Offer Document comprises a professionally-bound succinct summary of the opportunity and electronic versions of same (Video, PowerPoint, etc.).

Selecting the right audience for the Offer Document is obviously of paramount importance and requires skill and know-how. ECS maintains an extensive, fresh and growing global database of sophisticated investors, fund managers, high-net-worth individuals, angels, investment funds, private placement sources, investment banks, lenders, brokers, joint-venture partners and contacts and we secure both equity and/or debt funding from these and a plethora of other fundraising sources.

In addition to distributing the Offer Document worldwide via our Representatives we "up the ante" by syndicating the proposal to other competing professionals in the capital raising space thereby also accessing their networks. The primary mission of ECS is to secure funding for the Client and in order to help achieve this goal ECS also authors copies of the Offer Document specifically for other successful and experienced professionals and organisations in the fundraising industry. ECS is usually able to engage and remunerate these parties at wholesale rates thereby ensuring wide circulation of the Offer Document.

5. Face to Face Presentations

As soon as the Offer Document is perfected and agreed upon by the Client it is widely disseminated and all serious inquiries and/or expressions of interest in participating in the project are immediately followed up by face to face presentations involving both ECS and the Client.

Our 5-Step Procedure