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•Equity Capital Raising Options
•Funding and Exit Strategies
•Being Investor Ready
•Valuations
•Share Capital Structure
•Possible Exits
•Small Scale Offerings
Equity Capital
Raising Options
Equity Raising in Australia
Non-Disclosure
(cannot advertise to public)
Small Scale Offer
$2m / $5m
20/12 rule
Retail & Sophisticated Investors
(personal offer)
Excluded Offer
Any amount ($)
Sophisticated Investors only
Disclosure
(can advertise to public)
Prospectus
Any amount ($)
Retail & Sophisticated Investors
Adv: Cost, access to Retail Investors & Sophisticates
Disadvantage: Distribution (Personal Offer), < $5m
Advantage: Can raise any amount ($)
Disadvantage:
Distribution (Sophisticated only)
Advantage: Can raise any amount ($); Distribution
Disadvantage:
Cost
The Funding and Exit Strategies
Stock Exchange
IPO
RTO
$1-5m
Seed Capital
Small Scale
Offer
Pre-IPO
Time
Trade Sale
Financial
Strategic
Special Private
Placement
$5-50m
Early Stage / Growth
Equity Raise
via Broker ($<5m)
Listed
SPP Facility
Convertible Note
Equity
Funding Strategy
Business Strategy
Becoming “investor ready”
oFunding Strategy Development
•Review of client / business situation
•Founder / Company / Investor exit options
•Review of financials (P&L, Balance Sheet, Forecast)
•Refinement and creation of business plans / forecasts
•Share Capital Structure calculation and Company Valuation
•Provision of Funding / Capital Raising Options
oBoard Directors and Management Team review
oCorporate Structure (working with accounting, tax and legal advisors)
oOffer Document (précis, offer document, information memorandum, prospectus, investor presentations)
oPR / Media Relations, Desk Top Publishing and DVD Production Services
oGrant and R&D funding options?
oDoes the company have enough working capital?
A word on investors and valuations
oThe more you raise the more shares you need to offer to investors
oValuations are based on the ability to monetise your ideas / products and depend on:
oIP and soft assets – patents, trademarks etc.,
oHard assets – plant and machinery, land, buildings etc.,
oEBIT – existing and forecast profits (in the next couple of years)
oStage of company, Board, Executive Team, ability to execute, innovate and to scale
oThe bigger the gap between the balance sheet and the valuation the bigger the gap the investor has to “jump over” to invest
oInvestors tend to invest in people not products (the product is assumed to work) – ie. business that can execute
oWe generally suggest to do a small raise, demonstrate value and execute on your business objectives and then raise again as required
Investors in unlisted companies
• Looking for high growth, leveraged companies
ie. superior returns (unlisted vs listed)
• Can participate in the company by being on the Board or executive team for growing and emerging companies
• Can oversee their investment (previous point)
• Can exit on the liquidity event (or stay with the company)
• Many unlisted companies exit via a strategic trade sale and get a higher price-to-earnings ratio than traditional trade sales
• Emotional vs sophisticated investors
• Sometimes invest as their self managed superfund as part of a balanced portfolio
Valuation and Share Capital Structure
EBITDA Breakdown
Revenue
Cost of Goods Sold
Operating Expenditure
EBITDA
Market Cap $1.9m
15.2% for $300K
Founders Value $1.6m
Market Cap $4.6m
30% for $1m
Founders Value $3.2m
Valuation depends on capital being raised and deployed to hit company milestones
A word on investors and valuations
oThe 5 things investors need to know:
oWhat does the company do?
oHow does the company make money?
oWho is running the company?
oHow do they invest?
oHow do they realise their investment?
oThe Valuation for the investor needs to be “fair value”
oWhat is on your balance sheet? Do you have any debt?
oWhat IP do you own and is it protected?
oManagement needs to be able to execute so they can deploy the funds to profitably grow the company.
oThe investor needs to be able to safely exit the investment in a reasonable time frame
Possible Exits
• Management Buy Outs
• Management team buys out the company (sometimes with help from a strategic investor)
• JV or Strategic Investor
• Supplier / Competitor / VC or Private Equity
• Financial trade sale
•Sell for a multiple of EBITDA
• Strategic trade sale
• Sell to a competitor or strategic investor
• Don’t build company out, but add value to acquirer
eg. drug company selling company to global pharmaceutical company
• Initial Public Offering
• List on a recognized stock exchange
• Which one and why?
• Overseas exchanges can be faster and cheaper that ASX
eg. Frankfurt / Toronto
• Reverse Take Over
• Vend into a “shell” either suspended or listed
• Usually complicated, time consuming and need to deal with “baggage of previous company”
• May need to go through Chapter 1 & 2
• Shells on other exchanges
Small Scale Offerings $1-5m
oStructured (Small Scale Offering)
•Suits emerging and growing companies
•Move private companies to Public Unlisted
(3 Directors, Audited accounts, Shareholder Meetings, ASIC overview)
•Introduction to investors via ASSOB process and BlueMount’s distribution channels
•Equity Raisings via non-disclosure (Section 708; 20/12; Class Order)
•Access to secondary Board so investors can trade shares
•Deal range $1-5M (and further raisings possible via disclosure)
•Company needs to be “investor ready” as per previous slides
•Offers to potential investors must be “personal offers” (to someone of interest as per their actions or words)
•Overseas and Sophisticated/Professional investors can also invest
The Australian Small Scale Offerings Board Limited
The Australian Small Scale Offerings Board (ASSOB) is the largest and most successful capital raising platform for showcasing equity investment opportunities in high-growth, unlisted Australian companies.
To date almost $130M of equity capital has been raised via a network of over 20,000 subscribers, many of whom are high-net-worth-individuals, angel investors and sophisticated investors in almost every industry sector including mining, IT&T, finance, green technologies, food & beverage.
ASSOB also operates the only Secondary Sales platform in Australia servicing the unlisted sector and providing a mechanism for investors to conduct share transfers in unlisted securities.
www.bluemountcapital.com
About Us
We serve predominantly sophisticated investors, private and public companies delivering a broad range of services including:
Equity and Debt Capital Raisings
Stock Exchange listings
Mergers, Acquisitions and Divestments
Management Buy Outs and Buy Ins
Cross Border International Transactions
Strategic Partnerships and Joint Ventures
Technology Commercialisation
Providing Opportunities for Investors
Contact Us Today
AUSTRALIA CHINA HONG KONG IRELAND UK
BlueMount Capital Authorised Representative for AFSL 288877
Level 18 Riverside Centre • 123 Eagle Street Brisbane Queensland 4000 Australia.
Phone +61 7 3112 2903 Fax +61 7 311 22601
Email brisbane@bluemountcapital.com www.bluemountcapital.com
Venture Capital - Mark Rainbird, BlueMount Capital
Seminar Overview•Equity Capital Raising Options
•Funding and Exit Strategies
•Being Investor Ready
•Valuations
•Share Capital Structure
•Possible Exits
•Small Scale Offerings
Equity Capital
Raising Options
Equity Raising in Australia
Non-Disclosure
(cannot advertise to public)
Small Scale Offer
$2m / $5m
20/12 rule
Retail & Sophisticated Investors
(personal offer)
Excluded Offer
Any amount ($)
Sophisticated Investors only
Disclosure
(can advertise to public)
Prospectus
Any amount ($)
Retail & Sophisticated Investors
Adv: Cost, access to Retail Investors & Sophisticates
Disadvantage: Distribution (Personal Offer), < $5m
Advantage: Can raise any amount ($)
Disadvantage:
Distribution (Sophisticated only)
Advantage: Can raise any amount ($); Distribution
Disadvantage:
Cost
The Funding and Exit Strategies
Stock Exchange
IPO
RTO
$1-5m
Seed Capital
Small Scale
Offer
Pre-IPO
Time
Trade Sale
Financial
Strategic
Special Private
Placement
$5-50m
Early Stage / Growth
Equity Raise
via Broker ($<5m)
Listed
SPP Facility
Convertible Note
Equity
Funding Strategy
Business Strategy
Becoming “investor ready”
oFunding Strategy Development
•Review of client / business situation
•Founder / Company / Investor exit options
•Review of financials (P&L, Balance Sheet, Forecast)
•Refinement and creation of business plans / forecasts
•Share Capital Structure calculation and Company Valuation
•Provision of Funding / Capital Raising Options
oBoard Directors and Management Team review
oCorporate Structure (working with accounting, tax and legal advisors)
oOffer Document (précis, offer document, information memorandum, prospectus, investor presentations)
oPR / Media Relations, Desk Top Publishing and DVD Production Services
oGrant and R&D funding options?
oDoes the company have enough working capital?
A word on investors and valuations
oThe more you raise the more shares you need to offer to investors
oValuations are based on the ability to monetise your ideas / products and depend on:
oIP and soft assets – patents, trademarks etc.,
oHard assets – plant and machinery, land, buildings etc.,
oEBIT – existing and forecast profits (in the next couple of years)
oStage of company, Board, Executive Team, ability to execute, innovate and to scale
oThe bigger the gap between the balance sheet and the valuation the bigger the gap the investor has to “jump over” to invest
oInvestors tend to invest in people not products (the product is assumed to work) – ie. business that can execute
oWe generally suggest to do a small raise, demonstrate value and execute on your business objectives and then raise again as required
Investors in unlisted companies
• Looking for high growth, leveraged companies
ie. superior returns (unlisted vs listed)
• Can participate in the company by being on the Board or executive team for growing and emerging companies
• Can oversee their investment (previous point)
• Can exit on the liquidity event (or stay with the company)
• Many unlisted companies exit via a strategic trade sale and get a higher price-to-earnings ratio than traditional trade sales
• Emotional vs sophisticated investors
• Sometimes invest as their self managed superfund as part of a balanced portfolio
Valuation and Share Capital Structure
EBITDA Breakdown
Revenue
Cost of Goods Sold
Operating Expenditure
EBITDA
Market Cap $1.9m
15.2% for $300K
Founders Value $1.6m
Market Cap $4.6m
30% for $1m
Founders Value $3.2m
Valuation depends on capital being raised and deployed to hit company milestones
A word on investors and valuations
oThe 5 things investors need to know:
oWhat does the company do?
oHow does the company make money?
oWho is running the company?
oHow do they invest?
oHow do they realise their investment?
oThe Valuation for the investor needs to be “fair value”
oWhat is on your balance sheet? Do you have any debt?
oWhat IP do you own and is it protected?
oManagement needs to be able to execute so they can deploy the funds to profitably grow the company.
oThe investor needs to be able to safely exit the investment in a reasonable time frame
Possible Exits
• Management Buy Outs
• Management team buys out the company (sometimes with help from a strategic investor)
• JV or Strategic Investor
• Supplier / Competitor / VC or Private Equity
• Financial trade sale
•Sell for a multiple of EBITDA
• Strategic trade sale
• Sell to a competitor or strategic investor
• Don’t build company out, but add value to acquirer
eg. drug company selling company to global pharmaceutical company
• Initial Public Offering
• List on a recognized stock exchange
• Which one and why?
• Overseas exchanges can be faster and cheaper that ASX
eg. Frankfurt / Toronto
• Reverse Take Over
• Vend into a “shell” either suspended or listed
• Usually complicated, time consuming and need to deal with “baggage of previous company”
• May need to go through Chapter 1 & 2
• Shells on other exchanges
Small Scale Offerings $1-5m
oStructured (Small Scale Offering)
•Suits emerging and growing companies
•Move private companies to Public Unlisted
(3 Directors, Audited accounts, Shareholder Meetings, ASIC overview)
•Introduction to investors via ASSOB process and BlueMount’s distribution channels
•Equity Raisings via non-disclosure (Section 708; 20/12; Class Order)
•Access to secondary Board so investors can trade shares
•Deal range $1-5M (and further raisings possible via disclosure)
•Company needs to be “investor ready” as per previous slides
•Offers to potential investors must be “personal offers” (to someone of interest as per their actions or words)
•Overseas and Sophisticated/Professional investors can also invest
The Australian Small Scale Offerings Board Limited
The Australian Small Scale Offerings Board (ASSOB) is the largest and most successful capital raising platform for showcasing equity investment opportunities in high-growth, unlisted Australian companies.
To date almost $130M of equity capital has been raised via a network of over 20,000 subscribers, many of whom are high-net-worth-individuals, angel investors and sophisticated investors in almost every industry sector including mining, IT&T, finance, green technologies, food & beverage.
ASSOB also operates the only Secondary Sales platform in Australia servicing the unlisted sector and providing a mechanism for investors to conduct share transfers in unlisted securities.
www.bluemountcapital.com
About Us
We serve predominantly sophisticated investors, private and public companies delivering a broad range of services including:
Equity and Debt Capital Raisings
Stock Exchange listings
Mergers, Acquisitions and Divestments
Management Buy Outs and Buy Ins
Cross Border International Transactions
Strategic Partnerships and Joint Ventures
Technology Commercialisation
Providing Opportunities for Investors
Contact Us Today
AUSTRALIA CHINA HONG KONG IRELAND UK
BlueMount Capital Authorised Representative for AFSL 288877
Level 18 Riverside Centre • 123 Eagle Street Brisbane Queensland 4000 Australia.
Phone +61 7 3112 2903 Fax +61 7 311 22601
Email brisbane@bluemountcapital.com www.bluemountcapital.com
