Proof of Funds & Down Payment Investors for SMB Business Buyers: A Capital Raise Solution

02/08/24 • 45 min

🚀 Get My Free Book! 📖 How to Buy Your First Million Dollar Business
Summary
William Fry, CEO of Mainshares and founder of Beacon Business Brokerage, discusses how Mainshares helps SMB buyers close the gap in equity funding. Mainshares provides a network of credit investors interested in owning a piece of SMBs, allowing searchers to find additional equity infusion to complete acquisitions. Mainshares assists in structuring the deal, providing standardized investment documents, and facilitating compliance. The platform also offers tools to manage the capital raise and access to investors. Fry advises entrepreneurs to start early, build relationships with investors, and create a cohesive narrative for the capital raise. He emphasizes the importance of transparency, momentum, and prioritizing anchor investors. The conversation explores various aspects of raising capital and working with a broker dealer. It also discusses compensation for referrals and the trend of all equity deals in the future.
"Mainshares is a platform for entrepreneurs and investors. Broker-dealer services provided in connection with some of the investment opportunities on the Mainshares platform are offered through Main Street Securities LLC, a registered broker-dealer, affiliate of Mainshares, and member of FINRA/SIPC. For additional information, please contact your licensed securities representative of Main Street Securities LLC or visit FINRA’s BrokerCheck."
Chapters
00:00 Introduction to MainShares and Beacon Business Brokerage
01:02 The Problem of Closing the Gap in Equity Funding
02:01 MainShares' Role in Capital Raising and Deal Closing
03:01 Structuring the Deal and Identifying Investor Preferences
04:20 Standardizing Investment Documents and Compliance
05:42 Differentiating Between Transactional and Strategic Investors
06:29 Flexibility in Working with MainShares and Other Investors
07:20 Pricing Options for Entrepreneurs on MainShares
08:13 Comparison to Other Investment Platforms
08:18 Timing and Preparing for the Capital Raise
09:34 Early Engagement and Building Relationships with Investors
10:04 Structuring the Equity Raise for Different Business Types
12:28 Preparing for Investor Exits and Liquidity Events
13:11 Considerations for Overvaluing a Business
15:18 Creating a Narrative for the Investment Structure
16:32 Proof of Funds and Pre-Qualification Letters
17:58 Creating FOMO (Fear of Missing Out) Among Investors
19:10 Timeline and Closing the Capital Raise
21:20 Crafting a Cohesive Capital Raising Narrative
23:47 Avoiding Over-Engineering the Deal and Focusing on Operations
25:46 Reaching Out to Investors and Creating Momentum
28:26 Attracting Investors for Niche Businesses
31:13 Creating Urgency and Closing the Capital Raise
34:41 Coaching Blue Collar Operators in Raising Capital
36:40 Transparency and Timelines in the Capital Raise
38:31 MainShares' Approach to Growing the Investor Network
40:51 Working with a Broker Dealer
43:04 Compensation for Referrals
44:14 Raising Capital with Debt or Equity
45:44 The Rise of All Equity Deals

Previous Episode

From Single Family Home Real Estate Portfolio to 22 Vertically Integrated Business Acquisitions

🚀 Get My Free Book! 📖 How to Buy Your First Million Dollar Business
Summary
In this conversation, Michael Byars shares his journey as a serial entrepreneur and his experience in acquiring and managing multiple companies. He started his entrepreneurial journey with a tech company and later transitioned to the restaurant business. After selling his restaurant, he ventured into real estate and began acquiring companies in various industries, including HVAC, plumbing, and forest mulching. Byars emphasizes the importance of adding value to the companies he acquires and implementing systems and processes to drive growth. He also discusses his approach to advertising and the importance of targeting specific demographics. Additionally, Byars shares his experience in acquiring a coffee chain and the benefits of partnering with someone who has a passion for the industry. In this conversation, Michael Byars shares his experiences acquiring and managing multiple businesses. He discusses how he acquired a coffee shop by reaching out to the owners and negotiating a deal that worked for everyone. He also talks about his acquisition of a mailbox company and the success of the business model. Michael emphasizes the importance of cashflow and building a strong team of talented individuals. He shares a lesson learned from a failed acquisition of a concrete company and highlights the importance of due diligence. Overall, Michael's approach to entrepreneurship is focused on creating win-win situations and building a positive company culture.
Chapters
00:00 Introduction and Background
00:57 Starting the First Company
02:22 Growing and Selling the Tech Company
03:22 Transition to the Restaurant Business
05:03 Challenges and Lessons from the Restaurant Business
06:25 Transition to Real Estate
08:57 Expansion into Other Industries
11:59 Acquiring HVAC and Plumbing Companies
16:23 Financing and Managing Acquisitions
19:42 Managing Multiple Companies
22:35 Growth Strategies and Advertising
28:08 Acquiring a Forest Mulching Company
34:09 Diversification into a Coffee Chain
35:58 Acquiring a Coffee Shop
39:35 Partnership and Responsibilities
42:08 Due Diligence and Financial Integrity
43:30 Acquiring a Mailbox Company
44:47 Success of the Mailbox Business
48:36 The Importance of Cashflow
49:04 Ownership and Cashflow Distribution
52:22 Automating Business Processes
53:05 Lessons from a Failed Concrete Company Acquisition
57:46 Managing Multiple Companies

Next Episode

Achieving Success in the Lower Middle Market: an Interview with CEO Sier Capital Partners, Kevin Ramsier

🚀 Get My Free Book! 📖 How to Buy Your First Million Dollar Business
Summary
Kevin Ramsier, CEO of Sier Capital Partners and Rival Capital, shares his journey in the M&A industry. He discusses his background and the motivation behind starting his own business. Ramsier reflects on the importance of aligning personal values with business decisions. He shares his experience of buying and selling companies, including SWOT Environmental and Sage Integration. Ramsier also discusses the role of partnerships and relationships in finding deals and the importance of buying businesses at the right price. In this conversation, Kevin Ramsier discusses the due diligence process, deal sourcing, building relationships with sellers, and working with unmotivated sellers. He also talks about flexible deal structures, managing sellers through change, and maintaining confidentiality in deal discussions. Kevin shares insights on understanding seller goals, challenges of transitioning ownership, and handling disagreements and respect in partnerships. He explains how to select partners, evaluate potential deals, and assess financials and growth prospects. He also highlights the strategic competitive advantage in the greenhouse industry and the importance of capitalizing the business and preparing for headwinds. The conversation concludes with a discussion on partnership structure.
Takeaways
• Aligning personal values with business decisions is crucial for long-term happiness and success.
• Building relationships with family offices, private equity firms, and other professionals can lead to deal opportunities.
• Timing and pricing are key factors in successful acquisitions.
• Having a clear growth strategy and leveraging unfair advantages can drive business success. The due diligence process involves legal due diligence, insurance and risk due diligence, and quality of earnings due diligence.
• Building relationships with sellers is crucial for deal sourcing, with half of the deals being off-market and the other half coming from failed processes.
• Flexible deal structures, such as allowing sellers to roll equity and providing strategic guidance, can be attractive to sellers.
• Managing sellers through the transition involves understanding their goals, being patient, and providing support and creative solutions.
• Confidentiality is maintained through signing NDAs and emphasizing the importance of trust and respect.
• Understanding the seller's financials, growth prospects, and strategic competitive advantage are key factors in evaluating potential deals.
• The greenhouse industry offers growth opportunities, particularly in design, build, maintenance, and repair verticals.
• Properly capitalizing the business and preparing for headwinds are essential for long-term success.
• Selecting partners requires finding complementary skills and personalities that align with the company's vision and values.