well, here is my rare detailed, actual, serious, for real, opinion (with some explanation - though most should be obvious to all) - no mas espagnol for this.
i agree with both nick and awesome b. to some extent, but this is a bit more beyond the thunderdome. gave this a little more thought.
need detailed agreement and quantified/verified info (due diligence) - not just - "hey, we'll give you some money "soon", and will give you shares in our company which we can run how we want (i.e., no more after we're done, your % of ownership may be reduced from 10% to .001%; we will pay ourselves what we want and deal with "our" assets as we choose (including selling to ourselves or our other companies for a penny on the dollar); and will tell you what we want, when we want, if ever, but again, "soon" it will be better if you agree - trust us). So:
(1) get as much money now as youo can (more is better, whatever there is may not be there in a year, although more excuses certainly would.
(2) if this was real (not misfit) continuing investment decision - by settling/discounting for "if come" investment value - which is kind of like a capital call from existing investors given the (our/their) history, i would want more detail, everything in writing, and the following in addition to any promises already received by Matt as condition of going for this (some necessary, some subject to tweaking:
(a) THIS IS NECESSARY. Open books of ACLY for present and periodic review by someone competent (not me) and trustworthy - including p/l statement, complete financial statement, and complete shareholder list; include disclosure of salaries/compensation, and tight cap - keep the principal employees/officers pay minimized, give them controlled stock incentives (so that their main compensation is contingent on success, and is shared with existing shareholders (e.g., PGPM - us). Need someone to be responsible for/to verify accuracy of what info is provided, too.
(b) THIS SHOULD BE GIVEN IN SOME FORM(since discounting note payment for future promises - must maintain ownership in exchange for risk). Get written assurances of no further dilution of PGPM % ownership absent certain conditions, such as minimum share value of "X"; i.e., if issue new stock PGPM receives stock distribution to extent required to keep its ownership percentage the same (this could be condition of preferred stock - by the way, what are the proposed "preferred" stock terms - especially upon liquidation, conversion or distribution?).
(c) THIS MUST BE GIVEN. No reverse splits absent certain conditions or absent consent of PGPM rep (who must make decision on what is best interest for PGPM).
(d) ??. Priority in any payments out to preferred shareholders (e.g., with respect to distributions).
(e) Requirement of guaranteed base valuation for any future stock sales (i.e., must get "X" per share), absent PGPM approval.
(f) THIS SHOULD BE A GIVEN. Definitely representation on ACLY board (and possibly veto rights for future asset divestment/sale/stock dilution or splits - see above) to assure no dilution of assets or sale/transfer below market to insiders or their affiliates.
(g) THIS SHOULD BE A GIVEN, AND IS TOTALLY REASONABLE. Requirements for periodic reporting/disclosures to shareholders/PGPM (no more secret games among the old boys network).
(h) THIS GOES WITHOUT SAYING, BUT GIVEN TRACK RECORD, MUST BE SAID. No sales other than cash sales at value (actual, not depreciated) to insiders or their affiliates.
(i) THIS REQUIRES SOME THOUGHT, BUT IS A DEFINITE REQUIREMENT: Sanctions for violating any of the foregoing or any agreed conditions must be provided (personal guarantees are real nice, but so is winning the lottery).
anyway, before i or my clients put up $ in such a situation, these are types of considerations at issue.
there is my substance for this quarter - now i can go back to cerveza.
laz
AI
