Acquisitions – Attracting Deal Flow

First of all, one should note start-up and early stage companies have an insatiable appetite for capital. They all think that what they have is so fantastic that, once you hear about it, you’ll be the one cutting the check. They have no idea of the size, scope and dimensions of the private capital markets, because they’re private. Sadly, it has been our experience, since beyond 1998 that  98% of all entrepreneurs haven’t a clue as to what they are doing in terms of raising capital, while maintaining personal wealth potential during the process. In addition, the vast majority of professional service providers, such as; attorneys and CPAs have knowledge in their respective fields, don’t know the private capital markets and the required deal structuring to meet that demand but may pose as if they do. Even worse, most of the entrepreneurs and professional service providers can be or already are in technical violation of federal and state securities laws, rules and regulations, without even knowing it. Entrepreneurs have a choice. They can stay in the herd of sheep or develop the wolf pack mentality. We don’t invest in sheep.

 

PRODUCTIVE  PROSPECTING

 

Through our automated Capital Access Portal, we’ve deflected the burdens and liabilities normally associated with qualifying deal flow away from you. We’ve taken great pains to simplify this process in order to ease your obligations so you spend more time having meaningful conversations higher up the food chain. We know how to keep you productive as possible, and that’s through automation backed by education. Your success will be in exact proportion to creating as many seamless entry points into our Capital Access Portal as possible, using your Alliances, as leverage, as well as using your URL, text links, linked banners and or Invitation Code directly.   Your Invitation Code is your first initial followed by a dash then your last name. For example: J-Morrison. No other Invitation Code will be accepted.

 

Our Acquisitions Phase starts with a 4-step filtration system:

  1. Alliances. These are the primary referral sources and serve as the initial filter. Our mission is to enable these Alliances to easily and seamlessly send start-up and early stage companies to the Capital Access Portal of our website utilizing their URL, text links, linked banners and or Invitation Code. By you inviting them with your URL, text links, linked banners or Invitation Code they signed up under your downline. You can track their deal flow in your back office area. Why are Alliances willing to send them to us? Because we incubate quality deal flow for them “organically.” They feed us the deals that are not ready for their services and we incubate them through our Capital Access Portal and or through our Corporate Engineering Conservatory.™ No more expensive fighting to lure clients or customers away from competitors in the zero-sum game arena. We’ve made incubating quality deal flow for their practices or business operations as painless and risk free as possible. This process will weed out 80% of the start-up & early stage companies seeking capital.   Only 20% of the original candidates remain.

 

  1. You as a professional Managing Director or Managing Enterprise Director, engaging start-up and early stage companies directly through social media and small business expos, etc. or having Alliances send them through our Capital Access Portal. After registering, the prospective portfolio company candidate completes our Initial Due Diligence Questionnaire to establish its diagnostics rating. This process will weed out the same 80% of the start-up & early stage companies seeking capital that Alliances weed out. Only 20% of the original candidates remain.

 

  1. The Diagnostics Rating determines the next action. Company candidates enter the Capital Access Portal to ultimately establish a Diagnostics Rating by:
    1. Agreeing to a Mutual, Non-Disclosure Agreement (NDA);
    2. Filling out the Company Registration
    3. Completing our Initial Due Diligence Questionnaire to establish an initial Diagnostics Rating; and
    4. Uploading any and all requested documents.

 

If the Diagnostics Rating is high enough, their senior management team is invited to a video conference call with our Investment Policy Committee to qualify for our Block & Tackle full service. This process will weed out another 50% of the start-up & early stage companies seeking capital.  Only 10% (50% of 20%) of the original candidates remain.

 

  1. Video Conference Call. This process will weed out another 80% of the prospective candidates. Only 5% (50% of 50% of 20%) of the original candidates remain for our Block & Tackle full service and are sent an Engagement Letter along with a Corp. Finance Term Sheet.

Remember, the 5% remaining for our Block & Tackle full service is from the entire population seeking capital, not your population.  Your population should be no less than 10% , most probably an average of 30% and as high a 50% in time. So for every 10 firms you send through the Capital Access Portal personally, 3 should produce revenue from our Block & Tackle full service. That’s a total of $60,000 cash in production commissions with a minimum average of $210,000 ($350,000 x 20% x 3) in preferred equity.  See MD Executive Comp. Calculator in your Back Office.

In addition, we don’t reject the 98.4% balance of those who don’t make the grade (a higher enough Diagnostics Rating to be offered a video conference call) the first, second or even the third time though, we recycle them through our Friction Free, Corporate Engineering Conservatory.™ Before you know it, these recycled companies will either re-qualify for our Block & Tackle full service of they’ll enter into our Friction Free automated service, and choose to OPT-IN into qualifying for entrance into our VC Fund; Commonwealth Capital Income Fund-I.  Those who OPT-IN to our VC Fund though the Friction Free, Corporate Engineering Conservatory™ give us a reasonable amount of preferred equity (currently $100,000) and due diligence fee (currently $20,000). From these amounts you too get paid a commission.  See MD Executive Comp. Calculator in your Back Office.

For those who choose to OPT-OUT of entrance to our VC Fund, they’ll continue through the Friction Free,  Corporate Engineering Conservatory™ on their own and then eventually to the hostile outside advisors and investors. It’s much safer for them in the Commonwealth Capital Income Fund-I, as our fiduciary duty remains and is strengthened with the portfolio companies that OPT-IN to our Fund(s).

 

APPROACH – SUCCESS BREEDS SUCCESS.

 

There are two ways to market for qualified Acquisition Candidates for our VC Funds—with sniper fire or a shotgun blast.

 

Sniper Fire.

As a Managing Director or a Managing Enterprise Director, you will maintain an invitation only, secretive stealth approach to acquiring companies.

Do yourself a favor. Limit the distribution of your business cards to only the very worthy and pre-qualified Entrepreneurs (sniper fire). By studying the elements of the Initial Due Diligence Questionnaire, you will learn how to pre-qualify on-the -fly.  You will not only deflect time wasters, deadbeat dreamers, tire kickers and unicorn chasers, you’ll attract quality deal flow to our firm, as well as to your personal equity portfolio, all the while further developing techniques to attract more of the same, because you’ll know how to spot quality a mile away.   Remember, that as a Managing Director or Managing Enterprise Director you are responsible to make sure the prospective portfolio-company candidate is fully vetted through the Initial Due Diligence Review process.

By signing up and leveraging the power of selective Alliances you are exercising a leveraged but stealthy controlled flow of deals, which would also be considered sniper fire.

 

Shotgun Blast.

If you walk into a small business expo, a capital conference, a pitch deck conference, or any other arena where Entrepreneurs are seeking, and comingling with, investors and you give out your Commonwealth Capital Managing Director business card lavishly (shotgun blast) you’ll get the ego boost of the “rock star” in the room effect. But you’ll soon discover you’ve attracted an extremely “needy and clingy” crowd that will waste your time and exhaust your passion.

Posting your banner ads or paying for click-through ads on various social media sites would also be considered a shotgun blast approach because you start to lose control of the deal flow.

This approach may not work for a Managing Director, but may work well for Managing Enterprises, as it will require volume to work through the numbers.

By signing up and leveraging the power of Managing Enterprises you are exercising a leveraged but uncontrolled flow of deals, which would also be considered a shotgun blast.

As a Managing Director, we suggest you take the Sniper Fire approach exclusively to maximize quality with your limited reach and limited time.  As a Managing Enterprise Director we suggest you take the Sniper Fire approach first, then lead into a Shotgun Blast, with your own internal systems, to maximize quantity with your large reach.  Utilize one or the other approach but not both in the beginning, as your internal systems and practices will need to focus on what works best and then continue to refine for your chosen approach.

 

LEVERAGE THROUGH ALLIANCES

 

Alliances are companies, organizations or enterprises that have the ability to reach the highly fragmented entrepreneurial market, but have yet to fully monetize that reach. Alliances are able to receive cash flow directly from any number of our portfolio companies as professional service providers or engaging in other facets, such as; loaning money in the case of a commercial or community bank. We do not pay Alliances, as Alliances, under any circumstances.

However, Alliances may earn the right to become Managing Enterprises based on their overall participation. A Managing Director may sponsor the application for an Alliance to become a Managing Enterprise.  Most Managing Enterprises will need to show us they have what it takes by performance as an Alliance first. Rarely, if ever, will senior management at Commonwealth Capital make an exception.

They seek to build their customers and clientele of well capitalized companies to do business with.  From each young company they engage and secure into one of our VC Fund, an Alliance receives a direct benefit by creating their own quality deal flow for the services they provide.  They are our direct connection within the small business community and drive their clients and prospects to our Capital Access Portal to compete for potential funding. For companies that have yet to engage a Managing Director, our firm will assign a Managing Director, based on the production performance. The higher the production performance of a Managing Director, the more and better quality leads one receives.

Read each webpage for each Alliance on our Website and choose a few you are used to working with and we’ll help you develop a strategy based on your needs.

 

LEVERAGE THROUGH INDEPENDENT DIRECTORS

 

Independent Directors are key influencers that drive entrepreneurs to one of our VC Funds. Independent Directors are able to build equity and receive cash flow directly from any number of our portfolio companies as independent Directors. We do not pay Independent Directors under any circumstances as it would cause undue conflicts of interest.

Independent Directors are professionals (serial entrepreneurs, attorneys, accountants, IT engineers, angel investors, etc.) that have established practices of servicing start-up and early stage companies, but desire to elevate to a Directorship status with a few choice companies they have already established a trust relationship with. Most start-up and early stage companies don’t know what they don’t know and need to be told what to do by a “trusted source.” Independent Directors provide that impetus and serve as closers to our Corporate Engineering Conservatory™ Platform. We offer these professionals the ability to easily elevate their status as Independent Directors of companies that are being properly engineered for IPOs or outright sales, with liability protection protocols in place. Independent Directors bring their existing client companies to our Networks and Platforms to fulfill the goal of creating value for a profitable exit. In doing so, they bring their company contacts into a network of other companies and other directors, thereby creating a pool of start-up and early stage companies needing independent Directors and Independent Directors needing to serve start-up and early stage companies as independent Directors.

This protocol will continue to attract high quality Independent Directors to our Networks and Platforms.

 

LEVERAGE THROUGH MANAGING DIRECTORS OR ENTERPRISES

 

MANAGING DIRECTORS are individuals with a clear understanding of the private capital markets. MANAGING ENTERPRISES are companies, organizations or enterprises that have the ability to reach the highly fragmented entrepreneurial market but have yet to fully monetize that reach.

 

MANAGING DIRECTORS OR MANAGING ENTERPRISES are NOT able to receive cash flow directly from any our portfolio companies as professional service providers or engaging in other facets, as it constitutes a conflict of interest.

 

OPERATING POLICY:

TERMS

  1. Managing Director = MD
  2. Managing Enterprise = ME
  3. Supervising Managing Director = SMD
  4. Managing Director or Enterprise-1, the 5% Commission = MD-1 & ME-1
  5. Managing Director or Enterprise-2, the 20% Commission MD-2 & ME-2
  6. Agent = an Employee of any Managing Enterprise that we do not pay commissions too but track production for the benefit of the ME = MEA
  7. Alliance = Any Professional or Organization that would like to send deal flow our way to create and incubate their own quality deal flow for their particular needs.
  8. Invitation Code = the code within your embedded links and banners from the Shareable Invitation Links Portal within a Managing Director or Enterprise Dashboard in their back office within our web-portals. These are the only commissions code/links the company uses to track and pay commissions.
  9. All invitations with embedded commission codes for signing up Companies, Alliances, MDs, MEs, or Investors are produced and housed in the form of invitation links in the Shareable Invitation Links Portal Button on your Dashboard. No other form of invitations, other than examples within this course and Shareable Invitation Links Portal may be sent via email.  Links and Banner ads from the Shareable Invitation Links Portal can be used for social media and other web–based solicitations, as well.

 

PROCEDURES:

MDs can and are encouraged to signup other MDs and MEs for HQ approval.

  1. Once an MD signs at least 1 MD they become a supervising MD (SMD).
  2. Once an MD signs at least 1 ME (including their own ME) they become a supervising MD (SMD).
  3. Both MDs & MEs must be trained by our MD Training system. MEs are not trained by our system. MEAs are not trained by our system.
  4. Our Tier II Commission System (aka Affiliate Program) flows as it would for any other affiliate program. (Straight Sales Commissions: 20% for the Tier I—production level, and 5% for the Tier II—supervisory level).

 

EXAMPLE:

  1. MD-1 personal production.
    • MD-1 receives a direct straight commission of 20% on gross subscription and production fees.
  2. MD-1 signs MD-2 or an ME-1.
    1. MD-1 receives a 5% supervisory commission from MD-2 or ME-1’s direct straight commission of 20% on gross subscription and production fees.
  3. MD-2 or ME-1 signs MD-3 or an ME-2.
    • MD-1 receives ZERO (0%).
    • MD-2 or ME-1 receives a 5% supervisory commission from MD-3 or ME-2’s direct straight commission of 20% on gross subscription and production fees.

 

5.  ALL MDs will be invited by HQ, another MD, or ME-1.

    • Inviter emails a “HQ Approved” pre-invitation invitation link or banner from their Shareable Invitation Links Portal to prospective
    • If prospective MD is approved by Natl. Sales Mgr., Natl. Sales Mgr. will email post-invitation linked letter directly to prospective
    • The new MD must click on and follow that link to agree to and execute the MD/ME Agreement, online.
    • Once prospective MD has executed the MD/ME Agreement, the prospective MD becomes a MD Trainee.
    • MD Trainee signs up with a new Invitation Code as their first initial followed by a dash then their last name. For example: J-Morrison. No other Invitation Code will be accepted. New MD’s SS# and bank account info. is to be logged into our back office by the MD.

 

6. ALL MEs will be invited by HQ, another MD, or ME-1.

    • Inviter emails a “HQ Approved” pre-invitation invitation link or banner from their Shareable Invitation Links Portal to prospective
    • If prospective MD is approved by Natl. Sales Mgr., Natl. Sales Mgr. will email post-invitation linked letter directly to prospective
    • The new ME must click on and follow that link to agree to and execute the MD/ME Agreement, online.
    • Once prospective ME has executed the MD/ME Agreement, the prospective ME becomes a ME-1, if signed by and MD or an ME-2 if signed by an ME-1 and has full access to their respective Dashboard.
    • All MEs must sign up with a marked Invitation Code with their designation. This as an easily identifiable name Warner-Nocross or set of initials (AT&T) or an acronym (NIBA). No other Invitation Codes will be accepted.
    • MEs TaxID# and bank account info. to be logged into our back office by the ME. No other identifiers are necessary. Once completed, if signed by an MD, the MD becomes a SMD.

 

7. MD Owned MEs. Some MD(s) may own and operate a company they would like to sign up as an ME. If so, MDs with MEs WE will need to consolidate the MD’s Tier II, 5% supervisory commissions with their ME’s Tier I 20% commissions into the ME-1’s bank account and for tax reporting purposes. We will only pay the ME-1 under this arrangement.

    • Inviter emails a “HQ Approved” pre-invitation invitation link or banner from their Shareable Invitation Links Portal to prospective
    • If prospective MD is approved by Natl. Sales Mgr., Natl. Sales Mgr. will email post-invitation linked letter directly to prospective
    • MD owned ME signs-up online as an ME online with that MD Link. (Example: ME-1-NEWME)
    • MD then informs Natl. Sales Mgr. of their desire to consolidate the 5% and 20% into the new ME.
    • ME-1 sends Invitation Code link to ME-1.
    • MD owned ME has then knocked MD out of commission loop.
    • Now 100% of all commissions are covered with payments only to the ME with one wire (25% under) to the same bank account and only one 1099 to the IRS.
    • MD owned ME TaxID# and bank account info. to be logged into our back office by the MD owned ME.
    • Once completed, the MD becomes a SMD of its own ME.

 

8. MDs signing up potential MD’s that own a potential ME. This is a very rare occurrence, but it can happen. Most owners of MEs will not qualify as MDs. Due to the limitations of Two-Tier Commission structure, MDs looking to sign up MDs that own an ME will need to sign all entities directly under MD.

 

For instance:

  • MD-1 meets 3 partners who own a professional services firm. Since MD-1 knows that these 3 new potential MDs will need training but doesn’t want to sign them as MDs and then have them sign up their ME, knocking MD-1 out of the commission structure.
  • MD-1 emails a “HQ Approved PDF” pre-invitation linked letter to prospective ME first.
  • If approved by Natl. Sales Mgr. and ME is signed directly under originating MD-1. MD-1 emails a “HQ Approved PDF” post-invitation linked letter to prospective
  • The new ME must follow the link within that letter and agree to and execute the MD/ME Agreement. The new ME is now under MD-1’s commissions code/link.
  • MD-1 then emails a “HQ Approved PDF” post-invitation linked letter to prospective These 3 new potential MDs are also under MD-1’s code/link.
  • The 3 new MDs sign-up as MDs under MD-1 and then sign up again as MEAs (Agents) under their ME to track individual production without knocking MD-1 out of the commission loop.
  • Any ME can sign an unlimited number of MEAs under it for activity tracking to determine commission payouts on the ME’s end. We provide this as a valuable service to the ME, as our company only pays the ME. The ME can then decide how it wants to pay its Agents. (MEAs).

 

9. Random MDs or MEs. A prospective MD or ME may come across our website without an invitation but would like to request one. They do so, on our website as per instructional link.

    • The prospective MD or ME registers and uploads resume’ or CV.
    • Sales Mgr. reviews resume’ or CV and calls for a phone interview.
      • If rejected, Natl. Sales Mgr. sends “HQ Approved PDF” rejection letter via email.
      • If approved, Natl. Sales Mgr. sends prospective MD or ME an “HQ Approved PDF” invitation linked email and guides them through the process if necessary.
    • If it is an ME, it is an “In-House” lead that needs supervision and will be given only to a MD that has passed the FAS Course, on a random basis with other MDs of the same stature. If so, existing MD sends their Invitation Code or link to new ME with an “HQ Approved PDF” invitation linked letter and guides them through the process if necessary. This policy includes random Alliances, Companies and Platinum Investors.
    • If it is an MD, it is an “In-House” lead that needs supervision and may be given (at Natl. Sales Mgr. discretion) only to a MD that has passed the FAS Course, on a random basis with other MDs of the same stature. If so, existing MD sends their Invitation Code or link to new ME with an “HQ Approved PDF” invitation linked letter, and guides them through the process if necessary. Once completed, the MD becomes a SMD.

Below, you’ll find the Acquisitions – Attracting Deal Flow quiz. To progress to the next lesson you must correctly answer all of the questions that follow. If you make any mistakes, you can retake the quiz once complete.