DDR & Associates

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  • 1. ENGINEERED  CORPORATE  STRUCTURE  Walker  Center  175  SOUTH  MAIN  ST.  15TH  FLOOR  SALT  LAKE  CITY,  UT    84111  medancy@ddrassociates.com  mdoron@ddrassociates.com  drees@ddrassociates.com      801-­‐303-­‐5736                                      801-­‐214-­‐9215      
  • 2. DDR  &  ASSOCIATES,  LLC   DDR  &  ASSOCIATES  DDR  &  Associates  was  formed  to  provide  broad-­‐based    solu>ons  to  our  clients  by  bridging  the  gaps  that  exist  between  tradi>onal  strategic  consul>ng,  legal,  financial  service  and  venture  capital  firms  to  facilitate  the  raising  of  capital.  We  accomplish  this  by  helping  our  clients  evaluate  all  the  poten>al  opportuni>es  that  exist  to  raise  capital  and  acquire  strategic  resources.      Our  approach  is  never  one  of  form  fiIng  your  needs  to  the  solu>ons  that  we  offer.    Instead  we  find  the  right  investment  channel  for  your  organiza>on.  We  then  help  you  prepare  the  informa>on  to  support  a  highly  targeted  and  proven  communica>on  approach  that  will  op>mize  your  opportunity  so  it  will  appeal  to  our  extensive  network  of  investment  channels  and  poten>al  partners.    We  focus  on  working  with  growing  and  emerging  mid-­‐capitaliza>on  companies.  Our  advisory  and  technical  experience  and  exper>se,  and  that  of  our  alliance  partners,  enable  us  to  provide  services  that  leverage  your  global  market  poten>al.    Our  clients  are  located  in  Utah  and  throughout  the  United  States,  as  well  as  overseas  in  China,  India,  the  United  Kingdom,  the  Netherlands,  and  other  interna>onal  loca>ons.  As  a  result,  we  have  extensive  experience  helping  our  clients  conduct  business  both  domes>cally  and  interna>onally.    DDR  uses  a  blended  approach  to  public  and  private  finance.    Our  clients  are  typically  development  stage,  however  each  business  must  be  fundamentally  based  and  able  to  move  to  a  na>onal  exchange  within  approximately  36-­‐48  months.    Early  sage  investors  expect  significant  returns,  therefore  the  DDR  team  works  to  incubate  each  client  to  carefully  blend  a  private  equity  approach,  basing  investment  on  current  non-­‐market  related  valua>ons,  recognizing  the  upside  alongside  a  company’s  business  execu>on.        Below  is  a  outline  of  services  and  criteria  within  DDR  &  Associates:    Vincent  &  Rees     Private  Equity  Criteria   Public  Equity  Criteria     Legal  Services  Provided          12  M  illion  Cminimum  blocks   ommi]ed       Should  be  able  to  make  na>onal     •   $50K   exchange  in  36-­‐48  months   Merger  &  Acquisi>ons          Par>cipants  may  choose  project     Should  be  able  to  earn  $0.5  -­‐  $1.00   Private  Placements        Ownership  or  controlling   per  share  EBITDA  in  36-­‐48  months   Securi>es  Law   interest     Management  team  should  have   Commercial  Law        Target  10%  net  annual  growth   proven  experience  to  mi>gate   Transac>onal  Legal  Services     execu>on  risk     Capitaliza>on  to  reach  earning   targets  should  be  25-­‐30M  or  less  
  • 3. DAVID  REES   MICHAEL  DORON   BIOS  David   M.   Rees   is   a   partner   in   the   Salt   Lake   City   firm   of   Vincent   &   Rees,   a   law   and   Michael  J.  Doron  is  a  visionary  corporate  leader  with  execu>ve-­‐level  experience  business   advisory   firm.     David   has   represented   and   worked   extensively   with   in   investment,   banking,   debt-­‐restructuring,   consumer   services,   and   land  numerous   finance   and   lending   ins>tu>ons,   assis>ng   with   the   due   diligence   development  at  small  to  large  organiza>ons.  Strategic  planner  using  background  process   for   lending   as   well   as   structuring   hundreds   of   debt   financing   as   CFO,   COO,   VP,   consultant,   and   lobbyist   to   devise   most   effec>ve   tac>cs   in  transac>ons.    David  has  many  years  of  experience  working  with  small,  medium   achieving   goals.   Adept   at   leading   business   development,   opera>ons,   and   all  and  large  companies  in  various  capaci>es,  including  in  mergers  and  acquisi>ons,   financial   aspects   to   mi>gate   risk,   increase   revenue,   and   drive   customer  arranging   and   structuring   financing,   opera>ons,   sales/marke>ng,   and   cross-­‐ sa>sfac>on.   Rela>onship   manager   with   track   record   of   raising   significant   funds  border   transac>ons.     David   has   assisted   many   companies   in   going   public   and   for  companies  and  non-­‐profits.    going  private,  raising  capital,  and  growing  sales  opportuni>es  within  the  US  and    interna>onally.     David   has   traveled   extensively   throughout   Asia   throughout   his   Currently   Michael   is   a   Managing   Director   with   Covalence   Solu>ons,     a   consul>ng  business  career.       company   specializing   in   mergers   and   acquisi>ons,   turnarounds,   supply   chain       management,   start-­‐ups,   and   venture   capital.   Covalence   Solu>ons   is   focused   on  David   is   also   currently   serving   as   a   member   of   the   Board   of   Directors   of   Learning   assis>ng   emerging   and   established   companies   that   have   the   poten>al   for   short  Through   Sports,   a   privately   held   educa>on   company   in   Birmingham,   Alabama;   term   posi>ve   cash-­‐flow   and   EBITDA.   We   seek   out   under-­‐valued   opportuni>es  and  as  a  member  of  the  Board  of  Directors  of  Shaka  Shoes,  a  publicly  traded  shoe   with   quality   assets,   superior   strategic   and   growth   prospects,   enabled   by  and  apparel  company  in  Kona,  Hawaii.   proac>ve  superior  management  and  Boards.          Among   other   previous   posi>ons,   David   has   served   as   CEO   of   Well   Renewal,   a   Michael   served   as   both   COO   and   CEO   of   a   publicly   traded   company   where   he  diversified   oil   and   gas   services   company   in   Tulsa,   Oklahoma;   CEO   of   English   oversaw  a  complete  turnaround  of  the  company,  concluding  with  a  $5MM  debt  Language   Learning   and   Instruc>on   System,   a   publicly   traded   educa>onal   restructuring  and  spinning  off  a  public  en>ty.  sofware   company   in   Sandy,   Utah;   as   a   member   of   the   Board   of   Directors   and    Vice  President  of  Strategic  Planning  for  iMall,  a  publicly  traded  Internet  company   His   previous   posi>on   was   both   as   CFO   and   COO   for   FSA,   a   Utah   Consor>um  in   Provo,   Utah   and   Los   Angeles,   California;   as   a   Vice   President   of   Investment   transac>ng   over   $92   million   annually,   and   specializing   in   land   development,  Banking   for   Catalyst   Financial   in   Connec>cut;   and   as   general   counsel   to   engineering,   design,   construc>on,   finance   and   marke>ng.   Michael’s  numerous  public  and  private  companies.         responsibili>es   at   FSA   included,   planning   and   direc>ng   all   aspects   of   the       organiza>ons   opera>onal   policies,   objec>ves   and   ini>a>ves,   with   a   focus   on  David   was   an   associate   in   the   Mergers   &   Acquisi>ons   and   Corporate   Finance   strategic,   tac>cal,   and   opera>ons   management.   Michael   was   primarily  departments   at   the   law   firm   of   Skadden,   Arps,   Slate,   Meagher   &   Flom   in   New   responsible  for  the  a]ainment  of  the  organiza>ons  short-­‐  and  long-­‐term  financial  York,  NY.       and  opera>onal  goals,  as  well  as  ensuring  future  growth.            David   received   his   B.A.   in   History   from   Weber   State   University   in   1990   and   his   Michael  has  also  worked  as  Private  Banking  VP  for  Bank  of  the  West,  managing,  J.D.  from  New  York  University  in  1993.   preserving  and  crea>ng  wealth  for  high  net  worth  individuals  and  companies.    He   worked   directly   with   Bank   of   the   Wests   Asset   Management   Group,   Wealth   Investment  Group  and  Real  Estate  Investment  Trust  Group.     Michael   received   his   undergraduate   degree   from   the   University   of   Maryland,   College  Park,  and  graduate  degree  from  American  University  in  Washington  DC.      
  • 4. MICHAEL  DANCY   ASSOCIATES  &  DDR  Services   BIOS   Associates  includes:  Michael  Dancy  spent  the  last  ten  years  in  the  trenches  of  the  public  finance  and  corporate   structure   world   as   the   President   of   M.E.   Dancy   Consul>ng   Services,   •  Broker  Dealer  relaTonships  Inc.     Michael’s   client   list   included   numerous   BioMedical   firms,   an   IP   Broadcast   •  Access  to  Capital  markets  Television   Media   and   Network   Company,   an   Air   Cargo   Company   and   several   •  Merger  and  AcquisiTon  professionals  companies  developing  green  energy  solu>ons  including  an  environmental  energy  technology   company   focused   on   hybrid   drive   train   development   and   geothermal   •  SEC  PracTce  aorneys  power   development   and   technology   licensing   of   renewable   geothermal   electric   •  SEC  PracTce  AccounTng  Firms  power   plants   with   one   opera>ng   plant   in   southern   Utah   and   eight   ac>ve   and  early   stage   projects   in   four   western   United   States:   Utah,   New   Mexico,   Nevada   •  Public  and  Investor  RelaTon  Firms  and  Oregon,  as  well  as  a  concession  for  100,000  acres  in  Indonesia.       •  Brokerage  Firm  Market  Makers    Each   of   these   public   companies   underwent   significant   corporate   incuba>on   With  DDR  you  can:  including   the   placement   of   key   management   and   public   and   private   finance   on     Gather  compeTTve  intelligence  and  industry  insight  -­‐  their   way   to   be   acquired,   furthering   their   corporate   objec>ves   or   transi>on   to  na>onal  exchanges  such  as  the  New  York  Stock  Exchange.  Prior  to  his  experience   with  analy>cal  project  research    with   the   public   finance   world,   Michael   served   as   the   CEO   of   MedQuest     Benchmark  your  financial  performance  and  capital  Pharmaceu>cals  of  Utah.       structure  against  your  peers         Monitor  and  assess  risk  within  your  counterparty  banks,  Michael   spent   12   years   in   special   projects,   program   management   and   suppliers,  partners  and  clients    engineering  with  McDonnell  Douglas/Boeing,  working  on  numerous  government     Determine  your  strategic  growth  plan  and  iden>fy  and  commercial  programs  domes>cally  and  interna>onally.   poten>al  acquisi>ons,  partnerships  and  funding  op>ons         Gain  unique  transparency  into  mul>ples,  valua>on  and  Michael   received   a   Master   of   Science   degree   from   the   University   of   Southern   pricing  for  comparable  M&A,  equity,  bond  and  loan  California   in   Systems   Management   and   a   Bachelor   of   Science   degree   from   the  California  Polytechnic  University  at  San  Luis  Obispo  in  Aeronau>cal  Engineering.     transac>ons    Dancy’s   further   educa>on   path   includes   undergraduate   work   at   Pasadena’s     Monitor  global  market  developments  and  economic  California   Ins>tute   of   Technology   in   Mechanical   Engineering   and   Composite   indicators  that  impact  your  business    Design  and  Structural  Analy>cs  at  UCLA  (University  of  California  at  Los  Angeles).       IdenTfy  the  most  appropriate  funding  soluTon   and  reduce  your  cost  of  capital    
  • 5. Business  Services   Business  Process  Model  (DDR  Assists  with  the  IntegraTon)   BUSINESS  SUMMARY     IPO  Development   DTC  Filings   Current  Report  Filings  (10Ks  &10Qs)     PPM  Development       Capital  Forma>on  Strategy     SEC  &  Legal     Subscrip>on  Agreements     S1  IPO  Filings   FINRA  Filings   Funding  &  Contract  Reviews     Licensing  Development     JV  Development       Debt  Restructuring     Assist  company  to  complete  target  acquisi>ons     Business  Plan  Development   Core  Business     Market  Strategy  &  Research     Segmenta>on  Strategy   Assist  company  with  management  team     Mergers  &  Acquisi>on  Advisory     Roll-­‐up  Strategy   Develop  funding  strategies  for  growth  &  corporate  capitaliza>on     Opera>ons  Improvement     Supply  Chain  Improvement   Funding  Strategy     Exit  Strategies   Provide  project  funding  support  to  reach  corporate  goals    OperaTonal  Structure   Summary   DDR  &  Associates  offers  unique  solu>ons  and  services  to  its  clients  which   range  from  small  privately  held  companies  to  small  to  midcap  publicly   DDR  &  Associates   traded  companies  within  the  OTC,  NASDAQ,  AMEX  and  NYSE  markets.     Once  a  client  is  organized  on  a  firm  strategic,  financial  and  opera>onal   founda>on,  we  introduce  our  clients  to  select  members  of  our  investor   and  partner  network  that  have  an  expressed  interest  in  Public  Offerings,   Private  Placements,  Licensing  Agreements,  Debt  or  Exit  Strategy.   IPOs     Mergers   We  approach  your  business  as  though  it  is  our  own.  Our  success  can  only   and   Strategy  &   IR  &  Exit   be  measured  by  your  success.      Our  clients  benefit  from  our  long   Legal   standing  rela>onships  with  investors,  bankers,  corpora>ons,  VCs,  and   Capital   corporate  law  firms.  Our  commitment  to  ongoing  client  service,  quality   of  deliverables,  strategic  advice,  and  candid  feedback  has  ensured  the   Forma>on   best  possible  outcomes  and  is  the  founda>on  of  our  long-­‐term  strategic   alliances.  
  • 6. Typical  DDR  Deliverables  –  Companies  should  expect  the  following  when  through  the  DDR  process   TYPICAL  DDR  DELIVERABLES  The  basic  error  made  by  most  private  companies  is  not  beginning  early  enough  to  prepare  for  a  private  financing,  or  a  public  offering  as  part  of  a  transi>on  to  a  na>onal  exchange.  The  result  is  untold  millions  lef  on  the  table,  or  worse,  transac>ons  are  never  consummated.    The  seeds  of  a  successful  na>onal  exchange  lis>ng  are  sewn  months/years  in  advance.    Although  Public  offerings  are  each  dis>nctly  different  processes,  the  people  signing  the  checks  ul>mately  all  need  to  see  the  same  basic  things  in  or  about  a  company,  irrespec>ve  of  the  type  of  transac>on.  The  following  are  steps  that  dont  cost  a  lot,  but  can  make  a  huge  difference.     CLEAN  UP  THE  BALANCE  SHEET   The  first  financial  statements  given  to  poten>al  investors  or  buyers  set  the  stage.  Subsequent  revisions  are  at  best  viewed  with  skep>cism.  If  owners  want  to  pull  out  excess  cash  or   retain  personal  ownership  of  real  estate,  equipment,  copyrights  or  patents,  get  them  off  the  balance  sheet  now.    Loans  to  the  company  from  shareholders  should  be  replaced  by   bank  debt,  even  if  the  shareholder  has  to  pledge  the  company’s  payoff  as  addi>onal  collateral  for  the  new  bank  loan.  Receivables  due  from  officers  or  shareholders  should  also  be   cleared  up.    It  is  important  to  “come  clean”  with  a  company’s  equity  structure  at  the  onset.  This  promotes  trust  between  the  balance  sheet  and  poten>al  investors.    Investors  want  to   make  sure  there  are  no  “side  deals”  that  exist  which  might  nega>vely  influence  their  equity  posi>on.     HAVE  AUDITABLE  FINANCIALS   Audited  financials  add  value  and  may  make  the  difference  between  doing  the  deal  or  not.  (For  almost  all  IPOs  at  least  two  full  years  of  audited  statements  are  mandatory.)    If  your   financials  aren’t  audited,  at  a  minimum  have  a  credible  CPA  observe  year-­‐end  inventory  and  file  it  away.  The  cost  is  nominal,  and  it  usually  makes  a  retroac>ve  audit  possible  if  other   accoun>ng  records  are  in  order.       MANAGE  THE  INCOME  STATEMENT   Investors,  buyers  and  underwriters  all  look  for  consistent  earnings  and  growth.  Peaks  and  valleys  make  them  nervous.   Earnings  and  growth  to  a  degree  can  be  managed  within  the  bounds  of  generally  accepted  accoun>ng  principles  (GAAP).  Tax  deferral  is  no  longer  the  main  objec>ve.    Spikes  and  dips   in  year-­‐to-­‐year  profits  reduce  credibility  and  value,  but  in  a  smaller  company  can  be  smoothed  out  by  increasing  or  decreasing  reserves,  giving  or  postponing  bonuses  or  capitalizing   or  expensing,  where  the  op>on  exists.     Also,  within  bounds  of  accoun>ng  rules  it  is  perfectly  legi>mate  for  financial  reports  to  be  different  from  tax  returns.   Income  statements  can  be  "recast"  afer  the  fact  to  add  back  discre>onary  expenses  such  as  excess  owners  compensa>on  and  perks.  If  an  IPO  is  the  objec>ve,  however,  high-­‐  >cket   perks  should  be  eliminated  now  because  you  can’t  use  recast  financials  in  an  IPO.  Every  $1  spent  in  a  year  can  reduce  the  value  of  the  company  in  an  IPO  by  $10,  $15  or  more.  If   private  investment  or  sale  is  a  more  likely  goal,  at  least  keep  discre>onary  expenses  readily  iden>fiable  so  recast  statements  are  easy  to  track  and  reconcile.       FILL  GAPS  IN  MANAGEMENT   Most  investors,  underwriters  and  buyers  consider  management  their  top  priority.  Fill  gaps  in  management,  either  internally  or  from  the  outside,  sooner  rather  than  later,  and  give   people  already  on  board  the  right  >tles.  Companies  with  no  Vice  Presidents  make  management  look  thin,  and  managers  with  60  days  tenure  aren’t  par>cularly  inspiring.    Also,  there   should  be  at  least  the  blueprint  of  a  succession  plan  in  place,  and  senior  management  should  have  meaningful  and  well  thought-­‐out  answers  as  to  their  future  inten>ons  and   expecta>ons.    Key  execu>ves  should  have  professionally  prepared  employment,  op>on  and  incen>ve  agreements  in  place  before  discussions  start.  Seek  outside  help  to  determine   whats  customary  given  your  circumstances  and  considered  acceptable  to  investors,  buyers  or  underwriters.     POSITION  THE  COMPANY  FOR  THE  RIGHT  COMPARISONS   Investors  and  buyers  judge  by  comparison.    Maintain  a  running  comparison  of  your  opera>ng  and  financial  sta>s>cs  vs.  those  of  your  peers  and  compe>tors.  Prospectuses,  10K’s  and   annual  reports  are  excellent  sources,  as  are  trade  associa>ons  and  bankers  industry  profile  books.    A  fair  comparison  may  require  changing  your  accoun>ng  categoriza>ons.    DDR  will   study  security  analysts’  reports  on  companies  in  your  industry  and  determine:    a)  which  similari>es  you  want  to  reinforce,  b)  which  you  should  distance  yourself  from;  and  c)  how  to   accomplish  that.    Also,  try  to  determine  a  range  of  values  for  your  business  in  the  context  of  a  sale,  financing  or  IPO,  based  on  what  you  can  glean  from  public  and  trade  sources.  
  • 7. Typical  Projected  Timeline   TYPICAL  DDR  CLIENT  -­‐  PROJECTED  TIMELINE     PUBLIC  SEC  FILING  PROCEDURE       PUBLIC  COMPANY  MILESTONES  (36  MONTHS)   COMPLETE  10K/Q  AND  OTHER  SEC  FILINGS     COMPLETE  S1  REGISTRATION   RESPOND  TO  S1  COMMENTS  FROM  SEC   SIT  QUIETLY  AND  INCUBATE  COMPANY   CONDUCT  INTERNAL  FINANCE  AUDITS   MAKE  APPLICATION  TO  DTC  AND  FINRA   MAKE  APPLICATION  TO  NATIONAL  EXCHANGE   INVESTMENT  MILESTONES  (36  MONTHS)   INITIAL  VALUATION  OF  20M     500K  SHARES  ISSUED  @  $1   5M  SHARES  ISSUED  IN  STAGES  COMMENCERATE  WITH  BUSINESS  @  AVG  $3   INITIAL  DILUTION  (20M  SHARES)   SECONDARY  DILUTION  (20M  SHARES  @$5)   500K  SHARES  –  36  month  incuba>on  CAPITAL   (SECONDARY  AT  TIME  OF  NATIONAL  EXCHANGE)   5M  SHARES  –  18-­‐24  MONTH  ACQUISITION  CAPITAL   12.5M  FOUNDER  SHARES     40M  SHARES  ISSUED  -­‐  $5/SH  SECONDARY   2M  DDR  SHARES  –  TRANSACTION  FEE   =  200M  ADDITIONAL  MARKET  CAP   AFTER  24  MONTHS   48  Month  Projec>on   @  $10/Share   Poten>al  Investor  Liquidity  (3M  Dollars  @$3/SH)   =  400M  MARKET  CAP   BUSINESS  MILESTONES  (36-­‐48  MONTHS)     COMPLETE  product  development   Customer  Acquisi>on/Expansion   Grow  Produc>on  Capabili>es   ESTABLISH  INITIAL  VALUATION  (20M)   WAYPOINT  VALUATION  (60M)   WAYPOINT  VALUATION  (200M)   Ini>al  Customer  Base   Customer  Base  –  Grows  substan>ally   Start  Public  Offering  Road  show(6  months)   Should  be  EBITDA  approximately  10M/yr   Should  be  EBITDA  approximately  20M/yr