As the holidays season approaches savvy investors and companies begin preparing for there year end books, all the while staring a new administration in the face and tensions are on the rise.

As other companies are removing debt by returning investments and returns to investors, those receiving the funds are scrambling to place those funds by year end. Regardless of the profit, the main concern for any investor is the potential for steep capital gains taxes. Needless to say they don’t only fear the tax man, but a new administration that has clearly stated their intent to raise tax brackets substantially for people making over $250,000.00 per year.

With this said, facing the grim reality of putting those earning into the stock markets or other common shelters is like playing Russian roulette. Every major global market is in complete turmoil, so all private and institutional Investment avenues are screaming for Equity or Asset backed transactions to place there monies before year end.

This market; for the observant start-up company or smart potential borrower is perfect. They should begin to quickly market there product or proposals to any investment avenue possible. There are few times when a borrower becomes in control, and that’s at year end or in the times of major market meltdown. For those of you who might not be aware, these are both happening right now…

Don’t get overly excited though. Just because its “go time” for these groups, doesn’t mean they will take unnecessary risk. So take the time to develop your funding request as these opportunities only come once a year.

In most cases, investors are looking for safe equity backed transactions they can participate in on a minimal level. These forms of transactions typically include Regulation D Private Offerings. These offerings are structured as share or unit sales of temporary equity stakes in your company until the funds have been repaid, along with the earnings over a 3-5 year time frame. 

There are 3 different rules a transaction of this type will fall under.
They are as follows:

• Rule 504 is for raises under $1,000,000.00
• Rule 505 is for raises under $5,000,000.00
• Rule 506 is for raises in excess of $5,000,000.00

Each of these rules includes different stipulations regarding the amount of sophisticated Non-Accredited investors allowed to participate in that particular funding request.

While seeking out a dealer/broker is an option, it isnt necessary as these are Private Offerings and can be structured by anyone with knowledge of this form of funding. Additionally most DB’s will charge excessive sums of up front marketing fee’s to attempt in placing your project. Occasionally, as is the case with JMG Capital Partners, LLC the only fees associated with this form of capital is the drafting expenses that can range from $10,000.00 - $30,000.00 depending on the size of the PPM and amount needed.

Despite being a highly successful form of funding, rarely will you find groups offering these services for a success fees. Frequently when a firm offers these services under this payment structure, they will work hard to place these funds, as that is the way they are compensated. So, in a nut shell if you get paid they get paid and vice versa.