Brief history, 2008 I was invited to a meeting in Essen Germany to discuss the North American licensing rights for the “Equestrian Sports World Fair” brand name EQUITANA. The EQUITANA consumer trade show has been produced since 1972 and last year 1000 exhibitors and 200,000 attendees visited EQUITANA. The EQUITANA boasts a proven 39 year history of success, having collectively attracted worldwide millions of consumers, and a solid base of equestrian industry exhibitors, sponsors and partners.
The EQUITANA brand includes:
- EQUITANA USA (International & Domestic Consumer Trade Show) www.equitana.com
- EQUITANA USA Open Air (Regional Outdoor Consumer Family Festival) www.equitana-openair.com
- The HOP TOP Show (Theatrical presentation of the horse, produced injunction with the EQUITANA show)
- The STALLIONS Show (Theatrical presentation of the top breeds stallions, produced in injunction with the EQUITANA)
- The EQUITANA USA Cup (Sanctioned National Discipline Competitions)
- The EQUITANA USA Education Conference Program (Addressing the educational needs of Breeders and Horseman)
All parties agreed that my team was the perfect fit to re-launch the EQUITANA brand in North America. After a year of due-diligence, Reed Exhibitions Deutschland GmbH the brand owner agreed to grant my company an irrevocable, non transferable, the exclusive License Rights for the United States and Canada to use the brand name “EQUITANA” subject to securing an equity partner. Ok, I need to find an equity partner? Great challenge! Piece of cake! I just have to put together a business plan some financials and sit back and launch EQUITANA USA! What was I thinking!!!! Sit back? Come on!!!
So, my journey began. My first investors funding round to family & friends went miserly wrong, spent a great deal of money on lawyers, accountants and printed materials so as to develop and issue a Private Placement Memorandum (PPM). Wrong!!!! Collapse!! Flamed out!!! An influential family member who is one of my advisors wrote the following comments upon receiving my PPM.
I received your business plan and stock offering. Overall it appears very professionally done. It also looks like you have an exciting opportunity on your hands and a platform to make something meaningful.
You asked me to provide you my direct feedback so that you could incorporate it into your planning in order to improve your business plan. My comments in this email are meant in that spirit. They are by definition critical so as to help you to improve your plan, make it more appealing to investors and to improve your chances of success once capitalized. I hope you will receive them positively.
First, I would like to identify that the plan is, in general, a relatively good first effort. The opportunity is clearly stated and the documents are well put together. The language and formatting is clear and well written. Overall it looks professional in appearance.
As for areas for improvement, I have a number of important comments and observations. First, the business plan appears to have been put together primarily by lawyers and accountants. The offering documents are fully complete and detailed well beyond the rest of the business plan and well beyond what is necessary at this stage (unless you already have a significant fraction of the offering spoken for by larger investors, in which case most of my note here is moot!). By comparison, the management discussion and financials are relatively paltry. The financials consist of only two pages and are only annual in nature. I will discuss these more in detail later. The management discussion is relatively thin. Investors are much more interested in understanding the business plan and the quality of the management team well before they delve into the offering documents. In my view your management plan lacks the detail necessary to enable an investor to really understand the business you are proposing and the quality of the management team. While you have the biographies of the management team in the management plan, few of the proposed management have direct experience in the exposition world and therefore investors need to understand the quality of the management team based on the depth and quality of the plan you present. This does not come through in your management plan.
The business plan and the financial pro-formas need to provide an integrated package where the financials back up the management discussion with the actual plan for where money will be spent and revenues and profits earned. Both of these sections are seriously lacking detail that would allow an investor a window into how management will run the company. The prospectus and offering documents, not to mention the corporation agreement and bylaws only provide requisite and relatively standard structure and shareholder protections. In any case, they are likely to be renegotiated with interested serious investors. I would recommend that you spend no more money on lawyers in that area. At this point my advice would be to put more time into the business plan, imagining how you would actually run the business if you had it financed and putting that down on paper. Who would you hire? What do you need to buy? What agreements do you need to put together? What advertising, merchandizing, marketing, etc would you need to do. What are your fixed and variable expenses? How will you actually make money? Who do you charge and what are your fees? Will you take on debt? If so, how much and with what as collateral? Are there any strategic partners that you can bring on to reduce the risk to the enterprise?
In a nutshell, you should put no more work in the legal documents (until you actually have a handshake agreement for the money you are raising with a primary investor), you need to think through and improve both the management plan and the financial plan, you need to provide a more consistent year to year financial performance and decide how to grow the business more in out years, and you need to rethink the initial valuation of the company relative to the amount you are raising. Bobby, I wish I could be more help. Best of luck to you on the venture! Charlie.
So, that’s what I get for asking a stupid question!!! Hey Charlie, Can You Give Me Some Feed Back On MY OFFERING?
Without question I had my work cut out. I fired my lawyer! Fried my accountant! Dug in my heels, rolled up my sleeves and with determination I discovered parts of myself that I never even knew I had. I am determined to WIN!! Oh wait a minute, my best friend, my mentor, my Father , my DAD, 83 years young suddenly past away. Life and my dream are on hold!!!
Took a few weeks to regroup and to put myself back on track. In the process another advisor suggested I research “Angel Groups” Oh, come on!! I don’t want to do all that work!! Angel Groups?!! Well I swallowed my pride and hit GOOGLE! WOW, what a worth of networking opportunities!! Rewrote my executive summary (a one pager) submitted it to a number of prospects on Angelsoft. I became friends with a money matcher maker, got invited to present my business opportunity to an investor group and finally got some serious traction!! ….. More later…..
