Intellectual Property - The Global Battle Between Old and New

There is a sea of change occurring with respect to intellectual property rights as reflected in continued modifications of international and domestic law. These changes result from an attempt to reconcile the methods and manner of doing business in a new digital age; the “Business Revolution”. In many respects, the essence behind the legal evolutions, as more fully described herein, is a battle between intellectual property owners of the past, involving outmoded paradigms, and the new “Business Revolution”  players. On this stage, the complexity of the matter and the attempts to manipulate the law, represent one of many struggles pitting the old against the new. As with the prior historical economic and social shifts, the agrarian to the industrial, and the industrial to the information age, the struggle is over before it started. While there will be pauses along the way, as those vested in the past attempt to impede the advance of a new order, the past paradigms will fade as a result of unstoppable economic and global change. Nevertheless, the topic and the associated dynamics are worth thoughtful exploration and illustrate the motivation and dynamics behind the evolution of this important topic; a cornerstone to the new order of creation, ownership and knowledge.

"One of the biggest mistakes one can make when considering the globalization of intellectual property law is to assume away the increasingly contentious politics of the phenomenon. This is not to say that the emerging politics of international intellectual property law are simple, easy to understand, or unchanging - quite the contrary is true. However, we should resist the understandable tendency to reach for a quick, technocratic set of Procrustean tools that assume away the 'messiness of the world' and make it seem that concepts such as 'sovereignty' and 'property' should be, are, or always have been, particularly stable constructs" (Aoki, 1998b).

Analyzing the globalization of information and its impact on international and domestic intellectual property rights and legal regimes is a complex undertaking. A good starting point is to define the components of the issue: i) globalization, ii) information, and iii) intellectual property. A review of available literature shows this to be complex: Numerous academics and legal experts bring varying ideologies and different views on these components.

Some view globalization as a means toward strong national and international economies; others think globalization represents the increasing influence of developed nations and multinational entities. A major challenge in assessing globalization is the impact on the sovereignty of nation states. How can the independence of nations be navigated in light of an ever evolving and interrelated world? Globalization, at its core, is really the undoing of old paradigms in a new world driven by a more empowered citizenry that will ultimately render the political structures of the past irrelevant. In fact, this recap of relevant intellectual property rules and controls confirm this point.

With respect to information, a common view is that the Internet and the digital environment promote productivity by freeing information; others object that information is being commoditized as a result of its digital form and the ease of its flow across sovereign borders. Many view intellectual property rights as a natural aspect of individual creative products; others believe intellectual property rights have developed into a tool to serve the large economic and monopolistic interests of information-rich states; many others view them as an irrelevant concept having no meaning in a new digital age.

Regardless of philosophical tenants, the topic of international intellectual property law is complex. The matter includes numerous domestic legal systems, regional and international regimes and multilateral and bilateral treaties and agreements. As international or regional treaties or agreements are adopted, responsive or agreed changes to domestic law take place. Such domestic changes further drive changes to international or regional systems and, in turn, to domestic laws of other nations, as nations attempt to keep pace with each other. It is a complicated web, but one that was and is being created by existing structures designed to serve past constructs being used to address a new order. Hence the battle that ensues.

Assuming a satisfactory understanding of the central components of the issue, further complexity is encountered in an analysis of the issue itself. Assessment of the implications of globalization and digitalization of information on intellectual property systems is also a value-laden exercise, partly driven by ideology. Some cite the promise, economically, of new international or multilateral intellectual property agreements and philosophies prompted by a global and digital era. Others see, among the consequence of globalization and digitalization of information, the offer of reward only to certain players, namely developed nations and multinational corporations, and/or the information-rich

Globalization is being accompanied by more intellectual property protection, internationally and on many domestic fronts. In his review of Boyle's book, Shamans, Software and Spleens: Law and the Construction of the Information Society, Leith (1997) cites, increasing intellectual property rights and the increasing power associated therewith: "It seems to be difficult to push back the hegemony of increasing intellectual property rights. Everyone is currently claiming “a slice of the pie” and legal minds are setting out ways that more slices can be taken from a bigger pie." Leith suggests more is coming within the reach of intellectual property laws "because people have stopped asking what intellectual property is for and whether it is doing any good."

Considering international intellectual property law changes from the U.S. perspective, Crews (1998) sums up the changes, "The economic pressures and the growing international significance of copyright have led to new law. That new law is overwhelmingly in furtherance of expanding protection, easier protection, and longer protection. Moral rights, database protection, technological controls, extended copyrights, eliminated formalities, and even restored copyrights that were long in the public domain are symptoms of a legal regime of extraordinary and rapid growth." The reason for the growth is the obvious growth of the “Business Revolution”. The rate of change is being driven by players who own intellectual property assets more valuable in the past paradigm. Time is running out and these players know it.

Crews notes that the proponents of this expansion of intellectual property protection in the U.S., is similar with changes made in Europe, and cites domestic economic justifications:

"…the extended term of protection may generate twenty more years of commercial revenue for many economically viable works. Much of that revenue may come from foreign countries where many novels, motion pictures, and other U.S. works from the early twentieth century continue to find a market. The economic argument translates not only into greater revenues for U.S. copyright holders, but also into the subsequent tax revenues, employment prospects, and shareholder profits that accompany expanded business. Moreover, if those revenues are derived from foreign markets, the strengthened protection and longer term of protection for copyrights may also help shift the balance of international trade in favor of the United States."

In other words, the old players are looking to hold onto and maximize the value of their property before it becomes invaluable as the result of the “Business Revolution” and the new order of conducting business that is replete with new open, shared and collaborative methods of adopting and creating. These methods will rock the present approach to and contemplation of the very nature of what intellectual property is.

In comparison to domestic, pragmatic and economic arguments, Crews views strengthened intellectual property rights which do not include a corresponding balance of the public interest. Recognizing that copyright law was intended to achieve a balance between preserving a public domain or commons of ideas and providing incentive for creative under takings, he suggests public domain is neglected in the trend toward the maximizing approach to intellectual property rights. Increased protection of necessity, for example, is accompanied by limitations on the scope of the public domain and a reduction in affordable resources available for new creators, whether individuals or business entities. Crews points to limitations on the application of the U.S. fair use doctrine as a consequence of a focus on greater intellectual property protection. Other consequences he suggests are potential limitations on technological advancement resulting from restrictions on use, and loss of learning opportunities resulting from restrictions on dissemination or public performance of works.

There are different ways of understanding the issue of the implications of globalization of information on intellectual property laws, and these derive from different ways of understanding the basic concepts. The writings of recent years are packed with discussion of globalization and the growth of digital information, and the influence these developments are having on domestic and international intellectual property regimes.

A clear effect of globalization of information is a trend toward a standardization of intellectual property laws, in order to provide greater protections. While this trend appears to relate to positive economic outcomes, the prose of recent years suggests that these effects may be positive primarily for intellectual property producing nations and transnational corporations. It may also be diminishing the sovereignty of states in favor of the strength and power of private entities. It is possible that the prevalence of such writings in the literature is a response to the movement toward harmonization and stronger intellectual property protections - an attempt to ensure some of the less heard voices are expressed. In the end, the pressures that result from the sea of change and the irrelevance of past constructs will render the attempts to protect and control intellectual property for the benefit of a few ineffective.

Business Process Management Implementation

Adopting and adpating to the new revolution of conducting organizational functions is a challenge. A tool being relied upon by many is business process management. BPM represents the future of business technology. But which business process management software yields the best on-going benefits, efficiency and dynamic organizational behavior? Adopting the best practice approach both in software applications and in BPM deployment improves the chances of successfully utilizing BPM and seizing the benefits of reengineering an organization for performance in the new world.

Best Practices

 

Tried and true methods for implementing processes, for example, represent the best processes to implement BPM. Other examples include best practices for CRM, human resource development or organizaitonal development.

Best practices are instantly adaptable solutions. They optimize processes to meet primary objectives, eliminating the need to "re-invent the wheel. They are important in change management, because best practices enable organizations to be rapidly responsive given the current economic climate and the related rate of change. BPM best practices enable organizations to meet multiple challenges in an organized fashion. Rather than resorting to management by crisis, companies can navigate through difficult issues and develop strategies. By leveraging best practices from  existing business process management deployments, organizations can more easily:

• Develop objectives for BPM applications
• Support implementation of BPM
  
• Respond effectively to BPM feedback
  
• Adopt an ongoing dynamic amethod to business performance
• Create a goal-oriented management focus throughout the organization
• Set responsibilities and expectations for planning and goal achievement
  
• Manage operational goals and communication in line with key underlying objectives
• Promote transparency and accountability
• Formalize assumptions on the environment and its drivers

BPM practices are not just tools for competitiveness; they are effective methods for achieving efficiency in all areas, even uncompetitive or non-revenue-generating ones. Using BPM best practices in payroll, for example, helps to process paychecks efficiently, without making a company more competitive in market terms. By keeping costs low through efficient system design, though, helps to boost the bottom line.

 

BPM Software Applications

 

The core processes of BPM, IT and best practices give organizations control over the lifecycle of processes to achieve business agility. For example, many IT software solutions use the best practice approach for process support. Employing a formal standard for best practices to optimize corporate goals empowers IT departments; they can instantly access adaptable solutions and service organizational needs to provide customer value. Best practices in IT provide organizations with a logical framework to:

• Automate and streamline tasks
• Align IT to business processes
• Employ a framework for establishing and following policies, steps and rules
• Act on findings

Best practice BPM software also enables organizations to:

• Manage IT departments at consistently maximal efficiency levels to meet key goals (e.g., cost efficiency and profit maximization)
• Create IT department accountability for business performance and results
• Measure business performance and effectiveness
• Isolate and underline areas to implement cost cuts, enhancing quality and growth
• Provide customers with helpful information
• Locate procedural loopholes and superfluities
• Organize IT needs optimally with maximal efficiency and control

Implementing BPM Using Best Practices

 

To maximize BPM's potential, companies must implement business process management throughout the enterprise. Best practice BPM implementation strategies are relevant to any solution or application, regardless of software type or industry. Essentially there are four inter-related components in the strategy to successful business process management implementation. These are:

1. Conduct a test-pilot run
2. Involve other key departments
3. Plan for organizational change
4. Establish core expert group

 

Best Practice #1: Conduct a Test-Pilot Run

 

The best practice approach involves identifying one departmental project in line with key corporate objectives for the pilot run. This project can vary from one organization to another, depending on where its critical focus lies. For example, the help desk in an insurance company might focus on improved customer service, or a mortgage company trying to gain a competitive edge by fast processing times might focus on processing new mortgages.

The pilot run establishes the benefits of BPM implementation. By quantifying the findings and extrapolating them enterprise wide, companies can establish the benefits that BPM could yield to the entire organization.

Best Practice #2: Involve Other Key Departments

The best practice approach simultaneously involves professionals from other key departments so that they can:

• Benefit from the same solution
• Access interdepartmental process efficiencies
• Cut implementation, support and training costs

Involving other departments in the pilot run ensures that the same effort is invested in BPM implementation across the entire company.

Best Practice #3: Plan for Organizational Change

BPM implementation affects many aspects of the organization. From finance to service integration, companies must:

• Analyze, find and assess the level of change
• Determine how the change will be implemented
• Determine how systems will be used forthwith

BPM Best Practice #4: Establish a Core Expert Group

Concentrating expertise from IT departments, systems integration staff and key business users within the organization into a core discussion and action group brings shared experiences and fosters best practice discussion. The core group is also responsible for BPM:

• Evaluation
• Research
• Implementation

Conclusion

 

BPM best practices have much to offer companies, giving them a leading edge in difficult market conditions. Companies using best practices in BPM while focusing on key processes can navigate any economical climate. Using BPM best practices, companies that work this way remain consistently agile. In essentially what is a top-down management approach, these organizations meet the ideal objective of best practices and BPM; namely, maintaining continual flexibility, innovation, accountability and competitiveness to meet key corporate objectives.

Innovation - An Essential Ingredient for the New Business Environment

The Apple iPod is perhaps the first great innovation of the 21st century – judging by the phenomenal global impact it has made.

It is no surprise, therefore, to see Apple at the top of the most influential rankings for innovation. In 2006, the company topped Business Week’s rankings of the 25 most innovative companies as well as Fortune’s Best in Innovation category in its annual survey of the world’s most admired companies.

Business Week said that to launch the iPod, “Apple used no fewer than seven types of innovation. They included networking; a novel agreement among music companies to sell their songs online; business model, songs sold for a dollar each online; and branding, how cool are those white ear buds and wires.”

And to lend support to the case that Apple is an eon ahead as an organization getting the innovation mix right, its latest gadget, the iPhone, is already a global hit – and it has not even been released yet.

A Goggle search of iPhone brings up a staggering 50 000 000 hits – and just the official announcement of its launch this year saw Apple shares soar. The BBC ran the headline on 10 January 2007: “Apple shares up on iPhone launch”, and detailed an 8% rise in the share price and that “shares in makers of smart phones fell on the news, with Research in Motion - the company behind Blackberry devices - tumbling nearly 8% on the Nasdaq.”

Globally it is dawning that innovation is now a key part of doing well in an increasingly challenging business environment.

IBM CEO Samuel Palmisano said to a group of 500 executives at a leadership forum held in Rome in 2006: “The way to thrive in this environment is by innovating – innovating in technologies, innovating in strategies, innovating in business models,” he said. Unlocking creativity is particularly pressing for old school businesses as it is widely acknowledged that innovation is a very key part of economic growth and job creation.

So how can companies respond appropriately?

Before any action can be taken business leaders need to take cognizance of how innovation is fostered. Leaders need to recognize that what lies at the heart of innovation is the mindset of the people within the business. Innovation begins with creative ideas, and creativity begins with people. For this chain reaction to occur, though, businesspeople need to adopt and foster a culture of strategic thinking and action.

According to research by Richard Florida, author of The Rise of the Creative Classes, a tolerant environment that values innovation and diversity is one of three enablers of creativity, which in turn, he shows, is a key driver of economic growth.

A “strategist” is often defined as those in leadership who make the big decisions for the business – nothing could be further from the truth. The reality is that people at all levels in organizations can develop themselves to be master strategists.

Achieving this has real benefits in a business environment – it enables people to see more viewpoints, alternatives, solutions, and opportunities for success, and therefore to make more informed decisions on what action will create value for the organization. It is through developing this mindset that creativity and innovation will be unleashed to the benefit of the business.

Research and experience from leading thinkers on developing innovative organizations highlight seven key questions which leaders can address in order lay the foundation for an innovation process:

1. Are blocks to innovation being removed and boundaries lifted which will allow people to experiment?
2. Are boundaries and limits being created too? Good creativity is based on discipline and has limits – whether its ethics or values, or time or money. It’s essential to have these in place.
3. Is the possibility of connections between people being enhanced, thereby allowing for increasing conversation and information flow? The fuel of creativity is rich connections between people and ideas.
4. Is anxiety being created in people? Not too much or it will be counter productive. But too little tension is counterproductive too. Some pressure, drive and urgency are important to keep people engaged and alert - enabling creativity is like making a tight rope, which must be tight to be useful. In organizations this means one needs both a force of experimentation, and a force of control and stability working in harmony.
5. Is there a willingness to let efficiency slip periodically to allow people to make the mistakes they must make to learn and understand? Creativity requires extra resources if it is to manifest as a great solution.
6. How is power being used? Creativity is a voluntary act – a leader can set the conditions for it to emerge but can’t dictate or order it to happen. Remember the sun and the wind who contested to get the coat off the back of the man walking up the road? The wind tried first and the harder it blew the tighter the man held on to his coat. The sun came out and shone warmly, and in no time the man took off the coat. Developing creative people is a bit like that – businesses have to create the right conditions for people’s creativity to emerge. Be too autocratic, criticize mistakes and try to be too directive and creativity will evaporate. Rather encourage, motivate and reward - and get out of the way. A leader may also need to bite his or her tongue sometimes and to smile if creativity is to advance.
7. Are new trends being addressed? Encourage people to be alert and alive to new trends and ideas early – put out information about innovations, and get in guest speakers about trends.

Many businesses aren't harnessing their assets properly. In order to harness innovation organizations must let go of the bureaucracy that cripples start-ups, and let go of some controls. Adopting network strategies and other methodologies is the begining. At the same time poor governance and corruption rip the heart out of innovation. Usually, these are symptoms of stakeholders maintaining, through circumvention, their control or relevance in a world where it no longer exists.

Florida in his book shows that there is a direct link between the attractiveness of a region for creative people and economic growth. A rich cultural life, high degrees of tolerance for different life styles, interesting environments – these are important

We need to loosen up a little as a nation and celebrate our creativity – it will pay off economically.

The Global City, Cultural Assimilation and Sassen

Travel to any major international city and you will see an increasing commonality. The world is truly becoming global. Cultures are assimilating and evidence of tremedous change is becoming more obvious each day. This is but an initial phase of a rapidly expanding process whereby our globe is becoming one world without borders and one culture without limits.

Saskia Sassen, the noted Ralph Lewis Professor of Sociology at the University of Chicago, and Centennial Visiting Professor of Political Economy in the Department of Sociology at the London School of Economics, has written extensively on globalization and international human migration ( http://en.wikipedia.org/wiki/Saskia_Sassen ). In her paper, Global City: The Strategic Site/New Frontier, Sassen makes a number of important observations that relate to Globalization. One of her most notable is the definition of “Global Cities”. It is in this writing that Sassen defines the cities of the business and global revolution and why place and centrality are still a necessity to its end. Sassen also reflects on the dichotomy that is represented by these global cities, centers for the elite who benefit from readily available global capital while relying on the necessary services and inexpensive undervalued labor resources constituted by an underclass that migrates reterritorializes and assimilates. While her precepts are undeniable and intriguing, Sassen in later research will likely address and embrace both the necessity of the conditions she describes and the idea that place and centrality represents organizations clinging to old methods that ultimately will secede from the practice of the adoption of the new paradigm. As with past historical shifts in economics and society, we do not reach the idyllic without a transformation that entails some pain and therefore while describing the present state of the world becoming global, we should keep in mind the opportunity this future represents.

Sassen opines that globalization requires centers or places, leading into her definition of global cities, “A focus on practices draws the categories of place and production process into the analysis of economic globalization. These are two categories easily overlooked in accounts centered on the hyper mobility of capital and the power of transnationals. Developing categories such as place and production process does not negate the centrality of hyper mobility and power. Rather, it foregrounds the fact that many of the resources necessary for global economic activities are not hyper mobile and are, indeed, deeply embedded in place, notably places such as global cities and export processing zones.”

Sassen defines global cities as, “new geographies of centrality at the global level that binds the major international financial and business centers: New York, London, Tokyo, Paris, Frankfurt, Zurich, Amsterdam, Los Angeles, Sydney, Hong Kong, among others. But this geography now also includes cities such as Bangkok, Taipei, Sao Paulo and Mexico City (Sassen 2000b)”.

Of great interest is Sassen’s reference to the commonality of numerous aspects of the new geographies cultures. She refers to reterritorialized; “The large western city of today concentrates diversity. Its spaces are inscribed with the dominant corporate culture but also with a multiplicity of other cultures and identities. The slippage is evident: the dominant culture can encompass only part of the city. While corporate power inscribes these cultures and identities with ‘otherness’ thereby devaluing them, they are present everywhere. For instance, through immigration a proliferation of originally highly localized cultures now have become presences in many large cities, cities whose elites think of themselves as cosmopolitan, that is transcending any locality. An immense array of cultures from around the world, each rooted in a particular country or village, now are reterritorialized in a few single places, places such as New York, Los Angeles, Paris, London, and most recently Tokyo.” Here Sassen expresses the essence of a new global world in the global city. The assimilation of cultures is occurring each day as the result of the business revolution. However, ultimately this assimilation and the forms that they are taking at present will not be limited by space. They will each every place and touch every facet of each community on the planet.

Sassen further addresses the issue of assimilation of cultures as a result of globalization when she writes, “Immigration and ethnicity are too often constituted as ‘otherness’. Understanding them as a set of processes whereby global elements are localized, international labor markets are constituted, and cultures from all over the world are deterritorialized, puts them right there at the centre of the stage along with the internationalization of capital as a fundamental aspect of globalization today.”

The shift in population and cultural assimilations, according to Sassen, will not likely be met with resistance that will end the process; “The linkage of people to territory as constituted in global cities is far less likely to be intermediated by the national state or ‘national culture’. We are seeing a loosening of identities from what have been traditional sources of identity, such as the nation or the village (Yaeger 1996). This unmooring in the process of identity formation engenders new notions of community of membership and of entitlement.”

Capital Formation - The Private Placement

Obtaining capital for a business is a complex process that requires knowledge and experience in a variety of disciplines including business planning and analysis, an understanding of the industry and the opportunity proposition, team and resource recruitment, finance and accounting, information systems, marketing, concept and product development, the preparation of contracts and an understanding of both federal and state securities laws. Performed properly, the process takes into consideration innumerable issues including those of shareholders, investors, lenders, managers and the requirements of the company itself. Each contributor to a business must be clear in what they intend to receive as a result of their relative commitments, be it capital or otherwise. Defining, managing and balancing the expectations of all stakeholders is the key to successfully obtaining and structuring necessary capital that fits all of the stakeholders needs.

I have advised many clients in the area of capital formation and concluded many financial transactions. During the past seventeen years I have successfully directed ten private debt or equity placements for companies with net capital raises of between $300K to $3 Million each. Sources of capital included venture capital firms, high net worth individuals, commercial lenders and others. In addition to securing over $40 Million in debt refinancing and financings, I was involved as a key player in a significant hostile acquisition, where our team secured $249 million in senior debt from a group led by Canadian Imperial Bank of Canada, a $149 million bridge loan from Merrill Lynch and the issuance of PIK notes on the public market.

The environement today is replete with available capital given the right proposition that includes the proper balance of management first, and specific market opportunity second.  My experiences have provided in-depth knowledge of the complex issues and challenges facing the successful close of these transactions. In speaking with potential clients, I am often asked many questions regarding the process of raising capital. Since many of the firms I have advised are not fully aware of the issues that must be managed in the process, I have prepared some basic information for potential clients to review in evaluating the acquisition of capital for their businesses.

Frequently Asked Questions

1. What is a private placement?

A private placement is a capital formation transaction, privately negotiated with individual or institutional sources, which provides funding to support a company's financing requirements or shareholders' liquidity needs. Typically, capital is being sought by a company and given the phase of the business, going public or obtaining capital via other means is impractical. Thus, private placements become a rational means of securing the required funding.

Strict legal rules govern private placements. These transactions are typically completed under registration exemptions from Section 5 of the Securities Act of 1933. Private placements fall within alternative Regulation D rules and requirements, depending upon the size of funding and the nature and number of investors. Transactions less than $1 million are frequently structured for and directed toward individual investors while larger transactions generally target private equity funds and institutions. However, this is not always the case, as many Small Business Investment Companies fund smaller amounts. While disclosure requirements differ, depending upon deal size and investor attributes, the general preparation and process for completing a successful private placement transcend specific transaction categories.

Private placements may take the form of senior debt, subordinated debt, convertible debt, preferred stock, common stock and hybrid or combined forms of these instruments. Key structural determinants include development phase, historical and projected operating performance, current capital structure, designated use of proceeds, future funding expectations, time horizon for return realization and desired exit strategy.

2. Why would a company consider a private placement?

The private placement market is accessed by a diverse group of companies for a wide variety of purposes. Some of the more common transaction contexts are described in the following:

Secured credit sources may not be available to support an internal expansion initiative, given the company's relatively leveraged capital structure, lack of collateral or early phase of development;

Shareholders may wish to execute a liquidity strategy (such as a recapitalization or management buyout) which does not involve the public capital markets or sale of the company to a strategic buyer;

The public capital market may not be a viable long-term source of funds given the company's size, development stage, management organization or industry dynamics;

A significant strategic opportunity, such as an acquisition, may unexpectedly present the company with a consequential financing issue. A private placement can be tailored to the project's specific capital requirements and completed relatively quickly;

While shareholders may ultimately desire to take their company public, the firm's current market capitalization may prevent it from securing a quality underwriter. Alternatively, the timing of the company's funding may not coincide with favorable public capital market conditions. A private placement can bridge this gap, providing interim funds in anticipation of a subsequent public offering, and

A private placement transaction can help secure outside investors for the business to assist with business strategy formation, future financial support and financial strategy execution.

3. Who invests in private placements?

The ultimate source of financing for a given private placement transaction primarily depends upon deal size, phase of company and investment structure. For new and early stage companies, individual investors and venture capital firms are more likely to provide equity financing. Private equity partnerships, Small Business Investment Companies and mezzanine funds serve as the principal sources for equity and hybrid transaction structures involving expansion phase to mature companies. For larger transactions, institutional credit sources (insurance companies, pension funds, banks and other credit institutions) usually consider direct purchases of relatively large debt instruments.

4. What are the key success factors in closing a private placement transaction?

Capital formation transactions pose important implications for any company. Additionally, while significant capital is available within the private placement market, creditors and investors remain very discriminating with respect to their choices. As a result, management should invest the necessary resources and thoroughly prepare in identifying appropriate long term funding solutions and attracting suitable financing sources. In differentiating their company as a high-quality credit or investment opportunity, management should:

Structure the financing to accomplish achievable organizational goals. Identify logical and specific uses for the requested funds;

Develop realistic expectations with respect to prospective operating performance, entry and exit valuations and ownership dilution;

Prepare a descriptive but concise financing memorandum to professionally present the industry, company, management team, business strategy and return prospects to investors;

Target the solicitation effort. Approach investors that clearly understand issues confronting companies within your development phase. In addition, select creditors or investors with favorable experiences and continuing, expressed interest in your industry;

Ensure that current shareholders' time horizon for creating and realizing value is consistent with the investor's desired time horizon;

Approach credit institutions or investors that are comfortable with the size of the proposed transaction and capable of providing follow-on financial support to the business, and

Present reasonable financial strategy scenarios to investors with respect to return generation.