Royalties, a percentage of defined revenues, sold to an investor, should be used by the owners of companies in exchange for the definable benefit from having additional working capital.
Royalties, should be sold to raise capital, rather than selling equity, if the owners of the company believe the revenues will grow substantially and the company will increase in value.
Royalties should be sold to raise capital if the owners of the business wish to retain control of their business.
Royalties should be the method used to raise capital if the current owners wish to create or retain the broad benefits of private company ownership.
Royalties should be sold to raise capital, particularly if the terms of the royalty include the issuing company’s ability to redeem and terminate the royalty on acceptable terms.
Royalties should be used to raise the capital necessary for business expansion, including the acquisition of other companies and enhancing the company’s capability to better serve present and future customers.
Royalties should be used by companies having a longer-term mission of expansion. Royalty payments are a capital use fee, which allows company owners to retain their level of ownership. Royalty payments will reduce short-term profitability until the company is able to make use of and benefit from the funds received from the sale of the royalty.
Royalty issuance is the preferred method of financing privately-owned companies whose owners want to avoid the involvement of equity investors in the guidance, advice and supervision of their business.
Arthur Lipper, Chairman
British Far East Holdings Ltd,
858 793 7100
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