If growing corporate revenues is the objective then the sale of a percentage of defined revenues to investors will enable the company to obtain capital without the necessity of incurring debt or diluting the equity ownership of the current owners.
The percentage of the company’s revenues paid to revenue royalty investors is a use tax for the money paid to the company for the royalty. The greater the revenues, the greater the use tax, and benefit to the investors. The greater the revenues the more likely the greater the value of the company.
The royalty investor does not own any of the company, only the agreed percentage of the company’s revenues.
The owners of the company will benefit greatly by not being diluted in the financing of the company.
It’s that simple. If the company is on track to succeed, then why sell stock now if it is not necessary to do so in order to obtain the funds enabling this success?
One of the financing features that is attractive to business owners is the redemption right we recommend in royalties which allows the company to repurchase the royalty sold, on pre-agreed terms and conditions.
To explore the possibilities that your company can sell a royalty, read my many articles at arthurlipper.com and review REX-Basic.com and/or contact me directly.
Arthur Lipper, Chairman
British Far East Holdings Ltd.
+1 858 793 7100
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