Revenue royalties (royalties) provide participation in the increased use, reflecting customer satisfaction, of revenues, without sharing in any losses, and in publicly traded stocks, negative fluctuations.
Royalties, using our patented approaches, are collected as soon as the royalty issuing company receives revenues.
Royalty investors should never be “account payable” by the royalty issuing company, as the royalties are required to be paid as soon as the company receives the revenues. There is only the calculation of the agreed royalty rate, which is the percentage of the realized revenue to be made.
Royalty investors can be protected, and are paid before any other obligation of the royalty issuing company.
Royalty investors should buy royalties from companies able to realistically project increasing revenues for a sustained period.
Royalty investors do not have the same types of conflict of interest with the company founders and managers as equity investors do. This is because royalty investors do not concern themselves with company profitability or company valuation.
Royalty investors are in the preferred position of being immediately paid a percentage of revenues, without the concerns of shareholders, who usually only profit significantly by selling their shares after a company’s valuation increases. Royalty investors are unconcerned by levels of executive compensation and other areas of conflicted interests.
From the perspective of the royalty issuing company’s owners, they get the use of the money paid for the royalty and, most importantly, using our approach, have a right of royalty redemption. This negotiated right of redemption stipulates the multiple of the investor’s cost of the royalty if redeemed in a given period, less the cumulative amount or royalties already paid.
Also, the royalty issuing company, or its owners, can offer investors terms to repurchase the royalty at any time. In all cases, royalty financings allow the founders and other owners to continue to own all of their company, without the burden of shareholders, who only buy to sell.
Arthur Lipper, Chairman
British Far East Holdings Ltd.
+1 858 793 7100
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