Financing a business does not have to involve giving up the prerogatives of being a proprietor. Financing a business does not have to reduce the business owner’s ownership level. Financing a business does not require accepting the limitations and constraints typically imposed by professional lenders.
Is there another way?
Yes, there is and — it is the sale of a percentage of the company’s defined revenues, for an agreed period, through the sale of a redeemable royalty.
The longer the royalty payment period the lower can be the royalty rate.
The greater the investor protections the lower can be the royalty rate.
The royalty investor has no ability to guide or influence the management of the royalty issuer.
The royalty investor, having no ownership in the royalty issuing company, has no interest in the declared profits of the royalty issuer.
The terms of the royalty are fully negotiable as to maturity, rate, protections, etc.
The royalty should be redeemable by the issuer on terms agreed at the time of royalty issuance.
The well protected royalty investor, depending on the achievement of projected revenues, anticipates receiving an annual Internal Rate of Return of more than 15% over the course of the royalty payment period.
For more information contact:
Arthur Lipper, Chairman of REX Royalties
Blog Management: Viktor Filiba