Offering investors a sliver of future revenues in exchange for
their capital is a better way to finance both private companies
and projects than equity or debt for both the investor and the
capital consumer.
For the capital consumer, revenue participation based financing
avoids debt, interest, equity dilution, outside directors
and shareholders, and public company reporting requirements.
For the investor, revenue participation based financing offers
more predictable returns than equity, quarterly income, and
an effective means of investing in private companies.
Successful companies usually have growing revenues, but all
companies face the possibility of unexpected events which
can adversely impact profitability. The U.S. and Singapore
patent pending Fair and Shariah Fair Revenue Participation
Contract units enable investors to receive a percentage of
the company’s revenues regardless of the company’s
profits or expenses.
Privately owned companies frequently need additional capital
to accelerate growth and achieve long term objectives. The
owners of these companies frequently do not wish to either
increase or change the ownership of their company or to publicly
disclose the profitability of their company. The sale by the
company of a negotiated percentage of revenues for an agreed
number of years can be an attractive and appropriate means
of financing the future growth of the business.
Managers of publicly traded companies also can take advantage
of revenue participation contracts to finance projects requiring
additional capital without increasing debt or diluting earnings
to equity ratio.
The ever present pressure on the management of public companies
to report ever increasing earnings leads to short-sighted
decision making and, sometimes, fraudulent behavior. Revenue
participation based financing eliminates the pressure on managers
to prioritize quarterly profit reporting over longer term
considerations. |
