1) I do not ever act as a securities broker or dealer, an investment banker, or as any type of financial advisor to individuals or companies when assisting them and negotiating for them in the pursuit of capitalization;
2) I do not ever act as a sales agent in selling units or investment interests in any offering, private or public, of any client;
3) I never approach or even engage in discussions with any unaccredited investors (pursuant to Regulation D of the securities law, or pursuant to any laws of any state which relate to the same type of investor qualification); further, I do not solicit individuals for sums of money, nor do I work on a “commission-only” or “finder’s fee-only” basis, which might have me misconstrued as a securities broker — I cannot and therefore do not ever “shop ‘deals’ openly around the marketplace to multiple prospective sources and hope to earn a fee by luck or by probability. I act as a client’s agent and negotiator (pursuant to the terms of an Engagement Agreement) in assisting in the arrangement of capitalization or financing.
Incidentally — any “money broker” who “shops” your company’s capitalization or financing requirement around the marketplace is doing you a major disservice. If a prospective source or several prospective sources decline/s to proceed, word travels fast through the industry, and your company gets branded as a “loser” or a “beggar.”
This is damaging and unacceptable. You greatly increase the probability of this happening by engaging (at no fee, and without contractual discipline) several of such “mass mail” brokers — and to complicate matters further, if two brokers find the same interested source, the source will want no part of a fee dispute; Frankly, if your company has “shopped its financing requirement around,” and has been unsuccessful in attracting interest, I may be reluctant to undertake the engagement at any terms — a capital or financing requirement that is not presented to a very limited number of select, qualified participants under the assurance of industry silence is compromised; I prefer to work in an environment of discretion and confidentiality;
4) I generally will not participate in any capitalization or financing engagement which involves less than US$500,000.00, unless I am engaged by that client to perform other work. I have no maximum limitation;
5) If I examine your company’s requirement for financing (I do not charge for this initial assessment), and don’t think that the outcome will be favorable, I will: A) tell you what is lacking or required in my opinion, and, B) decline to proceed indefinitely, unless and until certain changes are made. I believe this to be a helpful and time-saving practice; should we mutually decide to proceed together, I will only do so pursuant to the terms of an Engagement Agreement where the client has retained my expert services to A) advise and assist it in preparing and presenting its requirement to specific “targets” which I have identified through my contacts, efforts and expertise, and to B) negotiate with such targets in order to obtain the best possible terms for my client.
I am paid my usual fee for the preparatory work, but I am not paid for my time expended in targeting or negotiations, with the exception that I generally receive a partial Success Fee (as a “bonus”) upon obtaining a letter of commitment from the target to my client, and the balance of the Success Fee at the closing, or at each infusion of capital or financing, if such installments are the case.
Sourcing capital or financing for my client is done with the utmost confidentiality, selectivity and expediency. In the current economic environment, or, for that matter, in any economic environment, this is the optimal and most ethical way to proceed, with the highest probability of success.
– Douglas E. Castle
Note: This page is a work-in-process and will be available by November 5, 2013. Please come visit us then. Thank you.
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