Deal Funding Strategies: Strategies To Acquire A Business For $0 Out-Of-Pocket

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216
Deal

Funding

Roland Frasier
Strategies
Strategies To Acquire A
Business For $0 Out-Of-Pocket
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The following Deal Funding Strategies come from videos where Roland Frasier shares the
many ways a deal can be structured with members of the EPIC Accelerator Program. This
published list is owned and copyrighted by Roland Frasier, 2020.

The graphics and notes are from Rik Villegas, and were transcribed as Roland Frasier shared
them in various training sessions. Additional links and information from the Internet were
added by Rik to provide additional information. Any omissions or errors are the responsibility
of Rik Villegas. Any corrections or additions can be sent to him at: [email protected].

The strategies are color-coded and grouped in three categories: Pre-Closing Strategies, Pre-
and Post-Closing Strategies, and Post-Closing Strategies.

In addition to this document, there is also a spreadsheet that summarizes the 216 Deal
Funding Strategies.

Abbreviations used in this document:
! 4DCM=4 Day Cash Machine
! ARR=Annual Recurring Revenue
! CBF=Customer-Based Funding
! COGS=Cost of Goods Sold
! DDP=Deferred Down Payment
! DDT=Debt Double Tap
! DP=Down Payment
! ESOP=Employee Stock Ownership Plan
! FF&E=Furniture, Fixtures & Equipment
! FMV=Fair Market Value
! HELOC=Home Equity Line Of Credit
! IP=Intellectual Property
! IRA=Individual Retirement Account
! LBO=Leveraged Buyout
! LOI=Letter Of Intent
! MBF=Merchant Based Financing
! MBO=Management Buyout
! MMR=Monthly Recurring Revenue
! OC=Owner Carry
! PO=Purchase Order
! PMN=Private Money Note
! PPP=Private Placement Memorandum
! RBF=Revenue Based Financing
! RE SLB=Real Estate Sale & Leaseback
! SLiP=Self Liquidating Loan
! SPV=Special Purpose Vehicle

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Table of Contents
216+ Deal Funding Strategies ............................................................................................. 8
Pre-Closing Strategies 1-140 ............................................................................................... 9
1. Asset Carve Out ................................................................................................................................................ 9
2. Instant Earn-In ................................................................................................................................................ 10
3. Temporal Milestone Earn-In [1:7 fallback position] .......................................................................... 10
4. Event Segment Milestone Earn-In [2:7] .................................................................................................. 10
5. Performance Segment Earn-In [3:7] ........................................................................................................ 10
6. Revenue Segment Milestone Earn-in [4:7] ............................................................................................ 11
7. Profit Segment Milestone Earn-In [5:7] .................................................................................................. 11
8. Revenue Company-wide Milestone Earn-In [6:7] ............................................................................... 11
9. Profit Company-wide Milestone Earn-In [7:7] ..................................................................................... 11
10. Sweat Equity .................................................................................................................................................. 11
11. Co-Investor .................................................................................................................................................... 11
12. Pipe Wrench .................................................................................................................................................. 11
13. Revenue Share Pre-Sale Tests ................................................................................................................. 12
14. 3rd Party Revenue Share Pre-Sale ......................................................................................................... 12
15. Fair Market Value (FMV) Based 100% Consign Non-Inventory, Non-Essential Assets ....... 13
16. FMV + Fee Based Consign Non-Inventory, Non-Essential Assets ................................................. 13
17. Fixed Value Based 100% Consign Non-Inventory, Non-Essential Assets ................................. 13
18. Lease Option on Total Business .............................................................................................................. 13
19. Lease Purchase ............................................................................................................................................. 14
20. Private Lender .............................................................................................................................................. 14
21. Sell & Stock Back + Call Option ............................................................................................................... 14
22. Sell & Stock Back + Put/Call Option ...................................................................................................... 14
23. Sell & Stock Back + Put Option ................................................................................................................ 14
24. Seller Consulting to Offset Purchase Price (Fee Based) ................................................................. 15
25. Seller Consulting to Offset Purchase Price (Performance Based) ............................................... 15
26. Seller Consulting to Offset Purchase Price (Blended Formula) ................................................... 15
27. Non-Competing #1 ...................................................................................................................................... 15
28. Non-Competing Equity Split #2 ............................................................................................................... 15
31. Seller Loan + Wrap ...................................................................................................................................... 16
32. Outside Integrator Investor ..................................................................................................................... 16
33. Internal Integrator Investor .................................................................................................................... 16
34. Short-Term Note Payable ......................................................................................................................... 16
35. Collateral Asset In Lieu of a Note ............................................................................................................ 16
36. Seller Subordinates Seller’s Carryback Financing ........................................................................... 16
37. Employee (Non-Integrator Level) .......................................................................................................... 17
38. 1099 Investor ................................................................................................................................................ 17
39. 3rd Party Hypothecation ............................................................................................................................ 17
40. Credit Card to Buy What The Seller Wants ......................................................................................... 17
41. Advisor Loan ................................................................................................................................................. 17
42. Advisory Board + Loan .............................................................................................................................. 18
43. Existing Advisor Investment .................................................................................................................... 18
44. Board Member Loan ................................................................................................................................... 18
45. Existing Board Member Investment ..................................................................................................... 18
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46. Board of Directors + Loan ......................................................................................................................... 18
47. Staggered Tranches PPM (Private Placement Memorandum) ..................................................... 18
48. Reverse Wholesale ...................................................................................................................................... 19
49. Deferred Payment + Liquidate ............................................................................................................... 19
50. Gross Cash Flow Assign Down Payment ............................................................................................... 19
51. Net Sales Cash Flow Assign Down Payment ........................................................................................ 19
52. Gross Margin Cash Flow Assign Down Payment ............................................................................... 19
53. Credit Card Down Payment ...................................................................................................................... 20
54. Paying Subject-To Debt of Seller ............................................................................................................ 20
55. Company Debt Wrap ................................................................................................................................... 20
56. Partial Debt Assumption ........................................................................................................................... 20
57. Full Debt Assumption ................................................................................................................................. 20
58. Seller’s Personal Debt Assumption ....................................................................................................... 20
59. Seller Inventory Consignment ................................................................................................................. 20
60. Tax Assumption ........................................................................................................................................... 21
61. Double Escrow .............................................................................................................................................. 21
62. Defer Close 4DCM ........................................................................................................................................ 21
63. Defer Close + Sale ........................................................................................................................................ 21
64. Working Capital Adjustment ................................................................................................................... 21
65. Opportunity Zone Favored Financing ................................................................................................... 21
66. 2nd Trust Deed Note Payable as a Down Payment ............................................................................ 22
67. Alternative Lenders .................................................................................................................................... 22
68. SBA 504 ........................................................................................................................................................... 22
68. SBA 7a Loan ................................................................................................................................................... 22
70. SBA 7a Express ............................................................................................................................................. 22
71. SBA Export ..................................................................................................................................................... 23
72. SBA Microloan ............................................................................................................................................... 23
73. SBA Disaster Loan ....................................................................................................................................... 23
74. SBA EIDL ......................................................................................................................................................... 23
75. SBA PPP (Paycheck Protection Program) ........................................................................................... 23
76. SBA CAPline ................................................................................................................................................... 24
77. Barter .............................................................................................................................................................. 24
78. 3rd Party Barter ........................................................................................................................................... 24
79. Refillable Seller Holdback Applied to Down Payment .................................................................... 24
80. Seller holdback Applied to Down Payment With Countering Note Payable ............................ 24
81. Seller holdback Applied to Down Payment ........................................................................................ 25
82. Owner Carry Without Note Payable, No Interest + Balloon .......................................................... 25
83. Owner Carry: Unsecured Note Payable, No Interest + Balloon [1:5 fallback position] ........ 25
84. Owner Carry: Secured Note Payable, No Interest + Balloon [2:5] ............................................... 25
85. Owner Carry: Unsecured Note Payable, Interest Only + Balloon [3:5] ...................................... 25
86. Owner Carry: Unsecured Note Payable, No Interest, Straight Amortization [4:5] ................ 26
87. Owner Carry: Secured Note Payable, With Interest, Straight Amortization [5:5] ................. 26
88. 3rd Party Personal Guaranty Loan ........................................................................................................ 26
89. Cash Release To Seller At Closing ........................................................................................................... 26
90. Accounts Receivable Offset ...................................................................................................................... 26
91. 3rd Party Co-Signer For Loan .................................................................................................................. 26
92. 3rd Party Gets Loan In Exchange for Equity ....................................................................................... 26
93. Seller Co-Signs Loan .................................................................................................................................... 27
94. Seller Pledges Assets For Loan ................................................................................................................ 27
95. Card Cash Advance ...................................................................................................................................... 27
96. Credit Card Round Robin .......................................................................................................................... 27
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97. Bank Loan Round Robin ............................................................................................................................ 27
98. Seller Non-Compete Geo Abatement For Purchase Price Reduction ......................................... 27
99. Seller Non-Compete Vertical Abatement For Purchase Price Reduction ................................. 28
100. 100% Promos ............................................................................................................................................. 28
101. IRA Loans from Personal IRA ................................................................................................................ 28
102. IRA ROBS (Roll-Over As Business Start-up) ..................................................................................... 28
103. Seller IP Royalty ........................................................................................................................................ 28
104. Seller IP License ........................................................................................................................................ 28
105. Seller Unit Royalty .................................................................................................................................... 29
106. Back-up Loan From A 3rd Party ........................................................................................................... 29
107. Real Estate Split-Off .................................................................................................................................. 29
108. Barter Arbitrage Acquire Low and Trade To Seller For Higher Value .................................... 29
109. Reverse Merger .......................................................................................................................................... 29
110. 3rd Party “Franchise” Sale ..................................................................................................................... 30
111. Jay’s Car Deal: Pre-Sell Inventory/Services/Asset Use ................................................................ 30
112. Business Broker/Investment Banker Loan From Commissions ............................................... 30
113. Business Broker/Investment Banker Investment For Equity ................................................... 31
114. Fractional Rights ....................................................................................................................................... 31
115. Post-Date Check ......................................................................................................................................... 31
116. Vendor Co-Sign ........................................................................................................................................... 31
117. Money Broker ............................................................................................................................................. 31
118. Deferred Down Payment (DDP) ........................................................................................................... 32
119. Leveraged Buyout (LBO) ........................................................................................................................ 32
120. Management Buyout (MBO) .................................................................................................................. 32
121. Self-Liquidating Payment (SLiP) .......................................................................................................... 32
122. Private Placement Memorandum (PPM) .......................................................................................... 32
123. Angel Investor(s) ...................................................................................................................................... 32
124. Straight Merger .......................................................................................................................................... 33
125. Straight Merger for Stock + Cash ......................................................................................................... 33
126. Special Purpose Vehicle Asset Merger ............................................................................................... 33
127. Special Purpose Vehicle Equity Merger ............................................................................................. 33
128. Straight Partial Acquisition ................................................................................................................... 33
129. Two-Step Partial Acquisition ................................................................................................................ 33
130. Roll-In ........................................................................................................................................................... 33
131. Partial-Option To Acquire From Seller .............................................................................................. 33
132. Full-Option To Acquire From Seller .................................................................................................... 34
133. Straight Baseline ....................................................................................................................................... 34
134. Disappearing Baseline With Option ................................................................................................... 34
135. Home Equity Line Of Credit (HELOC) ................................................................................................. 34
136. Margin Loan Against Securities Held ................................................................................................. 34
137. Sublease-Back Space To Seller ............................................................................................................. 35
138. Earn-Out ....................................................................................................................................................... 35
139. Tollgate ......................................................................................................................................................... 35
140. Opportunity Zone Financing ................................................................................................................. 35
Pre- and Post-Closing Strategies 140-150 ........................................................... 35

141. Compensating Balances Arrangement .............................................................................................. 36
142. Asset Swaps ................................................................................................................................................. 36
143. Stock Swaps ................................................................................................................................................. 36
144. Sponsorship Sale ....................................................................................................................................... 36
145. Intellectual Property Sale ...................................................................................................................... 36
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146. Sublease Space to 3rd Party .................................................................................................................... 36
147. Train-In ........................................................................................................................................................ 36
148. Real Estate Sale and Leaseback (RE SLB) .......................................................................................... 37
149. Landlord Rent Deferral For Set Period Of Time ............................................................................. 37
150. Landlord Abate and Add Strategy ....................................................................................................... 37
Post-Closing Strategies 151-216 ................................................................................... 37

151. Customer Accounts Receivable Debtors ........................................................................................... 37
152. 3rd Party Vendor Prepayments In Exchange For Discounts ........................................................ 37
153. Discounts To Recurring Payment (MRR/ARR) ............................................................................... 37
154. Offer Lifetime Memberships ................................................................................................................. 38
155. Seller Trash To Cash ................................................................................................................................ 38
156. Media Financing ........................................................................................................................................ 38
157. Media Revenue Share .............................................................................................................................. 38
158. Consolidate Debt ....................................................................................................................................... 38
159. Debt Restructure ....................................................................................................................................... 38
160. Debt Reduction .......................................................................................................................................... 39
161. Furniture, Fixtures & Equipment (FFE) Liquidate ......................................................................... 39
162. Furniture, Fixtures & Equipment Seller Leaseback (FFEE SLB) ................................................ 39
163. Furniture, Fixtures & Equipment Finance ........................................................................................ 39
164. Purchase Order (PO) Financing ........................................................................................................... 39
165. Raw Materials Finance ............................................................................................................................ 39
166. Container Finance ..................................................................................................................................... 39
167. Inventory Finance ..................................................................................................................................... 39
168. Return Inventory ...................................................................................................................................... 40
169. Supplier Invests ......................................................................................................................................... 40
170. Supplier Loan ............................................................................................................................................. 40
171. Supplier Terms .......................................................................................................................................... 40
172. Supplier Consignment ............................................................................................................................. 40
173. Landlord Deposit Release ...................................................................................................................... 40
174. Landlord Deposit Reduction ................................................................................................................. 40
175. Credit Card Reserve Release ................................................................................................................. 40
176. Letter of Credit Drawdown .................................................................................................................... 41
177. Life Insurance Loan .................................................................................................................................. 41
178. Close and Delay Accounts Payable ...................................................................................................... 41
179. Close and Defer Accounts Payable ...................................................................................................... 41
180. Private Money Note (PMN) .................................................................................................................... 41
181. Work-In-Process Financing ................................................................................................................... 41
182. Real Estate Refinance .............................................................................................................................. 41
183. 3rd Party Rent Discount ........................................................................................................................... 42
184. Government Grants .................................................................................................................................. 42
185. Private Company/Organization Grants ............................................................................................. 42
186. Debt Into Equity Swap With Creditor(s) ........................................................................................... 42
187. Inventory Into Equity Swap With Supplier ...................................................................................... 42
188. Inventory Into Equity Swap With Manufacturer ............................................................................ 42
189. Inventory Into Equity Swap With Wholesaler ................................................................................. 42
190. Inventory Pre-Purchase By Distributor Into Equity ..................................................................... 43
191. Non-Inventory Supplier Equity Swap ................................................................................................. 43
192. Apply Target Acquisition’s Line Of Credit To Acquisition Funding Requirements ............ 43
193. Switch-Incentive With Suppliers: They Pay You NOT To Switch ............................................... 43
194. Supplier Pipe Wrench: Agree Not To Compete ............................................................................... 43
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195. No-Switch Incentive Fee ......................................................................................................................... 43
196. Sell Overstock At Discount To Provide Acquisition Funding ..................................................... 44
197. Seller Overstock To Provide Debt Retirement On Seller Finance ............................................ 44
198. Sell Overstock To Provide Debt Retirement On 3rd Party Debt ................................................. 44
199. Mezzanine Financing ............................................................................................................................... 44
200. Crowdfunding For Amounts Under $5M ........................................................................................... 44
201. Sell New Ad Space ..................................................................................................................................... 44
202. Pre-Sell Ad Space In Existing Owned Media ..................................................................................... 44
203. Debt Double Tap (DDT) .......................................................................................................................... 44
204. Bank Guaranty ........................................................................................................................................... 45
205. Vendor Co-op Ad ........................................................................................................................................ 45
206. Roll-up .......................................................................................................................................................... 45
207. Real Estate New Loan ............................................................................................................................... 45
208. Real Estate Refinance Of Existing Loan ............................................................................................. 45
209. Accounts Receivable Recourse Loan .................................................................................................. 45
210. Accounts Receivable Non-Recourse Sale (AR Factoring) ............................................................ 45
211. Spindle. Sell owned manufacturing line time to 3rd party ........................................................... 46
212. Spindle Time. Sell contracted manufacturing time to 3rd party ................................................ 46
213. Employee Stock/Share Ownership Plan (ESOP) Buyout ............................................................. 46
214. Revenue-Based Financing (RBF) ......................................................................................................... 46
215. Merchant Based Financing (MBF) ....................................................................................................... 46
216. EB-5 Visa Financing .................................................................................................................................. 47
Additional funding strategies: ........................................................................................ 47

1. Customer-Based Funding (CBF): Pay-In-Advance Model ................................................................. 47
2. CBF: Matchmaker Model .............................................................................................................................. 47
3. CBF: Subscription Model .............................................................................................................................. 47
4. CBF: Service-To-Product Model ................................................................................................................. 48
5. CBF: Scarcity Model ....................................................................................................................................... 48
6. Equity Split With Seller ................................................................................................................................ 48
7. Reverse Pipe Wrench Strategy .................................................................................................................. 48
8. Celebrity Partner/Promotion .................................................................................................................... 49

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216+ Deal Funding Strategies

To Acquire Businesses for $0 Out-of-Pocket
Roland Frasier

Roland Frasier mentioned in one training session that you only really need DDP and Seller
Carryback to do a $0 out-of-pocket deal. These additional strategies give you more options to
choose from. The generals that win wars are the ones that have the most options. Now you
will have 216+ options to structure deals to outwit, out-bid and out-smart someone
competing with you to buy a company.
Because of the limits of the Excel Deal Software, the number of dropdown choices is limited,
but those are some of the best and easiest things to do, and what Roland uses as his go-to deal
stack. You should have a general awareness of all the strategies available to you. For example,
if you may want to do an Earn-in, and you’re aware of the many different types, you can refer
back to this list as a reference to choose the ones that will work best for you. [DealDone.io is
software that will have more functionality than the Excel spreadsheet.]
Roland suggests sitting on the same side of the table when negotiating the deal – not on
opposite sides. You literally want to be on the same side of the table with them to workout the
deal points before you draft an LOI. These terms would be what would go into a contract. It all
revolves around what the Seller wants and what the Seller plans to do with the money.
Knowing this allows you to structure the deal using these strategies.
These are the original 159 funding strategies, which have now been increased.

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The original list of 159 strategies has expanded into this list of 216, along with some
additional ideas shared by others in the group at the end. Use them to stimulate your ideas for
structuring a deal. Roland will go through the list when he is working on a deal so that it
reminds him of his many different options. He also does every negotiation with multiple
fallback positions. He has his goal deal that he tries hard to get before he will go to his fallback
positions. This gives him a framework to approach the deal.
Consider these as a toolkit of creative ways to acquire a business that can be combined in
multiple ways.

Pre-Closing Strategies 1-140

1. Asset Carve Out

When you make a list of all the assets in a business, you might not need all the assets to do
what you want to do, and you can carve out certain things out of the deal to reduce the
purchase price to something that makes more sense for you. The assets listed on the
balance sheet are at historical costs or book value, and may be worth more or less than
what is listed. You should do your due diligence to determine the real value of the assets.
Some things you can ‘carve out’ include:
! Cash required to operate the company is called Working Capital (WC). You may be able
to reduce this. For example, if WC is $200k, and you can get it down to $100k, the
additional $100k would be a carve out to reduce the purchase price.
! CD/MM/TB & Securities are something you don’t need and could carve out.
! Inventory can also be another carve out. There may be dead inventory that you don’t
want or it would be difficult to sell.
! Equipment or other assets could be a carve out.
! Real Estate is another carve out. You could lease it from the owner or you may already
have a place for the business.
! AR Financing – What do customers owe the company? You can carve these out and let
the seller collect on the AR. That will be cash flow that you won’t get, so make sure you
have enough Working Capital.
Roland mentioned that a lot of people will “pre-negotiate” against themselves in a deal.
There is a “zone of fairness” in negotiation where the seller and buyer will have a
difference in what will be paid. As the Buyer, you want to have the highest amount
attributed to an asset you plan to carve out, because the higher the value, the more it will
reduce the actual purchase price. The seller will think differently.
In your LOI (Letter of Intent), you will specifically mention assets that will not be part of
the negotiated purchase price. It won’t be the negotiated price minus the carve out assets,
but just the amount, with the assets already carved out.

Earn-Ins mean you are going to dedicate your time, effort and resources to achieve specific goals
in the company, and in exchange you will receive a specified percentage of equity in the
company. There are 8 different kinds of Earn-Ins positions listed below according to the order of
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desirability and advantage to you. When you exit a business, the desirable order of an Earn-In
would be the opposite, because you will have a Seller’s hat on.

2. Instant Earn-In
Equity is earned right now upon doing the deal. This is the best possible situation you
should start with as a Buyer. The next 7 Earn-In positions are fallback sequential positions
listed by priority that you should negotiate to get your best deal. You can earn equity in a
company by providing services, such as consulting or marketing, or contribute a product
or resources such as helping them buy companies.

3. Temporal Milestone Earn-In [1:7 fallback position]

Equity vests on completion of time spent on deals. This is the first fallback after an instant
Earn-In. Roland typically likes to get at least 50% up front, and no less than 20%, with the
rest vesting over time. If he Seller wants to terminate the deal, unless it’s for cause, the
agreement should state that the time-based equity will vest 100%.
For example, if it its’ agreed that you will get 50% of the company, with 20% now, and
10% per year over the next 3 years, and the Seller terminates after 6 months for anything
other than ‘cause’, the entire 50% would vest right now. In the agreement you will need to
define what constitutes ‘cause’ and what does not constitute ‘cause’. It is usually
something significant to justify a ‘for cause termination’ such as lying, cheating, or stealing.

4. Event Segment Milestone Earn-In [2:7]

Equity vests on completion of certain events. This is your second fallback position. This
can be defined however you want. Typically it is the completion of a marketing funnel,
marketing plan, software program, or any other project – not the performance of the
event.
The nice thing about this is that you will still get paid when you complete the event,
whether it works or not. This is important because sometimes things don’t work out as
planned, but you should still get paid for your efforts.

[Note: Strategy #5 was added after someone in the group made a suggestion to Roland and he
made a note of it. So the numbering will be ahead in the video up until # 76, because Short Term
Note Payable for Down Payment, was mentioned earlier as #34.]

5. Performance Segment Earn-In [3:7]

Equity vest on attainment of an objective performance criterion in a segment being met.
This is the third fallback position. For example, after the completion of a software
program, specific performance criterion needs to be met in order to vest.

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6. Revenue Segment Milestone Earn-in [4:7]
Equity vests on attainment of certain revenue goals in a segment of the business you are
responsible for. This is the fourth fallback position. There are different segments in a
business, and if one segment that you have an agreement, does well, you should get paid. If
other revenue segments do not perform well, it should not affect your equity earn-in or
payment.

7. Profit Segment Milestone Earn-In [5:7]

Equity vests on attainment of certain profit goals in a segment of the business you are
responsible for. This is the fifth fallback position. Profit can be manipulated, so you should
have it segmented for the activity or event you have agreed to work on. If the rest of the
company is not as profitable, it should not affect or penalize your profit segment.

8. Revenue Company-wide Milestone Earn-In [6:7]

Equity vest on attainment of certain revenue goals for the entire business. This is the sixth
fallback position. There is more risk for this because of factors outside your control that
could affect revenue (e.g. COVID-19)
Roland had a deal with a mail house where every additional $1M in sales brought into the
company; he earned an additional 2% in equity.

9. Profit Company-wide Milestone Earn-In [7:7]

This is the last fallback position. Equity vests on attainment of certain profit goals for the
entire business. This has the greatest risk due to factors inside and outside the business
that you have little control to improve or change.
[Note: To overcome the situation where Net Profit is manipulated to be lower than
expected, the Earn-In could also be based on Gross Profits with a predetermined COGS or
variable costs percentage established. The Earn-In would be based on the greater of gross
or net profits.]

10. Sweat Equity

Objective-based equity earned once it is achieved.

11. Co-Investor
This is bringing someone else in the deal who will put in some money and receive some
equity.

12. Pipe Wrench

This can be used if your existing business and is responsible for 10% or more of the
customers, sales or value to another business from referrals or from purchases you or
your customers are making. You can reach out to that business owner and say, “I know you
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may be worried because I’m sending you a lot of business (they may not be worried, but by
making that statement they may start to worry). I’ve been thinking that I’ve been sending
enough business that I’m either going to go into that business, or I’m going to buy a
business. Then when I started thinking, ‘I’m already happy with the relationship that we’ve
got,’ and imagine how much more business I could send to you if I had the incentive to do
that if I had an interest in the business?
“So what I’d like to do is rather than me send that business elsewhere, or starting or
buying a business myself, I’d like to acquire an ownership in your business, and for you to
give me that interest, and then we’d work together to build the business.”
Roland has had success with this approach because he’d already proved he was a valuable
partner from all the business he had sent their way.
The story behind the Pipe Wrench naming was shared by Seth Coyne in the FB Group: “For
those who are confused by the name, the pipe wrench offer comes from a story that was
experienced by the uncle of Roland’s business partner, Perry Belcher.
If I recall correctly, Perry‘s uncle came out of a bar in the middle of the night and got
mugged. The mugger actually tried to be fairly polite (you know, for a guy who is stealing
stuff). Apparently, the mugger told the uncle: ‘Either you can give me your wallet or I’m going
to hit you with this pipe wrench and then I’ll take your wallet. I’d rather you just give me the
wallet.’
The Uncle refuses and the next thing he knows, he wakes up in the hospital without his
wallet.”

13. Revenue Share Pre-Sale Tests

You run a promotion of your product or service to the company’s list on a revenue share
basis (typically 50/50, but can be any variation depending on the product) to determine
whether there is demand for your existing company’s products or services and apply your
revenue share to the down payment to acquire the company.
The benefit of structuring it like this that if you’re getting credit for your 50% share, then
you’re not receiving that share, you’re assigning that to the owner of the company to go
towards the purchase of the company. The benefit to that is that it will be pre-tax dollars,
rather than post-tax dollars. If you were to receive your 50% share in money, then pay tax
on it, and then take that money that was left over and give it to the owner to buy the
company, you would have less money.

14. 3rd Party Revenue Share Pre-Sale

You may not have a product or service, but you want to test if you can grow a company. Go
to a third-party company that has a product or service that may be appealing to your
target company’s audience and you cut a deal by saying, “Hey, you’ve got a great product
and I know a company that could really benefit from it. I can do a revenue share deal
where they’ll split the profits 50/50 (or whatever you can negotiate with them), and if I
can cut that deal, would you be willing to give me half of your profits too, and you’ll be
picking up all of these new customers?”
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Then you go to the target company and say, “Hey, I’m interested in acquiring your
company, but I want to be sure it can grow, so how about we do a 50/50 split on the
revenue share that comes from this? The company I’m going to bring in is going to get
50%. I’ve got a deal where I’ll get something from them.”
Effectively, you take a “tollgate” fee from each of the companies to earn 50% of the profit,
while each of them will get 25% of the profit. You’ll learn if the products from this 3rd party
are going to sell and be interesting to the Seller’s customers. Plus, you’ll shift your profits
over to the seller, so you’re paying for the acquisition with pre-tax, versus after-tax dollars.

15. Fair Market Value (FMV) Based 100% Consign Non-Inventory, Non-Essential Assets
Any assets you plan to sell post-closing are carved out of the purchase price, but you
commit to selling them and then paying the proceeds to the seller upon liquidation for
credit of total amount of sale against purchase price. Effectively, the Seller is consigning
those assets to you and give them 100% of the proceeds from the sale.

16. FMV + Fee Based Consign Non-Inventory, Non-Essential Assets

commit to selling them and then paying the proceeds to the seller upon liquidation for
credit of the total amount of the sale against the purchase price, less a percentage (10%)
fee for conducting the sale that the seller would have otherwise have to have conducted
but did not want to.

17. Fixed Value Based 100% Consign Non-Inventory, Non-Essential Assets

commit to selling them and then paying a pre-agreed upon fixed price to the seller upon
liquidation for credit of total amount of sale against purchase price. If you sell the asset for
more than the fixed fee, you keep the difference. If you sell for less, you make up the
difference, so agree on a low amount to avoid paying the difference.

18. Lease Option on Total Business

You pay a monthly, quarterly or annual fee to take over and operate the business and have
an option to purchase it for a pre-agreed upon price at the end of or prior to the end of the
option. Essentially you are renting the business, without an obligation to purchase. This is
useful if the Owner has shiny-object syndrome and wants to chase another opportunity, is
planning to close the business, or has died and the spouse doesn’t want to operate it.
The advantage is you can learn more about the business before deciding to buy, and you
pay a rent from the profits. You get to see if all the things you plan to do will increase the
value of the business. The price is fixed, and you have a 1, 2 or 3 year option that gives you
time to earn enough to pay for the business. All amounts paid in rent should be negotiated
to go towards the purchase price.

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19. Lease Purchase
You pay a monthly, quarterly, or annual fee to take over and operate the business and have
a contractual obligation to purchase it for a pre-agreed upon price at the end of or prior to
the end of the lease. This gives the Seller more confidence that the business will be sold,
and you get a chance to see if the business makes sense to acquire. If it doesn’t make sense,
you did it using an SPV and you can tell the Seller it’s not working and you don’t have any
personal liability.

20. Private Lender

Find individuals who have money, and want to earn more than what they could if it was
sitting in the bank. There are a lot of folks who do hard money loans against the hard
assets in the company – not typically intellectual property. These assets are anything that
can be liquidated. This is good for gap funding, where you have exhausted your funding
efforts and need money to fill the gap.
Roland worked out a 3-year deal and paid them 10% interest only on their money, and no
warrants, meaning no options and no equity.

21. Sell & Stock Back + Call Option

The Seller sells the company to your SPV and then you give back stock in the SPV, plus you
have the right to buy them out (Call Option).
Roland shared that a friend went to the owner of a manufacturing company that was at
$2.5M and not growing as much as possible, because the owner didn’t know how to grow
it. The friend suggested creating a new company so the liability in the existing company
wouldn’t be there, and he then gave back 20% stock in the SPV back to the original owner,
who then reduced the purchase price by 20%. After 3 years his friend had the right to buy
out the Seller’s stock for a pre-agreed price (Call Option). This can be a fixed price or an
agreed formula, like 2X profits.
There are also so potential tax benefits to the Seller by structuring the deal this way, and
then using it to negotiate the price down.

22. Sell & Stock Back + Put/Call Option

You acquire 100% of the business, then sell back stock to the Seller with a Put/Call Option.
This means that you have the right to buy out the Seller’s stock at an agreed price and
agreed upon time (Call Option), and the Seller has the right to force you to buy them out at
a predetermined price (Put Option). This is the second fallback choice, with the previous
one as the first option.

23. Sell & Stock Back + Put Option

This is the third fallback position, and it only allows the Seller to force you to buy them out
at a predetermined time for an agreed upon price.

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24. Seller Consulting to Offset Purchase Price (Fee Based)
You carve out a fee from the purchase price to pay the Seller a consulting fee over a period
of time. For example, if the business price is $1M, agree to pay $880k and pay the
remaining amount as a $10k monthly fee for the owner to come in and consult with the
business for one year ($120k).
The benefit to you is to finance that amount over a period of time, and the tax benefit of
expensing the amount for the consulting fee, versus the non-tax benefit of purchasing
$120k of the asset. It also ensures that the Seller stays involved in the business. The
downside to the Seller is that capital gains tax won’t be paid on the $120k, they’ll pay
ordinary tax.

25. Seller Consulting to Offset Purchase Price (Performance Based)

This is the same thing, except the Seller has to achieve certain results to get paid the
consulting fee. This is different from an earn-out, which is based on the pre-agreed
performance of the company. This is based on helping to complete some project or event
that is agreed upon by the Seller.

26. Seller Consulting to Offset Purchase Price (Blended Formula)

This is the same, but with a blend of fee based and performance based. For example, the
Seller is paid a fee of $5k for consulting, and the other $5k comes from some performance-
based result. This could be something like ensuring at least 80% of the staff remain,
building a funnel, etc.

27. Non-Competing #1
Third party provides 100% of funds, and you acquire the business at your valuation
purchase price. For example, if the business is purchased for $1M, with a $200K down
payment, the non-competing 3rd party may only want access to the customer list, and they
pay the $200k for 20% equity in the business.

28. Non-Competing Equity Split #2

Third party provides funds, plus acquiring at Fair Market Value, which may be significantly
more than you are paying. Once you have the deal locked up, let the other people come in
at a higher valuation. For example, if you purchase the business for $1M, and the FMV of
the business is $2M, the $200k down payment would only be worth 10% equity.


Third party provides other assets or resources instead of cash that will help you in the
business or that can be used to pay the Seller. This can be at the price you purchased the
business or for FMV.

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Third party provides funds, plus assets/resources.

31. Seller Loan + Wrap

There is a loan on the assets or the property and you assume the seller’s existing personal
loans and wrap them into a new promissory note with the Seller from your SVP to avoid
any potential due on sale clause issues.
For example, if the selling price is $1M and the Seller owes $600k in total loans. There are
clauses that makes the Seller liable for those loans, and with an SBA loan, it may be due
and payable with the sale of the business. To avoid this, you wrap all the loans into a single
loan, and you take those over. This reduces the purchase price by $600k, and you only
need to come up with the remaining $400k.

32. Outside Integrator Investor

Integrator means they are going to operate the business. This is any person outside the
business who invests cash or assets for equity, and then comes in to operate the company.

33. Internal Integrator Investor

This is the number 2, 3, or 4 person inside the business who invests cash or assets for
equity, usually at FMV – which is higher than what you negotiated to buy the business.
The inside person will operate the company. This money can be used as the down payment
to the Seller.

34. Short-Term Note Payable

This is used as part of a DDP in the escrow instructions as opposed to being a separate
document. You agree to pay a note as your down payment. Usually it’s less than 6 months;
and typically due in 30, 60, or 90 days. This gives you time to apply the post-closing
strategies with the assets that you have control over.

35. Collateral Asset In Lieu of a Note

You provide assets for Seller to hold for a short term as collateral to be replaced by cash
within 30, 60, or 90 days of closing.

36. Seller Subordinates Seller’s Carryback Financing

There are two steps to get to this. The first step is the Seller agrees to finance part of the
purchase. Then you get another lender, such as SBA, who will have first position for the
loan. The seller agrees to subordinate the loan, which means the Seller has a 2nd position
for the loan.
As an example, if the business was valued at $1M, and it has loans of $1.3M, it is over
leveraged. There is an SBA loan for $800k at first position, the seller financed the sale for
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$100k at second position, and another lender financed the remaining amount at third
position. If for some reason the business had to be sold for $830k, the SBA loan would be
paid first, the Seller would only get $30k and lose $70k, and the other loan would be wiped
out completely.
Real Estate is a great example of this. In R.E. you put down 20% and there is a loan for the
remaining 80%, and they have first position, which means they get their money before
anyone else. If you then go to a bank and get a Home Equity Loan Line Of Credit that will
be second in place. Understand the first position gets paid first, and so forth. This means

37. Employee (Non-Integrator Level)

Investor invests cash or assets into the business, which you then use towards the purchase
price to pay Seller. The employee or group of employees who are not in a higher
management level, but could be a great financing source for equity in the business. They
may have 401Ks or other savings they can use to invest.

38. 1099 Investor

Independent contractors in the business, or anyone doing business with the company may
invest cash or assets into the business, which you then use towards paying down the cost
of the business. The best place to find investors are friends, family and acquaintances, then
people who are in the business or doing business with the company.

39. 3rd Party Hypothecation

You get a third party to place their asset as collateral with a bank or other lender, in
exchange to get the lender to make the loan to your SPV.

40. Credit Card to Buy What The Seller Wants

A credit card is used to buy something the Seller wants. This is used to reduce down
payment (Rolex watches deal). This is why you ask a Seller, “What do you plan to do with
the money?”
The Seller may say they want to put cash into a money market – so this gives you a chance
to provide a greater return than a money market. If they say they want to take a trip
somewhere or buy a Rolex watch, you would pay for the tickets or Rolex watch on the
company’s credit card(s) and use as part of the down payment at closing. The Seller may
be okay with accepting this for the down payment and financing the rest of the deal.

41. Advisor Loan

An advisor from the advisory board in the existing company makes a loan to be repaid
from the business operations with the loan proceeds, and the loan is used to pay the Seller
a down payment or financing.

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42. Advisory Board + Loan
If the company doesn’t have an advisory board, you can set up a new one and give them
the opportunity to participate in the success of the company with no risk by making a loan
to the company. This is repaid from the business operations with loan proceeds used to
pay the Seller a down payment or financing.

43. Existing Advisor Investment

As opposed to a loan, the advisor(s) can make an investment for equity in the company.

44. Board Member Loan

An existing board member in the board of the directors makes a loan to the company to be
repaid from the business operations with loan proceeds used to pay the Seller a down
payment or financing

45. Existing Board Member Investment

Board member(s) in the existing company invest in the company for equity.

46. Board of Directors + Loan

You set up a board of directors and have them make a loan to the company upon setting up
a new board of directors, to be repaid from the business’s operations with loan proceeds
used to pay the Seller a down payment or financing.

47. Staggered Tranches PPM (Private Placement Memorandum)

This is Just-In-Time (JIT) funding, where you get the money over time as you need it, and
as you increase the valuation (dynamic valuation) along the way, you can get funding at
increasingly greater valuations.
To determine the new valuations, you can use industry standards from BizComp or other
sources; however, you set the valuation. If you need $100k for marketing and you know it
will produce 9x in revenue for the company, it will be worth $900k more. Even if you apply
the same multiple, after its added $900k, it’s going to be worth a whole lot more money.
You’re only taking the amount of money you need for the thing that’s going to have the
biggest impact on the value of the company – usually that’s media and marketing.
For example, you acquire and own a company for $200k, and you want to raise some
money to pay for the company. Let’s say you need $40k for the 20% down by giving away
20% of your equity. You need another $50k the next year to pay the Seller who is financing
the sale, and through your magic you have increased the valuation to $500k. So you only
need to give away 10% for that amount, and you still own 70% of the company. Another
year goes by and you need $100k to pay the Seller, and the company valuation is now at
$1M, so you only need to give up another 10% for that amount. You’ve raised $190k
through three different investments by selling 40% equity, and you still own 60% of the
company. Companies from Uber to Facebook do this type of funding.
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48. Reverse Wholesale

Get a contract option to acquire a company for a fixed price over a period of time (30-90
days) and then sell it to a third party Buyer during the option/due diligence period.
For example, if you get a contract option to acquire a company for $500k, and you find
someone willing to pay $750k for it during the option period. You earn $250k for having
put the deal together.

49. Deferred Payment + Liquidate

Negotiate a deferred payment with the Seller and liquidate all the assets to pay off the
Seller loan before it comes due. You make money on the amount earned from the
liquidated assets and the payment to the Seller. This can be done in a short period of time
if you know what to do.
Variation: Agreement with the Owner to receive a percentage of the liquidated assets, or a
higher percentage above a base amount that the owner wants. This avoids the risk that the
money from the liquidated assets is less than the deferred payment amount.

50. Gross Cash Flow Assign Down Payment

Assign some portion of the existing target business’s Gross cash receipts to Seller to pay
part or all of the down payment or Seller financing. This doesn’t take into consideration
returns, chargebacks, allowances, discounts, rebates or any other factors that like that.
You can sell the existing inventory and use it to pay for the down payment, and when it
runs out, revert to a JIT (Just In Time) system, or work out a consignment deal, or a low
from suppliers for future inventory. So, you’re using the assets of the company to fund its
operations and then assigning a portion to the Seller so they get paid quickly.

51. Net Sales Cash Flow Assign Down Payment

Assign some portion of the existing target business’s Net Sales cash receipts to Seller to
pay part of all of the down payment or Seller financing. This has the benefit of taking
margin into account after refunds/chargebacks, etc.

52. Gross Margin Cash Flow Assign Down Payment

Assign some portion of the existing target business’s Gross Margin cash receipts to the
Seller to pay part or all of the down payment or Seller financing. This has the benefit of
taking COGS margin into account after refunds/chargebacks, etc.
For example, if you sell $100k of stuff in a month, and there is a 70% gross margin, there
would be $70k of gross profit in the business. If you assigned 50% of that, the Seller would
get $35k. That still allows you to assign a portion of gross margin in a business that doesn’t
have a back stock of inventory of non-COGS things to sell.

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53. Credit Card Down Payment
Purchase product on the merchant account from Seller prior to the close with the Seller
receiving cash from the transaction. The Seller receives the cash, and the obligation to pay
falls onto your SPV.

54. Paying Subject-To Debt of Seller

Take ownership of the business at closing while taking on the Seller’s debt on a Subject-To
basis. This is not a formal assumption of the Seller’s debt. It means that you are taking it
over, but you realize that the debt has to be paid off and you’re not going to assume it.
It’s a legal distinction between an assumption where the debt becomes your SPV’s debt, or
a Subject-To where it remains the Seller’s debt, but you know you have to pay it off or
someone is going to come and take things.

55. Company Debt Wrap

Take the Seller’s company debt with a debt wrap. You will wrap all of the company’s
obligation to the Seller.

56. Partial Debt Assumption

Assume part of the target acquisition’s debt. You go to the creditor and let them know you
are going to assume part of the debt, and it lets the Seller off the hook for the debt.
Negotiate terms with the lender

57. Full Debt Assumption

Assume all of the target acquisition’s debt.

58. Seller’s Personal Debt Assumption

You assume some or all of the Seller’s personal debt. You go to the Seller’s personal
creditors and let them know you are assuming the debt and letting the Seller off.

59. Seller Inventory Consignment

Deduct the cost or FMV of the target company’s inventory from the purchase price and pay
the seller as it sells. The Seller effectively still owns the inventory and has consigned it to
you, and as the inventory sells, you will pay a pro-rata amount to the seller at the value
cost/FMV, not the price it is sold for. You want to look at cost and FMV because if the FMV
is less than the cost, then you want to be sure not to give the Seller more credit in the
transaction that the inventory is worth. Some inventory may be obsolete or out of style.
For example, if there are 100,000 units of inventory in the business, with a per unit cost of
$2, or $200k in inventory, and 50,000 pieces were sold in the first month, then you would
pay the Seller $100k that month. This gives you as the buyer a longer time to pay for the
inventory.
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60. Tax Assumption

Assume tax liabilities of the target acquisition. Otherwise, this would be another debt the
Seller would have to pay off when it closes. Be sure that it is not overdue and that you can
pay from the proceeds of the operations.

61. Double Escrow

Close the sale on the acquisition and then immediately resell the company at a profit to
another Buyer directly after the first escrow closes. This is similar to the Reverse
Wholesale, but there is not an option. It’s best to know who the Buyer is before you
acquire the business.

62. Defer Close 4DCM

Take over running the business, but defer the actual closing for a short period of time.
Then, run a 4-Day Cash Machine to provide the purchase price or down payment funding
for the closing. The 4DCM is an email campaign that comes from Frank Kern and it is just a
way to generate quick cash for the Seller.
This video by Frank Kern provides information about the 4DCM 2.0:
https://www.youtube.com/watch?v=dVehqjU81r0
Here is a PDF: http://dgkr88646ovag.cloudfront.net/The_4_Day_Cash_Machine.pdf

63. Defer Close + Sale

Take over running the business, but defer the actual closing for a short period of time (30,
60 or 90 days). Then, run a general sale at the business to provide the purchase price or
down payment funding for the closing.

64. Working Capital Adjustment

This is the negotiation of how much working capital needs to be left in the business in
order for it to operate going forward. Determining how much cash from sales coming into
the company is important. The multiple used to value the business assumes that the
business would continue to be able to operate, that’s why the business can’t come with no
cash in it.
[To understand this better listen to the two calls with Roland Frasier and Grant Teeples
did on the stock purchase agreement.]

65. Opportunity Zone Favored Financing

There are opportunity zones in the U.S. that give favored financing for the business.
Determine if the targeted business exists in an area where the government provides an
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economic advantage/incentive to purchase the business. (See also #140, Opportunity
Zone Financing.)

66. 2nd Trust Deed Note Payable as a Down Payment

This is a multiple step strategy where you can purchase 2nd Trust Deeds sell at a deep
discount. If you are a Real Estate investor or own multiple business properties, you may
be able to purchase a 2nd Trust Deed at a deep discount. There is a first, second and third
priority on business and Real Estate properties when it comes to loan payment.
For example, if there is a $100k, 3-year Trust Deed; you may be able to buy it for $80k. You
can then use that asset as a down payment with the Seller.
If you sold a property for $100k and the Seller was able to get 80% financing, and you took
a 2nd Trust Deed for the remaining $20k. That $20k is effectively free to you, and you can
turn around turn that into cash, and then offer it to the Seller as cash on the business
you’re buying. There’s a lot of opportunities to arbitrage that.

67. Alternative Lenders

Going to other types of lenders to finance your deal.
[Listen to the interview with Ty Crandall to learn about alternative lenders.]

The following are different types of loans by the Small Business Association. The SBA doesn’t
lend money directly to small business owners. Instead, it sets guidelines for loans made by its
partnering lenders, community development organizations, and micro-lending institutions. The
downside is that the SBA often requires a personal guarantee. However, you can get around it by
having the Seller get the loan and guaranteeing it. Then wrap the loan into the purchase so that
your SPV pays for the note.
Why would the Seller personally guarantee something that you are going to personally take
over? …Because they’re motivated and they want the cash. When you’re dealing with a motivated
Seller, they are more open to deals like these. If you’re comfortable with guaranteeing the loan,
you can get it in your name.

68. SBA 504

This is a commercial real estate financing loan for owner-occupied properties.

68. SBA 7a Loan

This is the SBA’s primary program for providing financial assistance to small businesses. It
can be used to acquire a business or obtain working capital. The maximum amount is $5M.

70. SBA 7a Express

This is a simple way to receive expedited, amortized government-guaranteed financing for
a small business. Entrepreneurs can be granted up to $350k of capital in the form of either
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a term loan or line of credit. Once received, this capital may be used for various business
purposes.

71. SBA Export

This loan is to help companies start or expand their export activities. Most banks do not
advance cash on the basis of working capital export receivables, orders, or letters of credit.
SBA Export loans fill this funding gap and help support firms’ export sales.

72. SBA Microloan

The Microloan program provides loans and grants up to $50k to help entrepreneurs who
may have trouble getting financing from other sources, such as banks or credit unions

73. SBA Disaster Loan

The SBA provides low-interest disaster loans to help businesses recover from declared
disasters.

74. SBA EIDL

This loan can be used for essentially any business purpose, such as payroll, buying
materials, making rent and repaying obligations. The funds are not supposed to be used
for physical repairs, expansions, bonuses or refinancing long-term debt.

75. SBA PPP (Paycheck Protection Program)

This is a loan designed to provide a direct incentive for small businesses to keep their
workers on the payroll. SBA will forgive loans if is used to pay employees or in other
designated ways.
For example, if you have a payroll of $50k per month, and you receive sales of $50k that
would have gone to pay employees, use the PPP money instead and put the $50k in
savings. After the 8 weeks, it will be forgiven and you will have the additional money in
savings. So you could acquire a company, receive SBA PPP money, and to pay for payroll,
and additional money from sales to fund the company.
The following websites offer more information about the SBA PPP:
https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-
protection-program
https://www.sba.gov/document/support--ppp-interim-final-rule-requirements-loan-
forgiveness
https://www.sba.gov/document/?program=PPP

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76. SBA CAPline
This program provides small business owners with fixed or revolving lines of credit up to
$5M to help meet their cyclical and short-term working capital needs.

[Original #76, Short Term Note Payable for Down Payment, was mentioned earlier as #34. This
puts the number back in line with Roland Frasier on his video explanation.]

77. Barter
The oldest form of negotiation where you have a product, service or other resource that
you can trade to the Seller in exchange for the down payment.

78. 3rd Party Barter

If you don’t have something the Seller wants, find a 3rd party that has that thing and trade
them something you have so that you can go back to the Seller and trade it.
Jay Abraham calls this the fine art of triangulation, and says: “triangulation becomes
invaluable – and essential – whenever you cannot achieve your primary barter objective
through the conventional two-party trade situation. …the astute practitioner can make up to
50 percent more barter deals and achieve net profits that may exceed 200% of the
traditional yields that basic trade deals produce.”
Barter Kings is a fun program to get you into the bartering mode. This episode shows how
multiple trades were made to trade a $300 accordion up to a $10,000 houseboat:
https://youtu.be/yLO9qrpjO60

79. Refillable Seller Holdback Applied to Down Payment

In the purchase agreement there is usually a holdback in the purchase price of about 10%.
This is to allow for money to pay for things that come up that weren’t disclosed. To help
finance the deal, you can negotiate with the seller to pay the holdback over a specified
period of time
For example if the acquisition price is $1M, and the holdback is 10% or $100k, you can tell
the Seller that instead of putting the money upfront now, you would like to have the option
of paying it in 6 months (or even up to 3 years). So you give a note for the holdback and
payoff the note after a specified period of time. The Seller is not going to get the money
anyone, and they may do it to make the deal happen.
Roland has a deal that he sold where the holdback is released over 3 years, with a third
being given back after each year. Anything that helps the person to get the money faster
will incentivize them to agree to the deal.

80. Seller holdback Applied to Down Payment With Countering Note Payable
The Seller holdback can be done with a countering note payable.

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81. Seller holdback Applied to Down Payment
The Seller holdback can also be applied directly to the down payment.

The following #82 through #87 are variation of Owner Carry where the seller finances the deal,
with #82 being the most favorable and the others are fallback positions listed in priority. Owner
Carry is where the owner carries the note and finances all or part of the purchase. It is also
referred to as a Carryback because when the purchase is completed, the owner will “carry back”
a note instead of money from the deal.
The seller is carrying back the note, often between 80% to 90% of the business in a promissory
note over a period of 5-10 years. Roland is willing to pay interest, but will start at 0% interest,
and sometimes he gets it. The service on the debt is from the profits of the company (not you), so
the business is truly paying for itself.

82. Owner Carry Without Note Payable, No Interest + Balloon

The Seller can carry an unsecured note, meaning that there is no collateral being pledged,
and the Seller does not have a lien on any of the assets or equity in the company. There is
no interest on the loan, and payment(s) on the loan made sometime in the future (a bulk,
unamortized payment 2-4 years from now), which is called a balloon payment.
This is the most preferable Owner Carry for the Buyer, and what you will offer in your LOI
to the Seller. The next strategies are fallback positions that are less and less favorable.

83. Owner Carry: Unsecured Note Payable, No Interest + Balloon [1:5 fallback position]
This strategy has a promissory note, but it is not secured with collateral being pledged, no
interest, and a balloon payment.

84. Owner Carry: Secured Note Payable, No Interest + Balloon [2:5]

This has collateral being pledged, so the Seller has a lien against the assets or stock in the
business. However there is no interest and a balloon payment in the future.

85. Owner Carry: Unsecured Note Payable, Interest Only + Balloon [3:5]
There is an unsecured note payable and interest only, which means there is no principal
amortization, so the principal balance is unchanged, and you are just paying interest
monthly or quarterly. The loan can be structured so the payments occur any time during
the term. To the right is an
example of Interest Only
being paid and principal
payments are due at the end
of the year.
Use the Interest Only Loan
calculator at this website to
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determine any variation of interest only calculations: https://financial-
calculators.com/calculations/interest-only-loan

86. Owner Carry: Unsecured Note Payable, No Interest, Straight Amortization [4:5]
This has an unsecured note payable with no interest and a straight line amortizing the
note.
For example, if the loan is financed at $240k over 2 years at $10k per month, then there
would be no interest on that note payable. There is no balloon.

87. Owner Carry: Secured Note Payable, With Interest, Straight Amortization [5:5]
This is the last fallback position, and it is how banks typically structure a loan – with
collateral, interest and straight amortization. You do not have a balloon payment on the
last two strategies. A balloon is desirable because you don’t have to make a payment every
single month or quarter, so that means you have more cash to grow the business and you
pay the Seller at the end of the period.

88. 3rd Party Personal Guaranty Loan

The Seller wants a guarantee on the loan, but you are not willing to provide it, or you don’t
have anything that the Seller feels comfortable with as a guarantee. You can then got to a
3rd party and make a deal with them to guarantee the loan in exchange for equity, interest,
payment, or some incentive upfront to get them to be the guarantor.

89. Cash Release To Seller At Closing

This is simply a way of carving out cash. At the closing you pay the Seller cash on hand,
either in X dollars or X percent.

90. Accounts Receivable Offset

You allow the Seller to keep their Accounts Receivable and you offset that amount against
the loan. Effectively, it is a carve out of the A/R.

91. 3rd Party Co-Signer For Loan

A loan where the 3rd party is liable with you for the loan. If a payment is not made or the
loan is not repaid, you and/or the 3rd party can be sued for repayment, and it will affect the
credit of you and the 3rd party if they are a co-signer. Whereas, a 3rd Party Personal
Guaranty Loan has the 3rd party liable for the loan, but it typically does not affect their
credit in any way.

92. 3rd Party Gets Loan In Exchange for Equity

Have the 3rd party get the loan in exchange for equity, payment, or some other incentive.
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93. Seller Co-Signs Loan

The Seller would do this because they want to get paid. This is similar to co-signing for an
SBA loan. The Seller is effectively participating in the liability, but they are not going to pay
it.

94. Seller Pledges Assets For Loan

The Seller provides assets as collateral for a loan.

95. Card Cash Advance

Get an advance on your credit card to help fund a deal. This has a higher interest rate, but
it can be used if paid off quickly. This can be used when you only need a small amount of
money, such as buying a FB Group.

96. Credit Card Round Robin

You have multiple credit cards that you can use to get cash in advance, and you use that
amount for your down payment.
If you apply for several credit cards, you would eventually be declined because each
merchant would do a hard query for credit, and with each query it ‘dings’ you. Each
merchant will know that you are applying for multiple credit cards and see you as a risk.
To get around this, there is software (Ty Crandall has this software) that allows you to
apply for multiple credit cards at the same time and there is only one hard query.
See this website for more information: https://www.creditsuite.com/

97. Bank Loan Round Robin

You can get loans from multiple lenders for cash that can be used to pay the down
payment. You don’t want to do this sequentially because it will alert initiate a hard query
and alert the banks that you are getting multiple loans.
Ty Crandall has software that allows you to apply for loans from multiple lenders at the
same time to avoid having multiple hard queries.

98. Seller Non-Compete Geo Abatement For Purchase Price Reduction

In a negotiation, you can sell back rights to the Seller to operate in other geographic
territories. This is called a Non-Compete Abatement, and it can be structured according to
any region, state, or country where you give the rights for the Seller to operate in areas
without competing against you.
[Note: As a strategy, you can initially ask for country or global rights in the beginning, and
if the Seller plans to operate in the country or another country, you negotiate a reduction
of the geographical rights for a price reduction.]
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99. Seller Non-Compete Vertical Abatement For Purchase Price Reduction

The rights in a vertical market can be negotiated to reduce the purchase price. You’re
effectively slicing up the rights of the company. Most people don’t think about this, and it’s
a creative way to get the price reduced.
For example, if the company is operating in the skin care and cosmetics industry and you
plan to focus your growth only in the skin care, you can give the rights for the Seller to
operate in the cosmetics industry for a price reduction. So you would get a vertical
abatement (reduction) in the broad industry of skin care that prevents the Seller from
operating specifically in skin are, but allows operation in cosmetics.

100. 100% Promos

You do a test promotion to the Seller’s list and then apply 100% of proceeds as credit
towards the down payment or purchase price. Instead of doing an affiliate deal where you
split the profits 50/50, you are making sure the company has customers that will
support/buy the things you are going to offer through the target acquisition.

101. IRA Loans from Personal IRA

There are loan amounts you can take from a personal Individual Retirement Account to
make an investment. Talk to your financial advisor to determine the amount.
The IRA is in the U.S., and countries may have something similar where a loan can be made
against a retirement account.

102. IRA ROBS (Roll-Over As Business Start-up)

This is a procedure you can discuss with self-directed IRA companies like Verizon Trust or
Equity Trust. It says start-up, but it doesn’t have to be a start-up company.

103. Seller IP Royalty

If there is Intellectual Property you will be using in the business, you will pay the Seller a
royalty payment in perpetuity, or for a fixed period of time, or until a fixed amount is
received in exchange for a reduction in the purchase price.

104. Seller IP License

If the Seller has Intellectual Property you will be using in the business, you will pay a
licensing fee in perpetuity, for a fixed period of time, or for a percentage of sales. This can
be applied to the purchase price or it will reduce the purchase price.

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105. Seller Unit Royalty
If the Seller has Intellectual Property you will be using in the business, you will pay a
royalty payment for each unit sold. This can be applied to the purchase price or it will
reduce the purchase price.
[Marcus Lemonis, in The Profit, gave a unit royalty in the Key Lime Pie Co. episode (Season
2, Episode 8) where he gave the Owner $1 for every pie sold for the rest of the Owner’s life.
Roland believes Lemonis made a mistake by giving this to the Seller instead of keeping it
for himself, because Lemonis put a lot of money into the business to be successful. See the
10 minute summary of the episode with the negotiation starting at 03:17
https://www.youtube.com/watch?v=ReKSvo93Ytg ]

106. Back-up Loan From A 3rd Party

This ensures you have the needed loan in case the loan from another lender does not come
through in time. This was learned the hard way for Roland, where he lost several million
dollars due to not being able to close a deal during the guaranteed due diligence period.

107. Real Estate Split-Off

You split the R.E. out of the deal and do a separate contract to purchase it, or you are not
interested in purchasing it.

108. Barter Arbitrage Acquire Low and Trade To Seller For Higher Value
It’s important to ask a Seller, “What will you do with the money?” because this allows you
to go out and make a deal with a 3rd party for the item at a low trade value, and then barter
with the Seller for a higher value in exchange for credit towards the acquisition.
This is similar to #78, Third Party Barter.

109. Reverse Merger

This is a way of going public without having to file a registration statement because you
are acquiring a public shell – a company that’s already publicly traded but has nothing in
it. The idea is that you have a non-public company you are acquiring, and you need to form
or acquire a shell of a public company in advance and then merge the company you
acquiring into the public shell and the Seller receives free trading stock or restricted stock,
or stock that has a restriction for some period of time, but the Seller is receiving stock in a
public company in exchange for the assets in the business they’re contributing into the
public company.
Roland warned that this is a fairly complicated process that can be a good option in
specific circumstances, but it carries some risk as well. Roland spent 5 minutes explaining
in Deal Funding Strategies Part 2 from 1+13:50 to 1:18:55.

Variation: Multiple Reverse Mergers. Roland mentioned Jeremy Harbour, who teaches
similar things as him, and Jeremy came up with a concept he calls ‘agglomeration’ – a new
business model that allows numerous SMEs to float as a single diverse, public corporation
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more easily and with less risk. The more SMEs that join, the more value that’s added to the
new corporation and the more attractive it becomes to investors. It’s beneficial for the
business owners because they form part of the new corporation’s board while retaining
complete control of their own companies.
In this article he states how SMEs can compete with the onslaught of online retail giants,
like Amazon, and level the playing field by joining forces with other retailers to form a
publicly traded company that will allow them to sell stock for investment and access new
markets: https://www.bmmagazine.co.uk/news/ex-government-advisor-floats-
groundbreaking-strategy-to-save-sinking-high-street/
Harbour also has a book on Amazon.com called: Agglomerate: From idea to IPO in 12
months: https://www.amazon.com/Agglomerate-Idea-IPO-12-
Months/dp/1781332096/ref=tmm_pap_swatch_0?_encoding=UTF8&qid=&sr=

110. 3rd Party “Franchise” Sale

You offer the rights to a 3rd party to use the brand of an acquisition target in another
territory, and then use that money to pay the Seller for their business.
Franchise is in quotes because you don’t need to go through the entire franchise process, if
you are not planning to expand as a franchise. To avoid becoming an “accidental franchise”
under the FTC’s franchise rule, you need to structure the relationship to eliminate the
existence of any one of the 3 elements from the franchise definition: 1) The other party
will have the right to operate a business identified with the franchise seller’s trademark, 2)
the franchise seller exerts a significant degree of control over or provides significant
assistance, and 3) the franchise commits to make a required payment to the seller. (see
https://www.franchising.com/articles/how_to_avoid_becoming_an_accidental_franchise.h
tml )
For example, if you’re buying a R.E. brokerage that someone else believes in the business
and would love to invest in the business, you could instead sell the rights for a 3rd party to
use the R.E. brand in another territory, and you use that money to pay the Seller.

111. Jay’s Car Deal: Pre-Sell Inventory/Services/Asset Use

Use the assets of a company to pre-sell the rights to individuals to ‘use’ those assets
without giving up equity, and then using that money to pay the Seller.
This comes from Jay Abraham, who worked with a client who acquired a Porche
dealership by raising money for the deal by pre-selling lifetime demo rights for $100k to
12 people for them to have lifetime rights to drive new Porches every year. These cars
would then be used or sold as demo cars. The client raised the money without having to
give up equity.

112. Business Broker/Investment Banker Loan From Commissions

Ask a business broker or investment banker to make a loan of their commission to be used
as the down payment. They are incentiized to do that because they want to make the deal
happen.

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113. Business Broker/Investment Banker Investment For Equity
Have them make an investment for equity. The smarter ones look at the better businesses
as deals to invest their money. Ask them to roll their commission in as an investment in
the deal.

114. Fractional Rights

This is another slicing the pie situation where it can be used to reduce the cost or generate
cash that can be used to buy the business. When you thin slice the company into all the
things that its has, you’ll find that you have an immense amount of flexibility. If there is
someone else that has a product or service that could be sold to the audience, you can sell
them the fractional rights for some period of time.
Fractionalization is probably one of the greatest opportunities for creativity in any deal
because people don't think about it. Many things come in a bundle of rights that can be
broken into different fractions. You can ask: Does this intellectual property have value
outside of this company?
If it does then maybe there are ways for you to fractionalize the IP and either use it to
generate cash from the Seller by giving up part of those fractional rights, or by licensing it
to other people. You could also do a full acquisition of it and liquidate it, meaning you just
sell it on the open market.
You might do a royalty-free license in which case you would be keeping it, but use it in the
company without paying a royalty, while the Seller has the right to do other things with it.
You could reduce the purchase price by $X and pay the Seller a royalty of a dollar a unit, or
3% of sales, or whatever in perpetuity or for a given number of years. or whatever right so
there's a lot as long as we use the IP and you still have it there or you could sub-license to
other people.

115. Post-Date Check

This is the ultimate deferred down payment (DDP) where you post-date the check for 30
to 90 days from the closing date.

116. Vendor Co-Sign

If a vendor is selling to the company and you can get a 3rd party vendor to sign on the loan
as a co-signer in exchange for an agreement to keep them as a vendor for 1-2 years. They
charge a fee to put together your investment kit, investor relations’ package and all the
systems and procedure for doing the deal.

117. Money Broker

Money brokers are 3rd parties that will go and find the money you need to do the deal, and
they typically charge a fee of about 5% to find a lender. They will prepare the documents
and typically charge a fee and some piece of the equity in the company. There is no
guarantee that they will raise the money.
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118. Deferred Down Payment (DDP)

One of Roland’s favorite ways because it lets the seller check a box on getting a down
payment, but it is paid at a later date. It is literally a deferred, no interest, down payment in
a shorter period (30, 60, 90 days, sometimes up to 6 months); whereas, a Seller Finance is
usually for longer periods (3-10 years).
You will then have 2 notes: 1) Owner financed (like a mortgage) and 2) DDP short-term
payment (note payable).
[Roland told the story of giving William Shatner a deferred advance (oxymoron) for his
$500k advance on his book deal, by paying him from the sales of the book. The $500k was
spent on marketing his book.]

119. Leveraged Buyout (LBO)

This is when you use debt on the company, typically greater than the value of the assets of
the company to acquire the company. These are usually used for larger deals.

120. Management Buyout (MBO)

This is where management is buying the company. It’s similar to an Integrator Investment,
but you get a group of those integrators and they go to the founder who is interested in
exiting the company to let them know their group is ready to buy the company. You could
facilitate that and participate in the equity, or you could acquire the company and then go
to the management to arrange for a MBO.

121. Self-Liquidating Payment (SLiP)

You want to be sure that the company can make the payments on the whole structure.
Every deal is ideally a self-liquidating payment deal.

122. Private Placement Memorandum (PPM)

You can use a PPM to raise funding for the deal by putting together a document that allows
you to raise money from friends, family or others like suppliers or people in the business.
This was mentioned in #47, Staggered Tranches PPM.
Google search definition: A legal document that discloses everything the investor needs to
know to make an informed investment. It describes the company selling the securities, the
terms of the offering, and the risks of investment.

123. Angel Investor(s)

You can go to angel investor networks to raise money for a target acquisition. This is a
person who provides capital for a business, usually in exchange for convertible debt or
ownership equity.

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124. Straight Merger
You merge the target company into your company for stock. You have an existing
company, your SPV, and you do your first deal, and now you have a platform company that
you can use to share equity in exchange for equity in another company that is similar or
would complement your platform company. The currency you use is the stock you control,
and can use to acquire other companies.

125. Straight Merger for Stock + Cash

In this merger you are offering both stock and cash. The cash can come from all the
sources that have been discussed in the Deal Funding Strategies.

126. Special Purpose Vehicle Asset Merger

You merger the target company into your SPV and add assets.

127. Special Purpose Vehicle Equity Merger

You merge the target company into your SPV and add stock or equity.

128. Straight Partial Acquisition

You acquire only a part of the Seller’s business. If you don’t have enough funds to acquire
100% of the company, you can use the amount to acquire a portion of the company stock
or equity.
For example, if the purchase price is $3M and you were only able to use the strategies here
to come up with $1.8M, that would be 60% of the company you could acquire.

129. Two-Step Partial Acquisition

You acquire part of the Seller’s business now, and have an option to acquire the remainder
at another date.

130. Roll-In
This is when you are going into an industry as a strategy to acquire specific businesses in
the same market and then you consolidate, or roll them into them into a larger company.
Combining small firms into a larger company allows the latter to pull their resources
together, cut down on operational costs, better positioned them to enjoy economies of
scale, and increase revenue. This also makes the larger company a more desirable target
for a private equity acquisition.

131. Partial-Option To Acquire From Seller

You may not acquire the company now, but you receive an option to acquire a partial
amount of the company at a later date.
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132. Full-Option To Acquire From Seller

This option allows you to acquire all of the company at a later date, which gives you time
to put together the financing.

133. Straight Baseline

You’re looking at a profitable company and you recognize a baseline of profit that the
owner keeps, and you will receive a percentage of the profits you are responsible for
growing over that baseline – typically 50%.
For example, if a company is earning $60k per year as a baseline, and you apply your
ability to grow that to $100k, then the additional $40k would be split 50/50, so you would
earn $20k.

134. Disappearing Baseline With Option

Determine a baseline profit from which you can use to get a percentage split (typically
50/50) on the increase in the benchmark profits. The magic of a Disappearing Baseline is
that when you get to 3x profit (or whatever you negotiate), you have an option that the
entire profit will split all of the profits 50/50. So there is no baseline after that.
The good thing about this strategy is that it incentivizes you have a target that you are
working toward, and the Seller is still ahead because if the business is making $180k
instead of $60, and you divide that by 2, the Seller is now making $90k, and you increased
their profit share by 50%.
Roland told about a company making $2M in profits and the owner (a celebrity) wanted to
keep some equity in the company. Roland negotiated to determine a $2M baseline on the
business and then do their magic and get a 50/50 split on all the additional profits from
the $2M baseline already earned. When it earns $4M profits, the additional $2M is split so
each gets $1M. When it did $6M, 3x the profit, then 50/50 was $3M each, and on
everything in the future.

135. Home Equity Line Of Credit (HELOC)

This is a loan where the lender agrees to lend a maximum amount within an agreed period,
where the collateral is the equity in their house. A HELOC works similar to a credit card
because it gives you a credit limit and you can take out money in increments rather than a
home equity loan, which gives you all the money at once.
If there is real estate in the business, you may be able to get a line of credit, or loan using
the R.E. as collateral.

136. Margin Loan Against Securities Held

This is the money borrowed from a brokerage firm that can be used for a down payment
or to purchase an acquisition. It is the difference between the total value of securities held
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in an investor’s account and the loan amount from the broker. The broker acts as a lender
and the securities in the investor’s account act as collateral.
If the business has securities, you can get a margin loan against the securities the business
has.

137. Sublease-Back Space To Seller

If the Seller has a couple of different businesses and you purchase the business and real
estate with multiple offices, you could sublease one of spaces back to the seller for income
or to reduce the down payment or purchase price. (See also #146. Sublease Space to 3rd
Party.)

138. Earn-Out
You agree on a formula where you pay the Seller the purchase price or additional
payments based on the future performance of the businesses. The formula can be anything
you choose and agree to, but be sure to cap the earn-out.
This is used when you can’t agree on a price, because the seller is basing the valuation on
future growth that may or may not happen (hockey stick projections), not its current
historical value. You tell the seller you want to pay them on what the business has done
historically, not what it MIGHT do in the future.
Tell them we have a couple of options: 1) Wait until the future and see if what you are
saying actually happens, or 2) give them option to buy it at your price, and if it earns what
the seller believes it will earn, an additional amount will be paid down the road. It defers
you paying the full purchase price at a later time. Roland has seen 100% earn outs.

139. Tollgate
You become the intermediary that connects the Buyer and Seller. Bob Serling teaches the
tollgate concept for joint venture deals, and Roland does it for acquiring companies. A
buyer pays a success fee, with you acting as a deal facilitator in the middle of the Buyer
and Seller. You may also receive equity as part of the deal.

140. Opportunity Zone Financing

There are special financing deals available for businesses in the U.S. that are operating in
Opportunity Zones. These are available because the government is trying to incentivize
investment in a particular town or region.
(See also #65, Opportunity Zone Favored Financing.)

Pre- and Post-Closing Strategies 140-150

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141. Compensating Balances Arrangement
You, the company or a 3rd party enters into a compensating balances agreement, which is a
specific type of agreement that you can enter into with a lender. It means you have some
amount of assets or cash that will be deposited with the lender, and then allow the lender
to make the loan to your company or SPV.

142. Asset Swaps

This is where you have assets that you want to trade for cash or equity to people in the
company or to the Seller.

143. Stock Swaps

You have a form of cash in the equity of your SPV, and that is something that you can use
like cash to acquire companies. You can take the stock in your SPV and swap them with the
Seller, employees, vendors or with anyone.

144. Sponsorship Sale

Sell sponsorships to businesses that would like attention or access to your list for a one-
time or MRR basis. If you have a choice, choose sponsorships over investors every single
time. This is because sponsors pay for a period of time, and then pays again when that
period of time expires. You get the money and they get whatever sponsorship benefits you
have contracted with them without giving up equity.
By contrast, equity investors give cash one time and they are in for as long as the business
exists. Think about how you can get sponsors to generate business. Roland sold a $50k 1-
year sponsorship to a mortgage broker for a RE FB group he acquired.

145. Intellectual Property Sale

You can sell off Intellectual property from the company. Here is a link about how to sell IP:
https://www.upcounsel.com/how-to-sell-intellectual-property

146. Sublease Space to 3rd Party

If you buy a business that has multiple spaces that can be lease, you can sublease those
spaces to a 3rd party for additional income to pay to the Seller. (See also #137, Sublease-
Back Space to Seller.)

147. Train-In
Sell look-over-your-shoulder training to an apprentice who wants to learn M&A while you
are doing a deal. This provides additional cash to help fund the deal.

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148. Real Estate Sale and Leaseback (RE SLB)
You can sell the real estate of the business to a 3rd party and then leaseback the building
for a FMV rent. If the deal was $2M and $1M was in Real Estate, you could: #1 carve out
the R.E. or #2 go to a commercial real estate broker to sell the building, which gives you
the money to pay off the lender, and the equity goes to the seller, which reduces the
purchase price of the business. Then cut a deal with the buyer of the R.E. to work out a
market rate lease or favorable lease.
This can also be done with other assets of the company, by taking that asset out of the
company. You now have cash that is the equity you’ll have in the property or other assets
when you buy it, that you can give to the seller to reduce the purchase price. You then
lease the equipment back from the Seller or lease it from a third party.

149. Landlord Rent Deferral For Set Period Of Time

Approach the landlord that you are paying rent in a newly acquired business, and request
a rent deferral for a set period of time in exchange for a lease extension or renewal. They
may want you to sign a new lease, and you sign it in your SPV so you aren’t personally
liable.

150. Landlord Abate and Add Strategy

Ask the landlord of a business you acquire to abate the rent for 30, 60 or 90 days and then
add that amount of time onto the back of the lease. This is to give you time to get up to
speed and get adjusted so you can ensure making future payments.

Post-Closing Strategies 151-216

151. Customer Accounts Receivable Debtors

You offer these customers early payment discounts so you have additional cash flow.

152. 3rd Party Vendor Prepayments In Exchange For Discounts

As you do some of these strategies to generate cash, you can then go to your vendors and
offer to prepare in exchange for a discounts.

153. Discounts To Recurring Payment (MRR/ARR)

Ask customers to buy sooner or in bulk and offer them a discount by paying in advance.
You get a better return on your money.

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154. Offer Lifetime Memberships
If you have members paying a regular payment, you can offer them a lifetime membership
price when they pay upfront.
Roland mentioned that War Room mastermind members were paying $20k per year to be
members, and they were given the offer to have a lifetime membership by paying for 5
years in advance, or $100k. There were some who took it up and it provide a lot of cash
upfront. War Room is 11 years old and it was a great deal for them.

155. Seller Trash To Cash

Identify “hidden assets” the Seller does not value or realize the value exists, and you can
sell them to fund the purchase. Think of the waste products, byproducts and unused assets
that are lying around any business you’re looking at because sometimes those items can be
sold for cash that would fund the business.
For example, a business that was acquired had a pile of tires in the back that could be sold,
and he was able to find a buyer who paid a lot of them. Another story is about the
Duraflame log company that built logs out of sawdust and then went to logging companies
and got a contract to haul away the sawdust for free and then used them to build the logs.

156. Media Financing

If a company is spending $10k per month, there are companies that will finance your
media purchases so you have the extra money to finance your business.

157. Media Revenue Share

Unsold media time (radio and television) is call remnant time, and if it is not sold, it
disappears. Instead of having dead space, they will often run PSA spots. You can often do a
deal with them by paying on a revenue share basis.
For example, Roland is going to radio stations and offering to do a rev share on what is
sold on their station from the ads they run, as opposed to paying in advance. This will
allow you to defer your media budget, and spend it to pay the Seller.

158. Consolidate Debt

Take lots of higher, more expensive debt and consolidate it into one loan that has a better
rate and terms. The reduced payment amount allows you to have money to pay the Seller
or yourself.

159. Debt Restructure

You can negotiate with the Seller’s lenders to restructure payment terms so you’re not
paying as much as you were before. Since the payment amount is down, you can use the
difference in the money to pay the Seller or yourself.

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160. Debt Reduction
You negotiate a contracted reduction in the amount of the debt that you’ve got in your
company.

161. Furniture, Fixtures & Equipment (FFE) Liquidate

You can liquidate old equipment and then use the money you make from it to lease
equipment at a lower amount than the money you earned from the liquidation.

162. Furniture, Fixtures & Equipment Seller Leaseback (FFEE SLB)

You sell FFE to a 3rd party and lease it back, so it gives you cash upfront, and allows the 3rd
party to have an income stream.
This is also known as Asset-Based Lending (ABL). You fund the deal by financing
equipment or other assets through a third party lender. Typically, the asset can be used to
get about 50% of the asset’s value.

The strategies from 163 to 167 are different forms of financing the assets in your business, also
known as Asset-Based Lending (ABL).

163. Furniture, Fixtures & Equipment Finance

You fund the deal by financing your FFE through a third party lender. You can also finance
assets through a government loan in the U.S. Typically, the asset can be used to get about
50% of the asset’s value.

164. Purchase Order (PO) Financing

If the business you are acquiring receives purchase orders, there are companies that will
finance those POs.

165. Raw Materials Finance

You can also get financing based on the raw materials in the business you acquire.

166. Container Finance

If you are buying products from overseas, there is container financing.

167. Inventory Finance

The inventory that the business has on hand can also be financed.

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168. Return Inventory
If you have more inventory than you need, you can talk to the supplier about returning
some of your inventory, and getting either cash or credit. Then you could move to a Just-
In-Time inventory system.

169. Supplier Invests

You could have a supplier invest in your company.

170. Supplier Loan

Go to the suppliers and ask for them for a loan. This could be done by:
• Asking for a cash loan.
• Not having to pay the bill for supplies for the next 3 months, which may be $5k that you
would pay out of pocket, and a contribution of $10k from sales, and that you can use to
pay to the seller at a later time, in consideration of a guarantee that they will continue
to be the supplier for 1, 2, or 3 years.

171. Supplier Terms

You can ask the Supplier to change the terms to your advantage.

172. Supplier Consignment

You can request the Supplier provide inventory on consignment, which is what Wal-Mart
does.

173. Landlord Deposit Release

Negotiate with the landlord a complete release of the deposit.

174. Landlord Deposit Reduction

Negotiate with the landlord a reduced deposit released to you.

175. Credit Card Reserve Release

Negotiate with the Credit Card company for a release of the CC reserves. This is probably
the biggest hidden asset of companies that have CC reserves that have built up and Sellers
have completely forgotten about it because it almost never shows up on the balance sheet.
Roland shared that the company that was started to launch EPIC had a CC reserve that was
15% of sales. He sold about $1.7M, which would be a reserve of about $250k. He was able
to negotiate that being released after about 4 weeks.

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176. Letter of Credit Drawdown
This is a drawdown on the company’s credit. If your acquired company has a credit line,
ensure that the credit line stays in place and then use it to draw down on that.

177. Life Insurance Loan

You can get a life insurance loan against your whole life insurance policy. Policy loans are
borrowed against the death benefit, and the insurance company uses the policy as
collateral for the loan.
If there is key person insurance on the company your acquiring it may have cash value.
The company owns that policy, so that’s an asset you want to make sure it gets included in
the deal.

178. Close and Delay Accounts Payable

After you close the transaction, you can delay the Accounts Payable. To delay means you
don’t pay for a period of time. It’s best to discuss this with those you own money and
negotiate a delay of the payment. However, if you need cash right away, you can just delay
payment on things that are coming due, and then work it out with them.
You’re making them involuntary creditors, but if that’s what it takes to close the deal and
keep the business alive, you will eventually get them on board. Beware that there may be
some penalties and interest for late payments, and it could affect your credit status.

179. Close and Defer Accounts Payable

The nicer way to get more time to pay your Accounts Payable is to defer them, which
means you go to those you own money and say, “I need a 60 deferral on payment. You can
charge us interest if you need to. I’m just looking to get some cash to take care of some
initial things I need to do with the company.”

180. Private Money Note (PMN)

You go to a 3rd party and after you close on a transaction you ask for a loan that can either
be secured or unsecured.

181. Work-In-Process Financing

This is for a manufacturing company that has raw materials and inventory. In between the
time that the raw materials go into the process, and the finished goods that come out is
what is called “Work-In-Process” (WIP). There are companies that offer WIP financing.

182. Real Estate Refinance

Once you have closed and have title to the assets of the company, you can refinance the
loan on the real estate.

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rd
183. 3 Party Rent Discount
You could rent certain assets of the company to 3rd parties that can come into the company
and use the assets on-site. Or you might have vehicles that you don’t use all the time and
you work out a deal for a 3rd party to use them during the times you don’t need them.
There are an infinite variety of ways to do those kinds of things.

184. Government Grants

There are a lot of government grants. It might be worth talking to a grant consultant to
determine what grants your company would qualify.
The Economic Injury Disaster Loan Emergency (EIDL) Advance provides up to $10,000 of
economic relief to businesses that are currently experiencing temporary difficulties. This
is for businesses experiencing a temporary loss of revenue, and it does not have to be
repaid. Here is the application website: https://www.sba.gov/page/disaster-loan-
applications

185. Private Company/Organization Grants

There are a lot of private company grants for different kinds of businesses that have
different kinds of customers in different areas.

186. Debt Into Equity Swap With Creditor(s)

Take debt and turn it into equity. If the company owes money to a 3rd party, approach
them and ask them to swap the debt for equity in the company. You not only eliminate the
debt, but also the payments on the debt, so that money can go towards your down
payment or seller financing.

187. Inventory Into Equity Swap With Supplier

You swap inventory with a Supplier for equity. Ideally, you will want to swap your current
FMV of the company (not what you paid) for their cost of the inventory items (not what
they charge you).

188. Inventory Into Equity Swap With Manufacturer

You swap inventory with a Manufacturer for equity. Ideally, you will want to swap your
current FMV of the company (not what you paid) for their cost of the inventory items (not
what they charge you).

189. Inventory Into Equity Swap With Wholesaler

You swap inventory with a Wholesaler for equity. Ideally, you will want to swap your
current FMV of the company (not what you paid) for their cost of the inventory items (not
what they charge you).

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190. Inventory Pre-Purchase By Distributor Into Equity
This involves two steps: First, ask the Distributor what kind of a discount you can get from
the Distributor, and second, once you get a discount, ask for them to convert that into
interest in the company.
The reason why suppliers, manufacturers, wholesalers, and creditors would potentially be
interested in these deals is because they would have an assured channel of distribution in
the future. You want to make sure that any business is done at a fair market rate or
discounted rate, often called ‘most favored nations’ pricing (MFN). This is a contract
provision in which a seller agrees to give the buyer the best terms it makes available to
any other buyer. Also, if there is an inventory shortage, they will prioritize giving the
inventory to the business where they have an ownership interest.

191. Non-Inventory Supplier Equity Swap

You can also swap equity with suppliers that do not have inventory.

192. Apply Target Acquisition’s Line Of Credit To Acquisition Funding Requirements

If a down payment was deferred, this is a place where you could use this.

193. Switch-Incentive With Suppliers: They Pay You NOT To Switch

The Suppliers pay you NOT to switch suppliers.
Roland told the story about working with Kent Clothier in the real estate market and how
they have a lot of people who buy, fix and flip rehabs. They were going to start a supply
store like Home Depot, where these people could get there supplies. Home Depot found
out and paid them $2M upfront payment in exchange for them to not start the store and to
continue buying from Home Depot. And if they did that for a year, Home Depot would pay
another $2M.

194. Supplier Pipe Wrench: Agree Not To Compete

The Pipe Wrench is if you are buying a lot of product or referring a lot of customers to a
particular Supplier, you can go to the Supplier and ask for equity and also agree not to
compete with the Supplier.
The reverse Pipe Wrench would be to go to a business that is buying a lot from you and
offer equity if they won’t buy from others and will send more business your way.

195. No-Switch Incentive Fee

[Skipped on the video.]

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196. Sell Overstock At Discount To Provide Acquisition Funding
One of the common things you will find when you acquire a company is that there is ‘dead’
inventory that hasn’t sold for a while. You can take that inventory and sell it at a discount
to help with acquisition funding.
The same thing applies to overstock inventory. Frequently the Seller will order because
they get a deal on buy extra inventory. You can liquidate the overstock until you have just
enough inventory on hand.

197. Seller Overstock To Provide Debt Retirement On Seller Finance

Same as #196, but to sell overstock inventory to provide debt retirement on Seller finance.

198. Sell Overstock To Provide Debt Retirement On 3rd Party

Debt
Same as #196, but to sell overstock inventory to provide debt
retirement on 3rd party debt.

199. Mezzanine Financing

Mezzanine is available for companies doing over a few million
dollars in revenue. Between Venture Capital, Growth Capital
and Exit, there is a whole line of capital called Mezzanine
Financing – hybrid of debt and equity financing that gives the
lender the right to convert to equity interest in the company in
case of default.

200. Crowdfunding For Amounts Under $5M

There are a lot of options and platforms with Crowdfunding that
are available to raise money.

201. Sell New Ad Space

Ads that you have not sold before in various owned media. Media the Seller had control of
such as podcast and media channels can be used to sell new ad space.

202. Pre-Sell Ad Space In Existing Owned Media

[No further explanation.]

203. Debt Double Tap (DDT)

Agree on a financed amount and negotiate down when you can pay. When you negotiate
an installment basis deal with the Seller, you can go back to them a few months after the
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deal and offer to pay a discounted amount in cash instead of the financed term, and they
will typically take it.
For example, if you had a $100k deal for 5 years, and you were able to put together a deal
for $290k cash. You can go to the Seller and say, “I know you have $100k coming over 5
years, but I can give you $250k now.” (Roland offers half to start with.)
Then see what they have to say, and either they’ll accept or you can negotiate an amount
that works for both of you. This is one of Roland’s favorite strategies and says the DDT is
second only to the DDP.
49:42
204. Bank Guaranty

You have the bank guarantee for the Seller finance amount. This ensures the liabilities of a
debtor will be met. So if the debtor fails to settle a debt, the bank will cover it.

205. Vendor Co-op Ad

You aggregate all of your vendors and do a co-op ad with them. This means all the
participants share the ad costs. The vendors involved are looking to improve sales of their
specific product.

206. Roll-up
You use stock in your company to acquire other related companies. It’s like a merger, but
targeted to a specific niche.

207. Real Estate New Loan


208. Real Estate Refinance Of Existing Loan


209. Accounts Receivable Recourse Loan

This is one form of factoring where you get a loan against your accounts receivable, but if
enough of the Accounts Receivable default and there is not enough money to pay off the
loans, then your company is responsible for them. Do this only through your SPV.

210. Accounts Receivable Non-Recourse Sale (AR Factoring)

This is a true factoring deal. It means that the factor is giving you money to buy your
Accounts Receivable. So if you sold $100k of AR for $80k, and some of the AR default, the
Factor cannot come back to you for the difference. That 80% can be given to the Seller to
fund the deal.

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211. Spindle. Sell owned manufacturing line time to 3rd party
Spindle Time means the capacity you have to manufacture things on your manufacturing
line. If you’re acquiring a business that has a manufacturing component, and it’s not
producing at 100% capacity, then that excess capacity has value and can be turned into
cash.
For example, if a business has the capacity of 3 shifts, and it is only running one shift at
50% capacity, then there is the possibility of adding 2 more and 50% more to the first
shift. So there’s 2.5 times the manufacturing Spindle Time available that can be sold to 3rd
parties if you own the plant.

212. Spindle Time. Sell contracted manufacturing time to 3rd party

If you’re contracting out with a 3rd party to use their manufacturing time every month, but
you don’t need 100% of it for your company, you can that excess Spindle Time and
contract it out to a 3rd party.
You’re turning that expense into a profit center that can reduce and sometimes eliminate
the overall expense.

213. Employee Stock/Share Ownership Plan (ESOP) Buyout

There are complicated rules about doing ESOPs. An ESOP allows employees owner shares
in the company. Employees typically acquire shares through a share option plan. Such
plans may be selective or all-employees plans. Selective plans are typically made available
to senior executives (see #120, MBO).

214. Revenue-Based Financing (RBF)

Companies will fund you based on your gross revenue. As you earn the revenue they take
the amount from the revenue at an agreed upon rate. What you’re doing is getting paid
now as a loan for the future sales of the company, and the company is getting a loan based
on what it has sold in the past. Then you give that money to the Seller, so it doesn’t come
out of pocket.
Lighter Capital will give you unrestricted capital for growth in return for a small
percentage of monthly revenues. See their website: https://www.lightercapital.com/

215. Merchant Based Financing (MBF)

Credit Card companies like American Express will fund you based on your gross revenue.
It’s typically good rates bit it’s only for 1 to 2 years. The only bad thing is they take a
percentage of your gross revenue each month as the payment, so if you have a big month, a
lot will be taken out for the payment. See American Express website:
https://www.americanexpress.com/us/business/business-funding/merchant-financing/

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216. EB-5 Visa Financing
There are a lot of foreign nationals that want to get into the U.S. and they can become
green card holders by investing at least $900k to finance a business in the United States
that will employee at least 10 American workers. The EB-5 program is intended to
encourage both foreign investments and economic growth.

Additional funding strategies:

The original list expanded from 159 to 216, and it is a continuing process as more creative ideas
are learned and shared. These are some additional ways to fund a deal that were mentioned by
others in the group or from other sources. They are included to give you more ideas. The first five
are Customer-Based Funding models that are different business models you can adapt or adopt
to an acquired business to get customers to help fund the business. Some aspect of them may
have been mentioned in the previous deal funding strategies.

1. Customer-Based Funding (CBF): Pay-In-Advance Model

This is the most straightforward of the 5 models, and it simply means that the business
requests the customer pay something up front – either in full or a portion of the payment –
before they receive what is purchased.
Examples include membership fee, deposit in advance, such as with Price-Costco, Sam’s
Club or a contractor requiring a deposit before remodeling a house.

2. CBF: Matchmaker Model

The business brings together Buyers and Sellers with no or limited investment up front –
without owning what is bought or sold. You facilitate and complete transactions in this
“tollgate” position, and then earn fees or commissions for your work. Those fees or
commissions can come from the Seller, Buyer, or a combination of both parties.
Examples of this can be found with Realtors who don’t buy the house, but they do help sell
it or rent it for fee for their services. An online example would be eBay and Airbnb.

3. CBF: Subscription Model

With this model the customer agrees to purchase either a good, service, publication or
digital product that is delivered repeatedly – weekly, monthly or quarterly – over an
extended period of time.
Examples include utility services, Netflix, SaaS, or “gift boxes” that are shipped repeatedly
and paid for in advance.

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4. CBF: Service-To-Product Model
The business offers customized services to meet their customer’s different needs. As the
business gains accumulated expertise with the varying needs of its customers, it can
deliver packaged solutions that are appealing to specific customer segments and give the
business a competitive advantage.

5. CBF: Scarcity Model

The Seller restricts sales to a limited quantity for a limited period of time, with no
reorders, and the Seller’s supplier is paid after the sale is made. This works in industries
where there is fast product obsolescence.
An example of this is a “flash sale” where “members” are given 24-48 hours notice of a
private sale with limited quantity and for a limited time – typically 3-5 days, with goods
priced at an attractive percentage below retail price. This can be done for clothing,
accessories, wine, and digital products.

6. Equity Split With Seller

Split the equity with the Seller so they continue to own a part of the business and can sell
their equity at a higher rate when the company grows.
For example, a business valued at $250k could be Seller financed for 60% the Seller could
keep 40%. If the business is sold when it triples in value, the Seller would receive $300k +
the initial $100k for a total of $400k.

Two additional Strategies from the Accelerator FB Group:

7. Reverse Pipe Wrench Strategy

By Sergio Estevez in EPIC Accelerator in FB Group

- What's your current business? Let's say it's a Clothing Ecommerce
- Contact clothing manufacturers telling them you're looking to invest $X of cash into Ecommerce and if
they email their list you'll make sure that the money you invest in the next 30 days you'll buy all the stock
from them.
Meaning if you invest $100K you'll buy that $100K from them.
- Get on a lot of calls with Ecommerce Stores

NOW you have 2 options.
- Either acquire 100% if it's genuinely a good deal
OR...
- Negotiate an earn it at 10%
Get a lot of 10% in different e-commerce (ALL from this manufacturer)
Let's say you get 10% of 10 companies that buy around $15,000 each from the manufacturer each month.
Now you have $1,5M a year in buying power.
Go back to the manufacturer and say.
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Either you give me X% or my companies are leaving.
The good old pipe wrench. And now you own a supplier.
OR... if you want to go down the "nicer route"
Just contact another supplier and say.
Listen I’ve got $1,5M I can give you.
Give me X% and a 5% discount on the products for a year. And I'm in.
--> Your companies benefit
--> You get a new company

Done.
The good thing? REPEAT THIS with ALL the suppliers.
Example: You can go to an accounting firm and say.
Listen I own 10 businesses, give us a discount + % and I give you X amount of business.
8. Celebrity Partner/Promotion
Patch Baker contribution on 11 May 2020 in EPIC Accelerator FB Group

I have a spin off of this I have used several times if it's helpful.
There are a bunch of variations, but here is one. Feel free to steal it.
I go to people who are famous, but don't have good apparel or online brands, (this can work for businesses
too) and set them up with an online store and merchant for no out-of-pocket money for them. I take 70% of
all sales, they take 25% but they have to let me tell others that I am advertising on their behalf, give me
exclusive access to run ads on their behalf.
Then I go to print on demand places and website store builders to work out a deal.
The print on demand place gets to advertise for 90 days that they are working with the celebrity if they give
us a better rate for services and product, and they do the design work, usually 20% off of their normal rate.
They are happy to do this because it looks good in their promotional material.
I go to the website company and offer them 5% of total sales, but they have to build the site on their own
dime. They too can advertise the resulting store for a period of 90 days.
I have access to promote the celeb on their own Facebook page through MY Business Manager.
Now, I have zero money out of pocket for me and the celebrity. I am getting a better rate than anyone else for
the product so my profit margins are higher than they would be if I owned 100% of my own store without the
celebrity endorsement.
Once I show the sales we generate on the ads, I offer to allow the celebrity to put in their own money for ads,
so they "get to increase" their 25% returns.
Basically, I allow the celebrity to "buy back" 20% of the online store, IF, and only IF, they pay for ALL of
the ads and make a certain amount of exclusive content every week for the ads.
At this phase, I get to start a new LLC with the Celebrity. I have a famous person I now get to say is my
partner.
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Think about the breakdown:
I own 50%, the celeb owns 45%, the website company owns 5% and I get a contract in perpetuity which I
can leverage in any direction I need to because I own the controlling share and all the assets.
The details in the contract make me super stable because I own:

100% of the data.
100% of the customers generated.
100% of the store.
100% of the Business Manager.
100% of the email lists.
100% of any content made for the branded store.
100% free ads.
The Celebrity gets a team of business development, marketing and automation, web store, printing and
shipping experts to make it a hands free operation to them. Mailbox money. All of which helps them become
more popular and more in touch with their fans.
We all win and everyone is happy.
The best part is... my new celebrity partner and I do none of the actual work.
--
When asked by Sergio Estevez to expound of the type of celebrity that would be a good fit for this,
Baker commented:
That's pretty simple really. We search for people with name recognition but no real online store.
You're putting me in a bad spot here, but I would go after people like (these are literally three on my list right now so
don't steal these ;-) ), Craig Wayne Boyd, Rodney Carrington, Larry the Cable Guy... they all have terrible stores.
As a bonus, John Isner is the number 8 men's singles tennis player in the world and doesn't have a store at all.
It can be anyone with name recognition. We always choose people that would be beneficial to us to have the
relationship and we always pick people who are easy to work with. If that turns out not to be the case, we just sever the
relationship and let the project die out.

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Pre- and Post-Closing Strategies 140-150 ........................................................... 35

Post-Closing Strategies 151-216 ................................................................................... 37

Additional funding strategies: ........................................................................................ 47

216+ Deal Funding Strategies

Pre-Closing Strategies 1-140

1. Asset Carve Out

3. Temporal Milestone Earn-In [1:7 fallback position]

4. Event Segment Milestone Earn-In [2:7]

5. Performance Segment Earn-In [3:7]

7. Profit Segment Milestone Earn-In [5:7]

8. Revenue Company-wide Milestone Earn-In [6:7]

9. Profit Company-wide Milestone Earn-In [7:7]

10. Sweat Equity

12. Pipe Wrench

13. Revenue Share Pre-Sale Tests

14. 3rd Party Revenue Share Pre-Sale

16. FMV + Fee Based Consign Non-Inventory, Non-Essential Assets

17. Fixed Value Based 100% Consign Non-Inventory, Non-Essential Assets

18. Lease Option on Total Business

20. Private Lender

21. Sell & Stock Back + Call Option

22. Sell & Stock Back + Put/Call Option

23. Sell & Stock Back + Put Option

25. Seller Consulting to Offset Purchase Price (Performance Based)

26. Seller Consulting to Offset Purchase Price (Blended Formula)

28. Non-Competing Equity Split #2

29. Non-Competing Equity Split #3

31. Seller Loan + Wrap

32. Outside Integrator Investor

33. Internal Integrator Investor

34. Short-Term Note Payable

35. Collateral Asset In Lieu of a Note

36. Seller Subordinates Seller’s Carryback Financing

37. Employee (Non-Integrator Level)

38. 1099 Investor

39. 3rd Party Hypothecation

40. Credit Card to Buy What The Seller Wants

41. Advisor Loan

43. Existing Advisor Investment

44. Board Member Loan

45. Existing Board Member Investment

46. Board of Directors + Loan

47. Staggered Tranches PPM (Private Placement Memorandum)

48. Reverse Wholesale

49. Deferred Payment + Liquidate

50. Gross Cash Flow Assign Down Payment

51. Net Sales Cash Flow Assign Down Payment

52. Gross Margin Cash Flow Assign Down Payment

54. Paying Subject-To Debt of Seller

55. Company Debt Wrap

56. Partial Debt Assumption

57. Full Debt Assumption

58. Seller’s Personal Debt Assumption

59. Seller Inventory Consignment

60. Tax Assumption

61. Double Escrow

62. Defer Close 4DCM

63. Defer Close + Sale