World  Business and Economic Analysis 

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Whether you're starting a business or already have an established company, there's a good chance that at some point you will be looking for money, either debt or equity, or combination of both. This article should help to properly prepare the materials presented to investors, thus increasing chances of successful funding.

Investors have money, but they don't have much time to sit and read through 27-pages business plan. If your initial presentation is more than 2-3 pages long, most likely it will end up in a waste basket. Under best circumstances you will receive a call from investor asking to briefly explain what do you actually want. Therefore, lengthy business plan is just as effective as a business card with contact information. It doesn't mean that eventually you won't need a comprehensive document, but not for the initial introduction.


Do not overburden the document with technical details because majority of investors simply don't care how raw material A transforms to end product B. Majority of investors speak financial language and the executive summary should be written in a language that they understand. Depending on type of financing you're looking for, include only relevant information. For example, if you are going after assets-based loan, include total value of assets, preferably both estimated orderly liquidation value (OLV) and forced liquidation value (FLV), and skip on principals' bios, because they are not relevant for this type of loan. It is also good to know that you can expect somewhere between 60% and 8% loan-to-value (LTV) depending on type of collateral.

Lets start with 1-5 paragraphs about your project, when it was started and how you've got to this point. Be precise, clear and concise.

Next, tell investors what you're looking for. What is the total amount? Should it be debt or equity, or both? What are the expected terms? Do you need a lump sum, or can receive money in tranches?

Now, lets put on investor's shoes. What savvy investors are looking for... what is the common denominator? Simply put, investors are looking for high return on investment (ROI) and low risk. Every project that investor evaluates should pass ROI-Risk test. Therefore, the presentation materials should contain information addressing these two subjects. Principals are usually pretty understanding to ROI requirements and reflect it in the documentation, however risk assessment is often overlooked. Needless to say that very often risk is the decisive factor.

It is critical for a principal to understand that 100% financing is very, very rare. It comes with hefty price tag and substantial collateral requirement. Usually investors want to see principal having some "skin in the game" to mitigate the risk. It's much less likely for a principals to fail if their own money are involved. Save yourself a lot of time by realistically evaluating the investment opportunity.

Regarding due diligence fee - be prepared to pay for direct expenses, like travel, food and lodging, hiring local counsel or documentation processing service, etc. Just make sure that such expenses are not padded a lot; ask for due diligence fee breakdown.

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Deputy Commercial Manager of SAIPA auto making group Hassan Baghaei said on Saturday that the group has inked a one-billion-dollar finance deal with South Korean company SK networks.

 Baghaei said following preliminary talks between the two sides, the deal was inked on Friday.
The South Korean company is to finance SAIPA's purchase of dlrs one billion worth of spare parts in complete knock-down (CKD), he said.
Talks between the two companies on joint venture investment is now underway, he said.
SAIPA has recently placed a dlrs. 250,000 order for purchase of auto-parts from South Korean company, he said.
During the recent visit of the South Korean president to Iran, 19 memoranda of understanding (MoUs) on broadening of mutual economic cooperation were inked between the two countries.

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Commenting on the latest business developments between the two sides, he said, "Regarding banking transactions, five or six second or third tier banks have begun dealings with Iranian entities. But as long as the concerns of major international banks wanting to deal with Iran are not removed, these visits of foreign delegations will not bear fruit," Pourfallah said in an interview.
Giving some numbers on the foreign trade missions that have visited Tehran so far, he said, "Nearly a thousand business and trade representatives have come to our country, which is a record. Moreover, Italy is the leading country in signing accords and letters of intent."
The first edition of the Iran-Italy Business Summit was held earlier this month in Tehran in the presence of a large delegation of Italian business leaders.
The meeting brought together key Italian and Iranian corporate and institutional stakeholders, leading economists and opinion-makers to help build an influential community of business leaders willing and able to enhance the close ties that marked the history of the two nations.

It is often heard that the foreign delegations come and go but nothing concrete happens, Pourfallah noted. "But in my opinion, after eight years [of sanctions] that we were cut off from the global economy, these visits were crucial and also necessary for both sides to be able to reconnect."
Henceforth "we should show solidarity and speak with one voice. We must insist on reaping the benefits that we anticipated when signing the nuclear agreement, and should not back down until we can find our way back to the global economy.''
True, foreign businesses are keen on reconnecting with Iran, but there are concerns regarding their future which has led to much hesitation and contemplation on their part, the official noted.
He warned of the consequences that "we will face should we not follow up on the accords that we envisaged" would follow the historic deal with the six world powers.
If things do not move on the right trajectory between Iran and the outside world "The number of business delegations travelling to Iran will gradually shrink and we will be back to square one – a sort of island disjointed from the rest of the world."
Iran has made known at the highest level of government that it wants to re-establish mutually-beneficial business with the comity of nations sooner rather than late. However, some legal hurdles still exist in the way of normalcy between western banks and Iranian businesses, namely the remaining US sanctions unrelated to alleged human rights violations and terrorism charges.

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کتاب عملیات بانکی در عرصه بین الملل -سرفصل ها،ضمائم ،توصیه صاحب‏نظران ارزی و مدیران ارشد بانکی

Investment Consulting &Project Finance


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