Revenue share interest method of financing an asset management firm

• US 7,574,390 B1
• Filed: 03/19/2004
• Issued: 08/11/2009
• Est. Priority Date: 03/19/2004
• Status: Expired due to Fees

• Current Assignee: Asset Management Finance LLC
• Original Assignee: Asset Management Finance LLC
• Inventors: Henson, William, Reamer, Norton, von York, Alexander, Jakacki, Robert
• Primary Examiner(s): KAZIMI, HANI M
• Assistant Examiner(s): Kesack; Daniel
• Application Number:
  US10/805,063
• Time in Patent Office: 1,971 Days
• Field of Search: 705 35- 38, 705/36.R
• US Class Current: 705/36.00R
• CPC Class Codes: G06Q 40/03 Credit; Loans; Processing thereof
• CPC Class Codes: G06Q 40/06 Asset management; Financial planning or analysis

Abstract

In an embodiment of a method of financing an entity, such as an asset management firm, a financing provider invests assets in the entity. The financing provider receives a revenue share interest in the financed entity. No ownership interest in the entity is given to the financing provider during the term of the revenue share interest, and no debt is used. To evaluate and price the investment, a revenue forecasting model may be used.

Claims

1. A method using a computer of financing by a financier of an asset management firm by obtaining a revenue share interest in the asset management firm, and excluding the financier from taking an ownership interest during a predetermined period of time of the revenue share interest, and excluding debt, the method comprising:

negotiating terms for obtaining a revenue share interest in the asset management firm, wherein the revenue share interest is a portion of the revenue derived from asset management,

providing financing by the financier to the asset management firm,

receiving a revenue share interest for the predetermined period of time,

wherein, no ownership interest in the asset management firm is received during the predetermined period of time of the revenue share interest, and no debt is used, and

evaluating the revenue share interest using the computer, which at least in part is using a probabilistic analytical model.

2. The method of claim 1, wherein the financing is provided to the asset management firm in connection with a succession, restructuring, buyout event or other liquidity or capital needs of the firm or its owners.

3. The method of claim 1, further comprising:

terminating the revenue share interest at the end of the predetermined period of time, and upon termination of the revenue share interest, converting the revenue share interest to an ownership interest in the asset management firm, callable by the asset management firm.

4. The method in claim 1, further comprising:

changing a term of the revenue share interest based on a comparison of actual business performance to a quantitative target level.

5. The method in claim 1, wherein the negotiated terms include one or more of a fixed expiration date, a variable expiration date, a perpetual revenue share interest, a percentage of a callable ownership interest, a price of a callable ownership interest, an amount of financing, one or more earn-outs, a payment schedule, one or more buyout provisions, one or more required employment agreements for one or more employees, one or more required non-solicitation agreements for one or more employees, one or more objectives, pricing economics, one or more debt limitations, one or more debt guarantees, one or more negative pledges on revenue, one or more negative pledges on assets, priority, or one or more asset disposal restrictions.

6. The method of claim 1, wherein the terms depend on revenue targets.

7. The method in claim 6, further comprising:

extending the predetermined period of time of the revenue share interest, if the revenue targets are not met, and

reducing the predetermined period of time of the revenue share interest, if the revenue targets are exceeded.

8. The method in claim 6, further comprising:

increasing the amount of the revenue share interest if revenue targets are not met, and

decreasing the amount of the revenue share interest, if revenue targets are exceeded.

9. A method using a computer of financing by a financier of a business by obtaining a revenue share interest in the business, and excluding the financier from taking an ownership interest during a predetermined period of time of the revenue share interest, and excluding debt, the method comprising:

negotiating terms for obtaining a revenue share interest in the business, wherein the revenue share interest is a portion of the revenue derived from the business,

providing financing by the financier to the business,

receiving a revenue share interest for a predetermined period of time,

wherein, no ownership interest in the business is received during the predetermined period of time of the revenue share interest, and no debt is used, and

evaluating the revenue share interest using the computer, which at least in part is using a probabilistic model.

10. The method in claim 9, wherein the business is one of an asset management firm, or any other financial services firm.

11. The method in claim 9, wherein the negotiated terms include one or more of a fixed expiration date, a variable expiration date, a perpetual revenue share interest, a percentage of a callable ownership interest, a price of a callable ownership interest, an amount of financing, one or more earn-outs, a payment schedule, one or more buyout provisions, one or more required employment agreements for one or more employees, one or more required non-solicitation agreements for one or more employees, one or more objectives, pricing economics, one or more debt limitations, one or more debt guarantees, one or more negative pledges on revenue, one or more negative pledges on assets, priority, or one or more asset disposal restrictions.

12. A method using a computer of financing by a financier of an asset management firm by obtaining a revenue share interest in the asset management firm, and excluding the financier from taking an ownership interest during a predetermined period of time of the revenue share interest, and excluding debt, the method comprising:

negotiating terms for obtaining a revenue share interest in the asset management firm,

providing financing by the financier to the asset management firm,

receiving a revenue share interest for a predetermined period of time, wherein the revenue share interest is a predefined share of the revenue of the asset management firm,

evaluating the revenue share interest using a computer which at least in part is using a probabilistic analytical model,

extending the predetermined period of time of the revemie share interest, if revenue targets are not met,

reducing the predetermined period of time of the revenue share interest, if revenue targets are exceeded,

increasing the amount of the revenue share interest if revenue targets are not met,

decreasing the amount of the revenue share interest, if revenue targets are exceeded, and

changing a term of the revenue share interest based on a comparison of actual business performance to a quantitative target level,

wherein no ownership interest in the asset management firm is received by the financier during the predetermined period of time of the revenue share interest, and no debt is used, and wherein the financing is provided to the asset management firm in connection with a succession, restructuring, buyout event or other liquidity or capital needs of the firm or its owners.