I’m not particularly familiar with this method you are using for raising capital. How do you insure your investors are accredited or otherwise not legally required to be accredited under your state’s blue sky laws? Where would the private placement memorandum or other similar documentation be available to review?

I think he’s trying to make a joke along the lines of that was your only independent machine so of course it was your best seller. Clearly you guys sell other machines from other manufacturers and what you meant was you sold more copies of Jetsons than any of those other machines you sell.

Sure. But, the world is a harsh place and many people are simply not suited (either personality wise or otherwise) to invest in small companies under the control of others. Many people are not qualified to differentiate a good deal from a risky deal to simply a bad deal, and for these people the blue sky laws are there to protect.

While I agree with much of the spirit of your post (people need to be nicer), this portion of your post is simply not correct. Sadly, the Pinside population base has been targeted over the years by people that simply couldn’t or wouldn’t do what they said they could do after they hit us for every penny they could liberate from our pockets (either through their own malfeasance like Skit-B or their incompetence and dishonesty like J-Pop).

The Pinside population has been mined repeatedly by people like Andrew, Dutch Pinball, and the 30 year memorial book by Stern...etc etc etc.

A little bit of doubt is a healthy thing and is the result of negative expierences. Anyone asking this community for money is going to be met with initial skepticism and questioned. Don’t confuse caution and asking questions for a community that lacks the ability or desire to be helpful.

* edit - I’m certainly not inferring there is anything wrong or improper with the investment being discussed here. I know nothing about it at all, just making some general friendly observations about why there will be a negative reception to a new project at this moment in time. *

That may have some antitrust facets if it were true. If Stern did indeed do that I’d be interested to see what the arguement would be from Stern for why it isn’t anti-competitive.

I do not believe Stern put any rule like this in place.

I can’t speak for electronics distributors or heating companies (there can be some limited exceptions in small or vulnerable industries where the product wouldn’t exist at all but for the anticompetitive practice, would seem strange but maybe those two industries are exceptions)...but I was the closing attorney on sixth new car dealership for a client I’ve represented for fifteen years last week (I also closed on their fourth and fifth dealerships at different points over the last ten years).

If, during the course of our dealings leading up to the closing, General Motors even gave a hint of requiring an exclusive dealing agreement I would I turned them in for violating the Clayton Act to the attorney general immediately. You - as a general rule (subject to exceptions) - can’t stifle competition through exclusive distribution agreements on third party distributors. Manufacturers may try it and they eventually get turned in and dealt with once people realize it may be antitrust violation.

While I personally feel there are some significant concerns and questions with capital raising in the manner the OP is doing, his customer service reputation has always been positive as far as I know (though granted, I know little about this group). Your accusations to the contrary seem out of place unless either you personally or someone you can identify can substantiate them in some meaningful way. As a rout operator yourself I’m sure you understand how statements such as these you have made here can be negative to someone’s business.

Anyway, a couple random thoughts, it’s an interesting idea the OP has to set a valuation formula for a larger transaction via this sale. That wouldn’t work for any institutional investors (they would give no consideration to a transaction such as this one for value, in fact, they likely would frown upon it because it is outside of normal and possibly complicated their deal by introducing potential dissenters). It might pass muster as a valuation tool for other individuals or possibly even the IRS for gift tax calculations...

If I had to proffer a quick speculative theory id say the absence of a personal guarantee by going this rout over a traditional lender is possibly viewed as a positive. Perhaps they have a larger debt deal lined up but the lender wanted to see more equity in the company, who knows.

Well, this company doesn't have a traded stock price to utilize in that manner...you'd have to go off revenue to determine a value but you'd still have to determine a multiple or other type of formula to apply.

The various formulas are totally different industry to industry and can even differ based on the type of operation that is making the acquisition. If you are buying a water distribution company (for example), only their gross annual sales matter (they generally sell off a 1x of gross model with some minor adjustments)...if you are buying a flower shop, they'd have their own multiples. OP has indicated his industry doesn't have many like sales to determine a standardized formula, which is probably true, so a buyer would look at a related industry and borrow from that formula.

Ah, understood. Yes, a retail outfit buying used pins can frequently rub some the wrong way.