CMR OPERATIONS MANUAL
INDEX
PAGE
Introduction 3
How to use CMR membership 5
Regional Operations12
Fees17
CMR Website – Explanation & Procedures29
SPECIFIC CMR PRODUCTS MANUAL
CMR Funding38
Private investor funding38
Reviewing SME funding propositions39
Analysing funding propositions41
Handling the client44
Introducing investors44
CMR fees for funding45
How to handle a non-fundable client46
CMR investor background47
Effect of FSA regulations on CMR51
Collateral-backed Funding53
Public issues & flotations54
Cavendish Management Finance Corp Ltd.56
CMR's Intellectual Property Licensing Programme
Types of IPR81
How CMR handles an IPR/Licensing project84
Corporate Recovery
Summary of insolvency procedures87
How CMR handles corporate recovery projects88
How does CMR obtain corporate recovery clients?89
The link between corporate recovery and M&A90
CMR Company Sales Programme92
CMR MBI Programme 100
CMR Catalyst Group Formation 110
CMR Mergers & Acquisitions 115
CMR's Progressive Company Sale Programme 117
CMR Management Support & Consultancy 123
CMR Fee Sharing Rules & Administration 125
CMR Mentoring Programmes 129
CMR’s Never Say Die Programme 130
APPENDICIES: 131
1Sample Proposition Review Form (PR1)
2CMR's Standard Funding Assistance Agreement
3CMR's Standard IPR/Licensing Agreement (clients)
4Standard 'omnibus' Funding, M&A, Co. sale agreement
5CMR's Standard Confidentiality Agreement
6The History, Philosophy & Objectives of CMR
7Virtual Organization' - case study on CMR
8CMR Membership - a personal summary
SUPPLEMENT: Handling Client Projects – Case Studies 158
INTRODUCTION
CMR is a global organisation comprising a large number of executive members with an experience base that covers all major business areas and disciplines. CMR's members have shared values not only concerning the professionalism and integrity with which CMR serves its clients, but also in the manner in which the organisation operates internally and between members. CMR's recruitment policy is designed to maintain the high ethical standards to which the organisation adheres.
CMR was created with two primary objectives:
1) To provide SMEs and entrepreneurs with the help and resources they need, but often cannot find/don’t have access to – i.e. real management expertise from senior executives with experience in their own field of business activity, plus support from a variety of essential resources including funding possibilities.
2) To provide experienced executives with the infrastructure, facilities, resources and network to enable each to fully develop their own career or business potential in the most beneficial way for the individual AND to provide all those facilities with the utmost flexibility and at a minimal cost to the member.
CMR receives a continuous stream of potential clients from all over the world and from all industry and commercial sectors. Some arrive directly into CMR, some as a result of alliances formed by CMR and some from introductions through CMR’s own executives. The vast majority of these potential clients are SMEs and entrepreneurs who are seeking inward investment for their businesses – funding is the main, primary door-opener to new clients. It would be great to imagine that most of these businesses will quickly acquire the funding they need and will then pay the success fees due to CMR, without the necessity of too much effort being expended. Sadly, that is not generally the case, and a far wider degree of involvement and understanding with each client will often be required to achieve a satisfactory and successful outcome. There will be few easy, no-effort-required projects that do not involve real endeavour and expertise. It is important for CMR Executive Members to understand that ubiquitous fact of life.
Having said that, there is in fact a plethora of opportunities on offer where CMR Executive Members who are involved, can both help clients to move forward and enjoy the prospect of substantial fee income. This Operations Manual addresses some of the ways in which those successes can be achieved. It is important to recognize that most clients will actually not attain the inward investment they seek – and that other solutions and alternative routes will need to be developed to achieve a successful outcome.
A CMR executive’s first contact with a potential client is their opportunity to assess the client’s situation, strengths and weaknesses, marketability and all the other essential parameters, and start to pull together the strategy and action plan that will be successful for the client. Sometimes the CMR executive will decide that obtaining external inward investment is indeed a viable way forward – in which case they will look at all the issues covered by the ‘Funding’ section of this operations manual – BUT always - they should also look at the alternative routes forward (as a Plan B) in the event that inward investment is not achieved. In other cases, the CMR executive may decide at the outset that funding is a non-starter for this client – and move onto to developing the alternative ways forward.
Any CMR executive who simply looks at a potential client purely as a funding client is doing both the client and themselves a disservice – and will almost certainly be disappointed and unsuccessful as a result. Please read this manual fully and carefully – it contains much wisdom acquired over the 30+ years of CMR’s operations on how to deal with clients and their business situations. It also has details of many CMR-specific products and ideas that can and should be employed when considering how to achieve a successful outcome for the client.
This introduction started by stating that funding was a very important door-opener to new clients. That is true, but it is also important to understand why most new clients will not achieve the inward investment they initially seek. As anyone who has watched the UK’s Dragon’s Den or USA’s Shark Tank on the TV will know – it is really difficult to attract investors – especially when you know that many of the on-screen ‘successes’ do not actually come to fruition after the show, when due diligence is done and terms, conditions and other impediments are discovered. The Funding section of this operations manual deals with all the issues concerning how to make the presentation of propositions to investors appealing and inviting.
The BBAA (British Business Angels Association) undertook a professional survey some years ago to determine the overall success rate for SMEs & entrepreneurs who are trying to attract inward investment. They found that the success rate was only 2.8% - meaning that 97.2% of all applications for funding were unsuccessful. That is actually good news for CMR, because it means that, to become successful, many of that 97.2% will require the management and executive expertise that CMR has. The fact that a business has failed to attract inward investment does not mean that it is no good. Many will have a business that is capable of achieving success but in a different way than just getting someone to give it money. It is also encouraging to note that most of CMR’s ‘competitors’ in the funding market do not have the ability to help in other directions. They lack the depth and experience of the CMR executive base as many are simply brokers and cannot help their clients in any other way. This effectively means that many of the 97.2% can only be helped by CMR and that represents an enormous marketplace for our skills and experience.
The other aspect that is addressed in this introduction, concerns the evolution of the funding market itself over the years. When CMR first started in 1984, we were almost the only source of investor funds for the SME/ entrepreneur market and as such attracted many investors and clients alike, mainly through local networking by CMR’s executive members. Since that time, the number of investment sources has exploded into literally thousands of organizations throughout the world – a lot of which are public-sector or city-supported. CMR no longer has the edge that it once had – it’s a fact of life that cannot be reversed however much wishful thinking there is. CMR has had to adapt to the situation – which means that when we have a client project that we truly believe deserves to get funded, that we introduce the proposition to a wider audience than just CMR’s own investor base, so that the client has the best possible chances of securing the inward investment they seek. Part of the skill base we are able to offer clients enable them to structure and present their business proposition in the most attractive way to potential investors. It obviously makes a great deal of sense to then present that proposition to the widest range of possible investors.
So, in conclusion in this introductory section – CMR is not for the faint-hearted or those who just hope to make good easy money without too much effort. It is for those who possess the personal skills and experience needed and who have the drive and motivation to seek and develop the right ways for a client to prosper. The rewards for doing this are both the personal satisfaction of helping to guide clients through the minefields that await them plus importantly the financial returns that can be substantial and continuing. This Operations Manual has been compiled to provide CMR executive members with the keys they will need to open all the doors.
Finally it is very important that you thoroughly read the CMR Operations Manual before you make any contact with clients. When meeting or talking to a client for the first time, it is imperative that you do not initially give the impression of being a consultant that can ‘help them’ – many of these client companies will already have been plagued with ‘ordinary’ consultants trying extract fees for ‘helping’ them.
Clients usually come to us because they are looking for inward investment – they are not looking initially for any other help and would probably show you the door if they get the feeling that you are just another money-seeking consultant. It is crucial that you only initially approach these clients to discuss their need for funding – you are effectively pre-vetting them on behalf of our investors. As a result of those discussions, you may see changes or improvements that are needed in order to attract investors or move the company in a different direction – and then it is perfectly in order to move those conversations forward.
We can guarantee you a good night’s sleep after reading a few chapters of this Operations Manual!
HOW TO USE CMR MEMBERSHIP
CMR was created to be a most flexible organisation for its members, enabling each to derive the maximum benefit in whatever way is best for the individual. There are few rules within CMR, apart from the ethical and confidentiality undertaking each member signs upon joining. However, it is up to each member to make their own use of the facilities provided. Whilst some aspects of CMR are automated, without effort from members, CMR was primarily designed for those with the motivation and ability to make things happen! CMR provides many standard products and the organisational infrastructure and executive network to help those that can, to do just that!
The most successful CMR members are those who are really proactive in terms of their integral involvement within CMR and perhaps also in tandem with developing their own private business interests (whilst respecting CMR rules). We hope that all members will want to be active in dealing with CMR clients, but how you spend your time is entirely your decision – the only thing we ask is that you will allocate sufficient time to those CMR clients you are handling and of course, to deal with them in a thoroughly professional and ethical way.
You can acquire clients either by becoming involved with the continuous inflow of CMR clients received by the organisation (all members get email-notified as new potential clients arrive), and by using CMR’s resources to obtain new clients directly yourself – from your own network contacts or from those that arise from attending networking functions as a representative of CMR. The fact that CMR is always looking for new investment-capable clients can be used by you as a valuable marketing tool in terms of making new contacts.
As stated in the above introduction, most clients initially come to CMR because they seek inward investment. However, the reality of life is that the majority of them will find that attracting an investor is much harder than they think – and for many clients this will not be a viable way forward. Nevertheless, an approach to CMR for funding is an excellent door-opener for us. You as a CMR Consultant Director will be viewed by new clients in the same (usually deferential) way as investors generally are. You will be able to ask all the questions and see all the things that an investor would expect. From this you will be able to use your extensive senior executive experience to assess the client’s true situation, their strengths and weaknesses, their problems and opportunities – and of course, if you think that continuing to look for inward investment is viable for them – and/or if there are other routes forward for them. In short, you should be able to quite rapidly assess whether or not they have the right strategy and plans for moving forward – and if there are other alternatives that should be considered.
As a result of how you first met the prospective client (i.e. as an investor – or at least the gateway to investors) your views will be considered seriously. If you have established through your personal gravitas and great business experience, that you are someone the client can respect and trust, then there is an excellent probability that the client will not only listen to your views, but also be keen to follow-up on your ideas. This non-selling method of client handling means that you are an important influence. It also puts you on the inside-track for developing a worthwhile business relationship with the client that could even result in a long-term association for continuing future help too. It is very important to note that these contacts with prospective clients are not selling expeditions -in fact, quite the opposite. Our research findings tell us that if the client feels he/she is being ‘sold-to’ it will destroy the relationship and trust will have been broken. It is vital that the client forms the view that you have their best interests at heart, that you can be totally trusted, and that you have the level of business experience and knowledge that could greatly benefit their company through having an association with you/CMR.
How you approach the subject of chargeable fees is a significant part of this relationship-building exercise. If you appear to be over-keen/desperate to charge fees, then no relationship will be built – clients are usually super-sensitive about this, as many will have met sub-standard consultants in the past who have tried to extract money from them. All clients are very happy to pay success fees (for a successful result) and will also be prepared to pay consultancy fees if they perceive there to be a good reason. It is your job as a CMR executive to talk this through with the client, so they understand what they are being offered and are happy. Under no circumstances must you over-promise - especially not by suggesting that the funding sought will be forthcoming. We can never guarantee that and we never want to be in the position where a client demands a refund of fees paid because they were over-sold to.
If you do decide that trying to attract inward investment is a viable route forward for the client, then follow the guidelines in the ‘Funding’ section of this Ops Manual. BUT – always recognise that the funding might not be achieved as intended – so make sure you develop a Plan B. This could include different forms of external investment – trade investor, JV’s, mergers, acquisitions, licensing, company sale, or perhaps other routes like CMR’s Catalyst Groups, CMR’s Progressive Company Sale Programme, CMR’s Self-financing Loan Scheme. Or if the business has reached a very difficult stage, then CMR’s Corporate Recovery programme may be applicable. It may also be that the client should change their strategic direction – this alone can often dramatically change the need for funding. Or it may be that changing operational or finance arrangements may be beneficial. For the majority of clients there will be many other ways forward for them, instead of just hoping/ wishing an investor will stump up pots of money! It will be your job as a CMR executive to advise the client on these issues as is appropriate for them.
This Operations Manual contains details on all the services and resources provided by CMR. Please use the manual to not only understand how these work, but also to help you generate ideas when dealing with client situations. A hallmark of CMR has always been the innovative ways in which we help and advise clients. I hope that having read to this point, it is crystal clear that only viewing clients in simplistic funding terms will not result in a successful outcome for them or you. It is imperative to think laterally, outside every box on the table. It should be encouraging to recognise that in many cases there will be a way forward for (the majority of) clients who fail to attract investment.