Money Machine Part V: Private Equity, Reverse Mergers, and IPOs
Family offices and multi-family offices make money for their owners by creating investments that most financial advisors do not understand.
These types of transactions are not open to the public and are usually available only to sophisticated investors.
These transactions require just the right combination of know-how, experience, and timing that makes these deals look like magic to the uninitiated. This is why few investors understand them, and even fewer can do them. The correct teams of experts in this field are usually snapped up by the family offices and funds so that when they reach the public, most of the higher profit margins have already been made.
That’s why family offices make double-digit and sometimes triple-digit profits while the ordinary investor is advised to put their money into US treasuries yielding 2% at best.
What are the essential elements of the type of investments?
- The first hurdle to overcome is to find the right team of investment experts who have done such deals before. The key team needs to have in-depth knowledge of how to put such deals together. Usually, family offices have such teams on their payroll. We are talking about talented merchant bankers, financiers, and traders with proven track records.
- Once you have found such a team, you need to find the perfect project and come up with the seed capital to fund the first round of it, structuring and acquiring it. This is complicated because you need the right timing, and good projects at the perfect time are hard to come by. For example, the timing for gold five years ago was all wrong; no one was interested in commodities, whereas a good gold project now is in perfect timing as gold is rising.
- But it doesn’t end there. You then need to find a way to quickly raise capital for the project. Of the many ways, the most creative is a reverse merger: acquiring an already listed company and then buying the privately owned vehicle through the public company.
Putting all these multiple factors together requires the equivalent of a financial Olympic team, and that is why only the most connected family offices acquire access to such deals. Indeed, most of these deals are pre-sold to a private club of family offices and institutional investors long before the public gets to hear about them.
By the time these deals reach the public, they are already listed shares trading at many times their book value and are in for slow growth at best.
Private Equity is quite simply individuals getting together to establish a private company to start a project or venture. Thus, if we issue a million shares and invest 1 million dollars at 1 dollar a share, the company can buy a gold prospect property with an immense probability of existing resources in the ground for a million dollars.
Private equity usually suffers from problems involving lack of capital. Gold is hard to get out of the ground and requires further funds. Many private equity projects run out of steam at some point for this reason.
The magic involves turning a private project into a public one. This way, you get access to limitless funds through the stock market and huge returns on your investment because your private share is now traded and becomes an exchangeable currency that can be leveraged due to its exponential rise in value.
To do so, one of the rarer and less traveled paths is what is known as a reverse merger. For family offices, this is really a money-making machine par excellence.
What is a reverse merger?
A reverse merger is a company listed on the stock exchange into which a valuable project is inserted. The project is then properly promoted, and the share price will have room for significant yield due to the early stage of the investment.
The key factors are having an experienced investment banking team of experts behind the project who know the reverse merger transaction’s art.
This is how the magic works: You buy an already listed shell, i.e., a project listed on the stock market that never took off. You then acquire the private equity company that owns the project by swapping shares (reverse merging) so that the private company’s stockholders now own stocks in the public company.
The team that conducted the transaction uses their expertise to promote it, and the shares begin to rise.
The reverse merger is a more sophisticated and arguably more rewarding play than an IPO but is very similar.
For more information please watch this Mundo Tv episode:
How it works
This is a top team of reverse merger experts that have a long track record of bringing amazing results to their qualified investors. They have floated companies in oil and gold with stellar success.
The first round is oversubscribed, and in the next few months, the second round is opening.
So, this Junior Mining Exploration company is formed by a management team with a proven track record that has raised and developed mining projects valued in hundreds of millions. The product is focused on the consolidation, exploration, and development of assets in known gold districts to build substantial gold resources over the next 24 months.
All major family offices and HNWI in the world have gold and other precious metals in their investment portfolio. The reason is simple: gold has always been an outstanding financial performer. Plus, due to the massive increase in money supply in the US and worldwide, this trend will not end soon.
Further, with the potential depreciation of fiat currencies, you will not want to have too much money invested in fiat currencies that are likely to fall. Gold is a rock-solid investment, and this is the best path towards a solid investment. Gold exploration and mine development companies offer beseeched investment yields.
Let’s see some highlights of this potential investment:
- Equity valuations respond to the discovery potential, which means this is an ideal entry point to the market.
- They offer to position within first-level gold regions with top-notch deposits and operating environments.
- They know the quickly changing market landscape to help you position assets that attract solid returns.
- They have assembled a high-quality pipeline of attractive gold assets that spans the western hemisphere.
- They have a proven track record of growing mining companies from formation and listing to full development.
Moreover, you can go beyond just acquiring the gold: you can become a shareholder of this booming gold exploration company.
What if you are not a gold expert? That’s fine. But know two things: 1) gold is a timeless investment that stands strong even through financial hardships, and 2) You can access liquidity after private investment because you are entering the project at an early stage, which means you will have a higher yield.
What else should you know about the prospective investment?
This is a gold exploration and development company focused on gold-producing regions of the world with known reserves and resources. Their company’s objective is to make discoveries for enhanced existing resources and properties.
They have a property in Nevada and are currently implementing exploration programs to enhance the resources and reserves associated with that project and make discoveries at depth. In addition, the company is evaluating multiple projects for acquisition. Those projects span all of The Americas: from Alaska to Argentina.
Also, they offer a highly prospective asset in Nevada, the top gold-producing state in the US and one of the best mining jurisdictions on the planet.
As a gold jurisdiction, Nevada enjoyed a gold rush in the 80s thanks to the improvement in exploration, development, and extraction techniques that drove the gold rush in Nevada in that period. Nevada produces over 80% of the total US gold production, which is the fourth-largest gold producer worldwide. If Nevada were a country, it would be the sixth-largest gold producer on the planet.
The property has ten known gold mines in almost 12,000 acres and is at the intersection of two major gold trends. It is located in a gold-producing region close to other mines such as Midas and Fire Creek. Plus, the target zone has been only drilled down to 220 meters. This means it has a ton of potential for large-scale deposits and explorations. Historical explorations confirm plenty of gold opportunities in the property both at surface and depth, thanks to sampling and drilling tests.
Plus, the companies involved have over $2 million in cash on hand, with explorations already funded underway and no debts. You’re entering a debt-free investment at a very early stage.
This multidisciplinary team has decades of experience in mining, capital markets, corporate business, and public company expertise. They have created significant wealth for their investors in previous companies and billions of dollars in market capitalization.
The companies involved already have drilling permits for the property and have started exploration activities, such as CSAMT surveys, to define epithermal gold deposits and drill targets. This exploration is already completely funded. The second phase is set to begin at any time and is also fully funded.
As explained before, the project’s financial structure is an RTO/reverse merger: a publicly-traded entity with no other asset than cash. The publicly-listed entity issues shares to the private entity, which becomes the majority shareholder of the public entity. Investors of the company are investing based on having access to the public markets listing. When they make their investment, funds go into an escrow account with a trusted law firm. They work with a Toronto-based law firm, which is one of the largest in Canada. Also, their lawyers are currently in the process of listing the company on the TSX Exchange, which is the ninth-largest on the planet.
Upon satisfaction of the company’s listing conditions, funds are released to the company, and shares are issued to the investor. This means that when the company trades, the investors are guaranteed that as part of their investment.
When you look at what’s happening globally, you see a global recession that drove governments to spend recklessly. This can lead to an inflationary environment and/or devaluation of fiat currencies in the foreseeable future. It is not a good time to save your money in cash. Thus, assets such as gold are bound to appreciate, which means that equities participating in gold will also appreciate, meaning we’re just at the beginning of a sustained bullish market for gold in the upcoming years.
Disclaimer: The information contained in this article is for informational purposes only and does not constitute financial advice or recommendations. Investing in financial products or cryptocurrencies involves risks, and you should be aware of the potential risks involved before investing. The content on this website is not intended to be a solicitation or offer to buy or sell any financial products or services. The information provided does not take into account your specific investment objectives, financial situation, or needs, and should not be relied upon as a substitute for professional financial advice. You should seek independent advice from a financial advisor or other professionals before making any investment decisions. Please be aware that the legal status of cryptocurrencies and other financial products may vary in different jurisdictions and may be subject to regulation. It is your responsibility to ensure compliance with any relevant laws and regulations governing the sale and marketing of financial products and services in your jurisdiction.
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