Accredited Investing

With the collapse of our financial system and a tightening of the credit markets for most business owners, the accredited investor will find opportunities abound.

In addition to a few other categories, an accredited investor is defined to include:

(a) any natural person whose individual net worth, or joint net worth with that person's spouse, at the time of investment in the common stock of the company, exceeds one million dollars ($1,000,000);

(b) any natural person who had an individual income in excess of two hundred thousand dollars ($200,000.00) in each of the two most recent years or joint income with that person's spouse in excess of three hundred thousand dollars ($300,000.00) in each of those years and has a reasonable expectation of reaching that same income level in the current year; or

(c) any trust with total assets in excess of five million dollars ($5,000.000.00), not formed for the specific purpose of acquiring common stock, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) of Regulation D.

There are an abundance of "private" equity opportunities for those investors that qualify as stated above. I have reviewed deals with investor relations firms, private hedge funds, real estate funds, and even a company in the high-end wholesale garden products business. Proper due diligence must be employed when reviewing any of these types of deals and "partnering" with a skill business attorney may help you make more rational decisions. Be prepared that all these deals will look good when presented by the owner who is seeking the capital investment. Here's a few basic rules (you will develop some of your own from experience): (1) always meet the owner - never invest where the owner is too busy or unavailable to meet with you; (2) do some background research on both the company and the owner - with the internet this should be somewhat easy; and (3) research the industry paying attention to particular trends which might help or hurt the company/opportunity.

My firm is in the process of publishing an accredited investor newsletter designed to highlight available opportunities and bring companies & investors together. If you'd like to be added to our mailing list, please email us.