acg presentation for the citizenship by investment & international residence conference (oct....

EB-5 Direct Investments: The Road Less TraveledCitizenship by Investment & International ResidenceLondon, UK - October 30th – 31st, 2013

Presentation Outline

Global immigration trends Why the U.S.? EB-5 todayACG & EB-5 Implications for immigration

professionals

October 30th-31st, 2013 www.aginskyconsulting.com 2

GLOBAL IMMIGRATION TRENDS

www.aginskyconsulting.com 3October 30th-31st, 2013

Global Immigration Trends

April 6th, 2013 www.aginskyconsulting.com 4

Source: United Nations Department of Economic and Social Affairs, Population Division, “Trends in International Migrant Stock: Migrants by Destination and Origin”

25.6%

25.4%

4.5%

49.7%

26.9%

3.6%

WHY THE U.S.?


Why the U.S.? Safe-haven for long-term investments Current economic environment: “buyers

market” Stability Free enterprise protection Top education and healthcare services

April 6th, 2013 www.aginskyconsulting.com 6

EB-5 TODAY


EB-5 Today – Visas Issued


2010 2011 20120

2000

4000

6000

8000

866

2,530

6,131

295

254

447

135

117

109

589

562

954

1,885

3,463

7,641

OtherVenezuelaSouth KoreaChinaTotal

Num

ber o

f visa

s iss

ued

EB-5 Today - Regional Centers Influx of players due to low barriers to entry:

17x increase in the number of Regional Centers over the past 5 years

325 registered Regional Centers todayFraud and SEC compliance issues:

There is a growing sense of distrust towards Regional Centers, in light of the recent IRCTC scandal

Increased USCIS scrutiny: I-924 acceptance dropped from

68% to 36% in 2012The tenant occupancy issue


ALTERNATIVES TO EB-5 REGIONAL CENTERS


Investor Options (Alternatives to RCs)Competing immigrant-investor

programs overseas Other Visa Categories (L-1, E-2) EB-5 Direct Investment


Alternatives - Direct Investment


ACG & EB-5


ACG EB-5 Service Offering: A One-Stop Shop

ACG

Investment Opportunity Identification

Due Diligence

Negotiations and Deal Structuring

Matter of Ho

Business Plan

New Entity

Formation

Immigration Legal

Support (if necessary)

Corporate Legal

Support

Post Acquisition Business

Management

Exit Strategy and

Execution

Escrow/Closing


EB-5 DIRECT INVESTMENT CASE STUDY


Client: Mr. SmithACG Collected

informationFinancial information

verificationMr. Smith’s Investment

CriteriaInvestment objectives:

Green card, safe investment, returns

Investment size: ~$1,500,000

Phase I: Information Gathering & Client Interviews


Mr. Smith’s Investment Criteria (continued)Risk profile: ConservativeTimeline

Green card as soon as possibleExit within 3-4 years of investment

Any other specific criteria: Majority control of the investment

Phase I Timeline: 1-2 weeks

Phase I: Information Gathering & Client Interviews


“NewCo LLC” Mr. Smith owns 100% membership stake in

NewCo LLC Mr. Smith hires ACG as a Manager

for NewCo LLC

Phase II Timeline: 1 week

Phase II: New Entity Formation


Phase III: Market monitoring & long listACG provides Mr. Smith with a customized list

of available dealsDeliverables: ACG Dealbook

Phase IV: Short list ACG works with Mr. Smith to narrow down to

1 or 2 deals that will work best for him

Phase III & IV Timeline: 3-4 weeks

Phase III and IV


Selected Deal: Commercial Janitorial Service Company

www.aginskyconsulting.com 20

• Total investment size: $1,500,000• Expected number of new jobs: 24• Projected ROI: 26.5%• Expected Exit: 3-4 years

October 30th-31st, 2013

Company Overview Founded in 1995 Services include janitorial services, floor

care, supply sales, related services to commercial customers

Markets: Oregon, Washington, and Arizona Clients include the likes of AT&T, Parr

Lumber, Union Pacific Railroad, Leading Regional Property Management Firms

Award-winning company


Financial Summary

*2013 forecasts are based on existing customer contracts


2010 2011 2012 2013*

Revenue

$1,906,939.00

$1,636,755.00 $1,707,474.00 $1,939,514.00

Cash Flow $387,767.00 $365,385.00 $377,684.00 $398,362.00 Net Cash Margin 20.3% 22.3% 22.1% 20.5%ROI 25.9% 24.4% 25.2% 26.6%


Pre-acquisition Org Chart

Total Employees: 12

Owner

Business Manager (1)

Operations Manager (1)

Janitorial Staff (9)

Office Manager (1)


Phase V: Due Diligence

ACG verifies all the claims made by the company

Financial, legal, personnel, and business due diligence

Deliverable: Due-diligence Report

Phase V Timeline: 4-6 weeks


Phase VI: Negotiations and Closing ACG negotiates and structures the deal for NewCo

LLC Reducing price by 23%

ACG works with the corporate lawyers to draft and finalize all the contracts for the transaction

Immigration attorney contract review

Escrow/Closing Phase VI Timeline: 2-4 weeks


Phase VII: Ongoing Management Day-to-day operations Key strategic decisions

Geographic expansion New service/product launch Strategic business development

Human resources management Job creation Strategic hiring

Regulatory/tax compliance Quarterly reports to investor Budgeting/forecasting


Post Closing: EB-5 Application ACG’s responsibilities:

Draft a “Matter of Ho” compliant business plan for NewCo LLC

Work with the client’s immigration attorney or recommend an immigration attorney if the client does not have one

Assist with I-526 application

EB-5 Application Timeline: 4-6 weeks


New Job Creation (post acquisition) Business plan outlined growth strategy and

job creation time table All senior hires were made first Salesmen (4 new hires) Contractor conversion

(8 conversions) New janitorial staff for new

accounts acquired (11 new hires) Initial hires were funded by

working capital reserves and existing cash flow


EB-5 Investor(s)

ACG Oversight

Senior Management

(4)

Sales Force (4)


Owner

Business Manager (1)

Operations Manager (1)


Office Secretary

(1)

Organizational Transformation


Pre - Acquisition

Post - Acquisition

Pre-acquisition # of employees: 12

Post-acquisition # of employees: 36

New jobs created: 24


Phase VIII: Exit Strategy and Execution Apply for I-829 (condition removal)

ACG will work with Mr. Smith and the immigration attorney to file the application

Mr. Smith decides to sell NewCo LLC after receiving approval of the I-829

Exit strategy execution (Phase VIII) ACG will prepare the offering documents to place NewCo LLC in the market ACG will work with interested buyers through the entire selling process

Exit Timeline: 5-9 months www.aginskyconsulting.com 30October 30th-31st, 2013

Summarized Process and Timeline Phase I. Information gathering and client interviews Phase II. New entity formation Phase III. Market monitoring and long listPhase IV. Selection process – short list Phase V. Due diligence Phase VI. Negotiations and contract signing PROJECT TIMELINE OF PHASES I-VI: 11-17 weeks Phase VII. Post-acquisition management (Ongoing)Phase VIII. Exit Strategy and ExecutionEXIT TIMELINE: 5-9 months after approval of I-829 www.aginskyconsulting.com 31October 30th-31st, 2013

Comparative Analysis: RC vs. DI


Metrics Direct Investment Regional CenterBusiness Control 100% control No controlNumber of Options Virtually unlimited Very limited

Involvement Level Passive/Active/Hybrid (options)

Passive only (no options)

Transparency Full LimitedBrokerage/ Admin fee 4% to 6% 5% to 10%

Liquidity Liquid IlliquidBusiness Expansion Optional Not an option

Returns 12% to 30% 0% to 1.5%Risk Low HighOctober 30th-31st, 2013

Advantages of Direct Investment – Lower Risk


Reduced risk – why? Business track-record Existing cash-flow Direct job creation, easy to

demonstrate Ability to bridge any job creation

deficit with existing cash-flow Perfect alignment of stakeholders’

interests No leverage required


Direct Investment


IMPLICATIONS FOR EB-5 PROFESSIONALS


Direct Investments – A New Tool for Immigration Professionals

To capture new clientele and capitalize on this emerging opportunity: Know of EB-5 investments taking place outside Regional

Centers Understand the process and structure of these transactions Expand your network of partners and affiliates to include

professionals experienced in structuring EB-5 direct investments


Closing remarks The EB-5 landscape is quickly changing:

Emergence of a more a robust and dynamic alternative to Regional Centers

As service providers, we must adapt and be at the forefront of the industry to better assist clients

The underutilized direct-investment route will be key to maintaining the EB-5 program’s momentum!



THANK YOU



QUESTIONS?


ContactsU.S. HEADQUARTERS

Office: +1-503-546-4049 Fax: [email protected]

INDIA OFFICE

Office: +91 11 [email protected]

www.aginskyconsulting.com


411 NW Park Ave., Suite 402Portland, OR 97209, USA

21, Nehru Place Greens, Suite 602

New Delhi, 110019, India

mailto:[email protected]




http://www.aginskyconsulting.com/

acg presentation for the citizenship by investment & international residence conference (oct....

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