Post on 16-Apr-2017
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
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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.?
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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
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EB-5 Today – Visas Issued
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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
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ALTERNATIVES TO EB-5 REGIONAL CENTERS
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Investor Options (Alternatives to RCs)Competing immigrant-investor
programs overseas Other Visa Categories (L-1, E-2) EB-5 Direct Investment
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Alternatives - Direct Investment
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ACG & EB-5
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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
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EB-5 DIRECT INVESTMENT CASE STUDY
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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
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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
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“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
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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
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Selected Deal: Commercial Janitorial Service Company
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• 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
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Financial Summary
*2013 forecasts are based on existing customer contracts
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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%
October 30th-31st, 2013
Pre-acquisition Org Chart
Total Employees: 12
Owner
Business Manager (1)
Operations Manager (1)
Janitorial Staff (9)
Office Manager (1)
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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
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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
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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
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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
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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
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EB-5 Investor(s)
ACG Oversight
Senior Management
(4)
Sales Force (4)
Janitorial Staff (28)
Owner
Business Manager (1)
Operations Manager (1)
Janitorial Staff (9)
Office Secretary
(1)
Organizational Transformation
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Pre - Acquisition
Post - Acquisition
Pre-acquisition # of employees: 12
Post-acquisition # of employees: 36
New jobs created: 24
October 30th-31st, 2013
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
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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
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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
October 30th-31st, 2013
Direct Investment
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IMPLICATIONS FOR EB-5 PROFESSIONALS
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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
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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!
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THANK YOU
October 30th-31st, 2013
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QUESTIONS?
October 30th-31st, 2013
ContactsU.S. HEADQUARTERS
Office: +1-503-546-4049 Fax: +1-503-549-8990info@aginskyconsulting.com
INDIA OFFICE
Office: +91 11 41207155acg-india@aginskyconsulting.com
www.aginskyconsulting.com
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411 NW Park Ave., Suite 402Portland, OR 97209, USA
21, Nehru Place Greens, Suite 602
New Delhi, 110019, India