May 2008 - Interview with: American Capital Partners Ltd., Inc. (APRJ-OTCPK) CEO, Frank Speight - featuring: their Business Development Company specializing in funding capital and business consulting to small start up private and private companies.
|American Capital Partners Ltd., Inc. (APRJ-OTCPK)|
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American Capital Partners Is A Business
Development Company Focused On Achieving A Nice Return On Their Equity
Investment Into Small Start-Up Private And Micro Cap Companies By Providing
Management Consulting Advice To Help Them Grow
American Capital Partners Ltd. is a Business
Development Company registered under the 1940 Act. It specializes in funding
capital and business consulting to small start up private and private
companies. It seeks to achieve high returns through its equity
participation, the charging of management fees, and dividends.
Mr. Speight: “American Capital Partners is going to stay true to the core understanding of what a Business Development Company is and that is to take money out of the public market and help capitalize Micro Cap, start-up and new venture companies. We plan to stay close to that game plan and seek out good investment companies that we can help capitalize, give some management consulting advice to, grow them, help them in the public market or an entrée in the public market and then see a nice return on our equity investment in those companies.”
CEOCFO: What do you look for in a company?
Mr. Speight: “We don’t have a particular sector that we like. There are a lot of Business Development Companies like ours that will go after high tech. What we tend to do is look at what we consider to be a good niche in the consumer market place. We tend to look for a good management team with a track record of past history and what we consider to be a good, solid, exciting business plan. For example, we have a company now that is into internet child security. We have had several independent consultants look at it and say it is state-of-the-art. We think that is going to be a good investment for us. We have a medical device company that has patented a machine that will tell you if a person is faking a back injury and the insurance industry is big on that. We are looking for somebody that can come into an existing space that has proven itself, like the internet marketing space or the healthcare industry, where they come in with a new radical concept that will change the market place a bit.”
CEOCFO: What is the extent of your involvement with the companies you sponsor?
Mr. Speight: “The extent of the involvement has been and will continue to be fairly hands-on. We are not looking to do straight capital investments and walk away, we are looking to do mainly investments into companies that need our money, but are willing to take our advice. We will take a seat on the board; help them with their marketing, their public relations, their patent process and hiring CFOs. We don’t want to run the company, but we certainly want to be involved in their major decisions and the growth of the company and giving them direction on that.”
CEOCFO: What does American Capital Partners know about developing companies that others do not?
Mr. Speight: “We have all been there; this is my third or forth go-around as a CEO of a public company. This is the first go-around of a company that actually sought to capitalize and help other companies. I personally have owned, operated, started, probably eight to ten businesses in the past and we have people on our staff that tend to be in that same boat, even the SEC legal counsel we use brings start-up business experience to the table to help these companies with their filings and stuff when they go public, those are guys that are very entrepreneurial minded, they have dealt with start-ups. The CPA we bring to the table, is from a small shop but they are used to doing start-up entrepreneurial businesses. Everything we bring to the table is not to help that person reinvent the wheel, we want them to get over the curve as soon as possible and get to the profitability stage where they are a healthy, mature company. We can take our capital investment and go to the next deal.”
CEOCFO: With so many potential opportunities how do you pick the best?
Mr. Speight: “That is probably the most difficult task and the most difficult part of the process is weeding out the good ones because we probably see twenty good deals a week and there is no way to do that many. It is simply a consensus within the company. We meet as a team, go over them and we actually we try to throw them out in the earliest stages possible. If there is anything about the business plan or the management team, anything that we do not like, we say sorry we cannot help you. The ones that we have a fair amount of interest in we spend a lot of time checking them out looking at the space, hiring an independent analysis if it is a space that we do not really know a lot about. It all boils down to due-diligence and the ones that pass the smell test. The last litmus test for us is, will we have fun doing this? Will we enjoy being a part of the project because at the end of the day if we are getting a great return on our investment for our shareholders and the company is doing well, and we aren’t having fun doing it what is the use of doing it.”
CEOCFO: What is the exit strategy?
Mr. Speight: “On almost all of the companies, they are already a struggling little Micro Cap company, and we won’t do anything with them unless we are confident that we could put them into the public market and arrange a liquidity of that for ourselves. In some cases we actually just sold a stake in the company to another group but in most cases it is an entrée to the public markets and I have to tell you it is becoming more and more an option that we do oversees. The last three companies that we took public and got liquidity for were on the Frankfort Stock Exchange in Germany where there is a bit of a more entrepreneurial feel for them.”
CEOCFO: How is the current economic situation helping or hurting American Capital?
Mr. Speight: “It is probably in the over all picture good for American Capital. I don’t think the over all economy is good, but it is good because what happens is our deal flow has dribbled down tremendously and I think that is only because everybody psychologically tends to take two or three steps back when they start hearing all the horrible news out there. But what we have found is there is still a lot of investment cash out there and still a lot of willingness to make a good return on their money. Our investors are still saying we want to look at deals, we still want to participate with you in funding companies but because the deal flow has dried up some, we can take more time looking for the deals. It looks like the more courageous entrepreneurs are out there pushing their product and that says something to us. If in this economy a guy still believes his company can be the next Microsoft, we will talk to him.”
CEOCFO: How does the oil and gas company in your group fit into your strategy?
Mr. Speight: “That really runs the gamut because we looked at that company mainly because it had a new wrinkle. That company is doing oil and gas exploration in the Gaza Sea for the state of Israel, they have been given exclusive licenses in a number of leases and are now doing the 3-D seismic analyst work on those leases to figure out what oil is down there then they will enter a joint venture. They have been approached by Exxon, Chevron, some of the big players that if the leases pan out and Israel is convinced that there are billions of barrels of oil under those leases then they will joint venture. That was actually a good investment at the right time without even knowing it; when we started communicating with that company we had no idea the price of oil was going to shoot up and become a major hotbed of investors. We sort of lucked into that. What we did like was the fact that there were proven reserves in these leases in an area of the Middle East that was pretty much untapped, which is Israeli oil in the Gaza Sea. That struck a chord with us and we got some very strong requests to look at it out of Washington D.C.; a more political motive, and we looked at it and liked what we saw. We are doing another oil and gas deal right now that is US based and they are actually looking at leases in Central America but they own a number of oil and gas leases in the US. Those were always cash flow positive leases for this new client company but as you can guess they are much more profitable now. It just made sense to us if we were going to invest in a company and help them acquire more leases and improve their lease holds; it was safe to go into an arena where obviously the price had sky-rocket.”
CEOCFO: What is your financial picture of American Capital today?
Mr. Speight: “Our financial picture is very good. The information on us is weak right now, we have a couple quarters to catch up, and our balance sheet will be very strong. When we did our most recent filings, our balance sheet has increased significantly; our cash flow has increased significantly. The company is poised to do very good things. We are actually forecasting our stock should be in the $2.00 to $3.00 range and we are going to stick to that forecast.”
CEOCFO: Why should potential investors pick American Capital Partners out of the crowd?
Mr. Speight: “It is because we are a bit unique. We bring to the table two things, a business development company which we are in the 1940 Act requires that we dividend out 90% of our investments every year of our net profit which means that if we are profitable we have to dividend that out to our shareholders which means that our stock could conceivably be very good dividend-producing equity. I also think the equity appreciation right now is tremendous for this company. When the news gets out and the market catches on to what we have done, what our balance sheet looks like, investments we have made, you will see a seriously significant increase in our share price. Lastly, probably the most interesting wrinkle of a Business Development Company is a person can build a portfolio of stocks by investing in our company too because one of the things that tends to happen with BDCs (Business Development Companies) and we plan to do a lot of, as part of the entrée into the public market from these client companies, we dividend out shares in those companies to increase their shareholder base, thereby our shareholders regularly would get distribution of shares in these start-up client companies. My argument to people is you can see a really good dividend on your shares, you see good income producing, you see great equity appreciation on the stock price, and lastly you have the potential to build a nice little Micro Cap stock portfolio without spending another dime.”
CEOCFO: Final thoughts, what should readers take away from this story?
“American Capital Partners is set and poised to do what the American economy
needs most and that is be at the forefront of capitalizing and nurturing
start-up Micro Cap companies which is the bread and butter of our economy
and always will be. We have committed ourselves to providing an access to
capital for these start-up companies and making sure they have a better shot
at reaching their goals and fulfilling their business plans.”
“American Capital Partners is set and poised to do what the American economy needs most and that is be at the forefront of capitalizing and nurturing start-up Micro Cap companies which is the bread and butter of our economy and always will be. We have committed ourselves to providing an access to capital for these start-up companies and making sure they have a better shot at reaching their goals and fulfilling their business plans.” - Frank Speight
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