The document discusses a client's strategy of acquiring private companies through mergers and exchanges of shares to become wholly owned subsidiaries. This provides ownership liquidity for private companies while allowing current management to maintain operational control. The client seeks profitable companies with strong management to join this cooperative network to access growth capital and tax advantages. The structure involves issuing exclusive series of preferred shares to provide owners rights and attract investors through dividend payments. The goal is to expand businesses through creative financing while maintaining autonomy.

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Mergers and Acquisitions Strategy White Paper
It has been stated that as much as $10 trillion in private and family businesses in North America
will be sold in the next decade as aging baby boomers move on to the next phase of their lives.
Selling all or part of their businesses is one of the most important decisions they will ever make.
Raising capital for funding growth or expansion has become a contact sport. Companies have to
look farther, dig deeper and work harder to lock in the long-term capital that fuels growth. The
lessons of previous downturns are still valid. Investors require balance-sheet strength and access
to liquidity; borrowers need to lower expectations and accept higher costs.”
We recognize that in these turbulent financial times, it is very difficult for private businesses to
receive adequate capital that they require to finance and grow their business. They are impacted
by ever changing regulatory and tax demands all of which make it difficult to operating alone.
Our client offers a very unique and innovative solution.
A planned alternative strategy both to transition ownership for purposes of liquidity often
combined with additional operational funding through equity can in this current environment be
preferable where capital needs, liquidity, and maximum value goals can all be realized.
Concept
Our client, a public traded company, has engaged our services to find select merger partnerships
in a co-op type strategy. This would be a forward acquisition where shares would be exchanged
to become a wholly owned subsidiary. In addition to an exchange of shares, which would be
based upon our G.A.A.P. evaluation of the business to be merged, the proposal often envisions a
secondary infusion of equity capital to fuel growth and/or retire conventional debt from the
issuance of a specific preferred share class. Our client is affiliated with merchant bankers who
continue to express robust interest in their issuances. These series of Preferred Stock have a par
value and are anti-dilutive and earn dividends.
Current ownership/management must want to stay and continue to independently manage and
operate their subsidiary company as our client has absolutely no interest in running the business.
We are looking only for established domestic companies that are profitable and have assets
and/or those emerging businesses in attractive segments of the market that have a strong
potential for expansion and growth. They must have a strong forward thinking stable experienced
management team in place to provide leadership going forward.
These would be privately or closely held businesses within the United States where management
would gain marketable securities liquidity while keeping a majority equity position and
maintaining full operational control to run their underlying business, gain resources for
expansion, and gain serious tax advantages.

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Strategy
Our client is purposely diversified in their holdings to minimize the impact of failure in any
particular business strategy. Their strategy is to form an "Alliance" with their wholly-owned
subsidiaries. They do not seek to acquire and replace management, rather to encourage
management to grow their proven business culture and hire more like-minded employees if
needed. This is our client’s “Covenant" with them; they will help them grow "their" business
within the boundaries of our client’s business. This is a unique and an innovative "collaborative
network" way of operating and way of thinking. Our concern is not the widget but driving asset
value growth and annual ROI. The companies that are attracted to our model want to become
truly "Agile" in the marketplace, not "Fragile".
Essentially, we are not looking for startups or bailout situations rather those who would benefit
from converting their closely held security to a marketable public traded security. The strategy
much like a cooperative is to form "Alliances" with wholly-owned subsidiaries run and
controlled by the subsidiary shareholder who retains controlling interest in that share class. As a
wholly owned subsidiary there is also significant strength reflected in the combined financial
position. The current owner continues to earn 90% of the net cash flow being generated by their
subsidiary. Our client expects generally 10% of subsidiary net earnings to be held in retained
earnings of the subsidiary to increase asset value. (The majority of that share class being held by
that current owner).
Our client company is currently a publicly traded holding company on Pink Sheets in the final
stages of restructuring, renaming & rebranding. They are qualified to operate as a Business
Development Company with independently operated subsidiaries. They seek to add performing
assets to their very strong balance sheet as part of that restructuring and an overarching strategy
based on solid business fundamentals, a realistic capital structure with a solid public company
management team. The company is the late stages of qualification for a much higher exchange
by election under the 1940 act to list on the NYSE MKT LLC, formerly known as the American
Stock Exchange (AMEX) which was integrated with the Alternext European exchange and
eventually renamed to NYSE MKT LLC.
To date management has:
• Removed approximately 95% of all the debt from the public company's balance sheet.
• Reorganized our company's governance to align with our business goals.
• Established highly attractive investment instruments known as derivatives in the form of
Convertible Preferred Shares that are non-dilutive and convert at the current par value of
the company = $0.00001/sh.

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• Initiated the process of a formal audit with MaloneBailey, LLP after which we will file a
registration and move to the OTCBB.
• Increased total assets through successful closed mergers & acquisitions throughout the
2nd
and 3rd
quarters of 2013.
Their strategies are bold yet conservative, and are very effective in the challenging and
demanding economic times in which we are living. Their strategies have consistently created
wealth throughout history and have always proven to return an honest profit to the stakeholder.
They offer an alternative to traditional funding based on assets and not on debt. Their strategies
help businesses improve their balance sheets with the addition of assets. They also help provide
the needed capital resources to empower and grow the businesses that have existing assets and
established cash flow. In addition, their proven methods protect the investors that invest in the
business and as a result risk goes down. Therefore, it becomes much easier to attract new
investors simply because the risk is low and speculation is diminished.
My client uses proven legal methods of tax reduction on the income earned from business
activities (management and investors) and they show management how to grow from a position
of strength using assets instead of the weakness which comes from dependence on debt
instruments. Business Owners quickly see the potential of increased personal income, overall
lower tax liabilities and the access to the fresh working capital they need.
Usually when a Public Company acquires a private company it does so for the sole benefit of the
Public Company. Most often, the private business must turn over the control of the bank
accounts and most, if not all, of the control of the day to day operations. It is for this reason
private business owners often seek the option to be acquired only as an Exit Strategy.
Targets
Our client offers quite a different approach. Their goal is not to take control of the management
of your business nor of your business banking. As a result, not all businesses will qualify.
Therefore we must require the following of companies that wish to form an "Alliance":
1. The business owner must have a strong business and financial background having
established a very successful business
2. The business owner must desire to continue to run their business without interruption.
They must stay in control of the revenue that their business creates as well as stay in
control of their and their banking accounts and day to day operation of the business.
3. The business owner must continue to work hard to earn a profit and declare a dividend to
the stakeholders of their series of convertible preferred shares.

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4. Our client will provide the consolidated balance sheet and pay for the accounting of the
newly acquired business.
5. Our client will run the public company and the business owner runs their business.
6. The business owner has now acquired a highly valuable asset in the form of a derivative
simply through “leverage" and zero cash!
Structure
There are many definitions for the term "Derivative" however as it pertains to these
contemplated transactions with our client it is defined as "Rights and Privileges" assigned to
certain Convertible Preferred Stock. Convertible Preferred Stock provides investors with an
ownership position in the public company, at a price per share assigned to the series. However,
Preferred Stock differs according to different rights and privileges as well as differs greatly from
common shares.
Our client has designed and road tested a very unique concept that works in such a way as to
enhance the Business Owner's asset portfolio. The derivatives also protect our 3rd party
Merchant Bankers or other investors who desire to invest in that Business Owners particular
business (share class). The Business Owner is given an exclusive series of Preferred Stock that is
unique to them, and is used exclusively to enhance their asset portfolio and attract new investors.
This series of Preferred Stock has a par value of $0.00001, is anti-dilutive, earns dividends and is
privileged to vote. The new Business Owner is also invited to have a seat on the Board of
Directors or a seat on the Advisory Board.
Dividends are a form of payment resulting from the profit of the corporation. Since each
Business Owner is given their own exclusive series of Preferred Stock and as a result there are a
limited number of investors that receive dividends from the profit of that business. This becomes
very appealing to the savvy investor as they understand there is a much greater opportunity to
earn a return on investment when the profit is shared with fewer individuals.
Derivatives also produce a greater desire to invest in the business when they are earning a
dividend. Therefore, we seek to implement the paying of dividends within the first 60 days of
issuing the Preferred Shares. With this approach, the Business Owner not only has Rights and
Privileges that have enhanced and increased their own asset portfolio; they also have a
mechanism in place to attract a wide variety of investors.
Now for the most attractive aspect of a dividend! The Business Owner may at this point elect to
have the profit they have been earning paid to them in the form of dividends rather than income.
Depending on what country the business is located in, this factor alone could be the most
significant motivation.

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Conclusion
In summary, essentially my client specializes in helping small to midsize companies to expand
their business and find new creative ways to finance their growth in order to build wealth and
liquidity maintaining operational autonomy while owning a vested of portion of a publically
traded marketable US based security. They seek both quality investment in assets and where
applicable the opportunity to generate ROI from putting capital to work in emerging growth
companies. As a Business Development Company (BDC), it will develop and continue to
develop a portfolio through acquisition and investment in targeted industries. Several
transactions have been consummated so far this year and we are currently in merger and
acquisition discussions with established and profitable candidates.
We specialize in finding and helping those small to midsize companies who seek liquidity with
an upside and join our team to expand their business and find new creative ways to finance their
growth. As advisors and analysts we are charged with identification and the early stage due
diligence of niche companies or projects that have additional profit potential, that desire to take
their business to the next level.
Alex H. Cunningham
President & CEO
Office: 954-941-8847
Cell: 859-533-3841
Fax: 859-201-1105
ahc@francnsult.com
http://www.francnsult.com/
http://www.linkedin.com/in/alexhcunningham