The Business Times

Want to trade on Valentine's Day? Here are some tips

Published Fri, Feb 12, 2016 · 09:50 PM
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POOR you. Your world has been stuck in a low-interest-rate environment for many years. There is plenty of liquidity elsewhere, but none is flowing your way.

You really want someone to sign a memorandum of understanding with you, followed by a joint venture and then a merger, perhaps.

What can you do to ensure the right one will come along to buy and hold you?

Find the right exchange

Recently, numerous online exchanges with zero listing fees have sprung up.

Some allow you to "swipe left" to reject a potential investor, and "swipe right" to signal interest.

Other online exchanges are less liquid. One offers you just one prospective match at noon every day, promising to make up the lack of choice with higher-quality deals. However, if your overall market is too small, such exchanges do not work.

Find better brokers

Maybe you prefer deals to be done over the counter (OTC), instead of having to put up a public profile and deal with heavy online scrutiny.

But OTC brokers may charge a premium for their services. The premium charged may not be worth the level of service provided.

The best OTC brokers are friends and relatives. They understand your requirements and do not tend to charge.

Ask them if they know of any potential deals.

Brokers also tend to offer a value-added service: Sell-side coverage. Find friends who can best articulate your attractiveness to your target investor base.

Improve your balance sheet

Give your assets and liabilities a rigorous audit. Prospective partners are attracted by quality assets that can generate a sustainable stream of free cash flow.

Some Asian investors, in particular, like dividend payouts.

There is always something you can work on to ensure a smooth due-diligence journey.

Make sure your assets are not impaired in any way. Unfinished matters with former investors can lead to ruinous future write-offs. Pay off your liabilities. Grow your revenue stream. Ensure costs rise proportionally less to maximise margins. Don't pay dividends with debt.

Clarify your business goals

Some prefer to be acquired, 100 per cent. Others want a 50-50 joint venture. Still others just want a cash injection and will find a legal loophole to terminate the contract as soon as they can.

Understanding your goals in a partnership will allow you to articulate them better during the due-diligence process, avoiding misunderstandings later on.

If you just want to contra, make sure the other party is on the same page. But be careful. Too much diversification eats into returns.

Lower your expectations

If your asking price is too high, you might never be able to find a counterparty to put in a bid.

Having lower expectations is hard when young. Still, try to have a realistic sense of how much you are worth and what kind of counterparty you are willing to settle with.

Don't give up

You are in this game for the long term. You, the deep-value you, must be patient.

And don't blame yourself. Markets can stay irrational longer than you can stay fertile.

Read More: Dating apps still look for money match

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