Would you put this on your resume as a job?

[Nate W.]

Recently, I met a colleague through a non-profit organization. He works as an investment banker at a company that acquires and restructures companies in the medical and chemical industries. Since he doesn't have a scientific background, he would like for me to identify and evaluate some potential companies. Initially, I thought he just wanted some help with contacts for which I would gladly do for free. Then after I helped him with 2-3 contacts that didn't pan out, he told me that the firm would pay me a finder's fee of 8% gross earnings for each company they acquired or restructured. Their minimum requirement for a potential company is EBITDA in excess of $2-3 million. It is straight commission no benefits.

As I look for a full-time job, would you put this on your resume? My colleague will provide me with a reference. The upside is the potential compensation and the opportunity for placement within the acquired company.

[D.X.]

It depends on your individual Situation. A question to you: is it any benefit to your career trajectory?.

I think with resumes, there should be red thread that runs through your experiences that allows you to tell a Story verbally - will this Job fit into your Story?

Becareful have having a CV what could be percieved as a fragmented Assemblage of experiences with no Story to tell.

On the other Hand, Balance that with sometimes employers may want to see you're keeping yourself busy during a period of unemployement, ideally with an activitiy where you're learning something that is of value to your development.

If you put it one the CV, I recommend that you are clear in what your role and responsiblity is, like anything else on the resume, you are accoutable for what is written in the CV.

I'm not going to comment on the activity itself, that's for you to decide and judge how and if you carry on. As is, whether you choose to add it to your CV in consideration of the above.

So from my end, I can't tell you whether to put it or not - but consider the above and take the decision.

DX

[Dick Woodward]

Nate:

You may want to check with an attorney who is well versed in SEC regulations. There are very strict rules about who can and cannot accept a contingency payment (aka commission)for facilitating the sale of securities in a company, or of the company itself. For example, there are people who charge a commission for raising venture money for a company. This is generally illegal unless said person is registered as a broker-dealer. As I am not an attorney, I cannot advise on your particular situation, but I do know that there are a number of regulations involving who can or cannot accept a commission for facilitating the sale of a company; some of these appear to depend upon whether the buyer is purchasing the entire company (e.g., its stock) or merely the assets of the company. In any event, I would suggest that you get a legal opinion.

Dick

[Nate W.]

Nate:

You may want to check with an attorney who is well versed in SEC regulations. There are very strict rules about who can and cannot accept a contingency payment (aka commission)for facilitating the sale of securities in a company, or of the company itself. For example, there are people who charge a commission for raising venture money for a company. This is generally illegal unless said person is registered as a broker-dealer. As I am not an attorney, I cannot advise on your particular situation, but I do know that there are a number of regulations involving who can or cannot accept a commission for facilitating the sale of a company; some of these appear to depend upon whether the buyer is purchasing the entire company (e.g., its stock) or merely the assets of the company. In any event, I would suggest that you get a legal opinion.

Dick

Dick, thanks for the information. We mostly deal with privately held companies in need of restructuring. This investment bank would pay me a finder's fee. A typical company in the medical space would be a doctor's clinic. We don't usually fund start-ups and don't do IPOs. In the case of an IPO, we have a partnership with another VC which would assist us if we wanted to take a company public. It is a dealer broker.

Yes, it sounds reasonable that a VC doing an IPO, financing, or selling a publically traded company would have to be registered dealer broker. I'll ask my colleague and his attorney at this company; especially if we are interested in a public company.

The reason I would like to put this on my resume is that it is really a sales job; a tough sales pitch at that.

[Dick Woodward]

Nate:

It is OK to ask the investment bank and their attorney for advice, but I would strongly suggest you retain your own counsel as well. It should only cost a few hundred dollars. The investment bank has a certain conflict (they want you to do something for them) and that may color their opinion.

Note also that the broker-dealer laws apply to private as well as public companies. Trust me - you do not want to run afoul of the SEC.

In a similar case, I knew a fellow who went from company A to company B. company B had a division that competed with company A, but since he was going to a different division in company B, Company B's attorneys assured him that this would not violate his non-compete. Company A sued, and the judge held for company A, costing the fellow quite a bit of money. He might have been better served by getting an opinion from his own counsel. Thus my suggestion to you.

Good luck - I hope that things work out.

Dick

[Nate W.]

Nate:

It is OK to ask the investment bank and their attorney for advice, but I would strongly suggest you retain your own counsel as well. It should only cost a few hundred dollars. The investment bank has a certain conflict (they want you to do something for them) and that may color their opinion.

Note also that the broker-dealer laws apply to private as well as public companies. Trust me - you do not want to run afoul of the SEC.

In a similar case, I knew a fellow who went from company A to company B. company B had a division that competed with company A, but since he was going to a different division in company B, Company B's attorneys assured him that this would not violate his non-compete. Company A sued, and the judge held for company A, costing the fellow quite a bit of money. He might have been better served by getting an opinion from his own counsel. Thus my suggestion to you.

Good luck - I hope that things work out.

Dick

You're sure this applies to private companies. They finance and restructure car dealerships. I doubt a private car dealership only goes to a VC company when they want to sell or refinance their dealership they probably seek out a Bank of America or Bank Of Texas. These aren't always classified as dealer-broker.

This is not a non-compete situation. I'll ask around; however, many attorneys in Dallas don't like to give just advice unless maybe you give them a sizable retainer ~5000-10k) and/or bring them a slam dunk winner of a case. Plus, I need an attorney that specializes in SEC regulations. Ain't going to be cheap even if I can find a guy. Maybe law professor will do this for cheap?

I get public traded companies and why? Got to love these government regulations that hinder our economy and keep people both under and unemployed. Thanks Congress!

[Dick Woodward]

Nate:

I am not an attorney. However, I have had the potential to run afoul of this in the past. As my attorney said "You can do this. However, if you get caught, the only question is if you go to prison in the US or Germany" (I had been asked to sell a division of a German company for a commission, and I am not a registered broker-dealer).

So - talk to an attorney - or not. Your choice, your consequences. Google the "Anka decision" (that is the singer - Paul Anka). He got nailed for making introductions for a commission.

Please do not respond to this - I am only trying to point out an issue that most people are unaware of. I do not wish to get into one of your long-winded arguments.

Dick

[Nate W.]

I wanted to update this post. We obtained an advisory opinion from the Texas State Securities Board. It is ok to identify and vet scientifically promising technologies for the purpose of investing. So long as you are not involved in the sale of securities whether it be private or public shares of a company. The law is complicated and varies depending on what state you live in. Often one runs afoul of the dealer broker regulations when an outside and independent individual (of the a given company; w/o a series 7 license), not a majority owner of the target company or an employee of a financial institution, tries act to raise money, acquire, or sell a company for his own benefit or the benefit of the employees of that company. Of note, VCs, angel investors, private equity and business brokers routinely engage in these financial activities and they are NOT licensed dealer brokers by FINRA. The requirements vary from state to state; in most states, one should register as a "finder" when acting as a technical advisor for a financial institution and in states like CA, one needs a real estate license and "a finder's" registration to be a business broker. In WA, one needs just a typical real estate license to a business broker. However, a typical technology advisor for a financial institution (VC, angel investor, private equity, or business broker) doesn't need a dealer broker license (unless they sell securities). Even if you wanted to get a dealer broker license, these financial institutions don't have a mechanism to sponsor one for a license; which means to get a dealer broker license, one would have to work as a stock broker at major bank (e.g. JP Morgan, Morgan Stanley, etc.) to get a sponsor for the Series 7 exam. Even then, your license would expire after a year of not working at a registered dealer broker (i.e. stock brokerage firm or a major investment bank). VCs, angel investors, private equity, or business brokers are not registered dealer brokers by FINRA.

PS: To get a definitive legal opinion, given the complexity and esoteric nature of the question, it would cost roughly 10-15K. Most securities attorneys don't understand the law in this area. Plus, most business professionals (MBA, equity analysts, and JDs) who work in these areas, actively want to discourage others, especially those with a technical background to work in this field. So, they give misleading information.

[PG]

This is definitely not my area of expertise but it seems rather straightforward.

If I summarize it correctly
It is a complex question
To get legal advice would cost 10-15k USD
If you get it wrong it may cost jailtime
Your network Contacts is discouraging you from moving forward (potentially due to that they dont want competition and potentially due to other causes)

Doesnt look like a difficult decision.

[D.X.]

Yes, confirmation that the opportunity dodgy to Nate.

Based on what Nate wrote, I recommend he doesn't touch it even with a 10 foot pole, even if it was yours PG!

Best and good luck Nate you got your advice, walk away and cut all ties.

DX