Q & A with Samuel A. Longo, Private Investment Banker

Samuel, let us begin with a general overview of your Company. What is your personal statement?
SAMUEL A. LONGO brings to the table strong leadership presence and a clear sense of principle and ethics. We are dedicated to serving client needs, and focus on building substantial added value to capital growth. Being politically aware and savvy, we are also conscious of and sensitive to global environmental issues and the diverse and profound struggle for basic human needs: dignity, sustenance and balance.

How long has your Company been established?
Our Company, through succession, has been established for over forty years. We are most diversified and within our Private Investment Banking activity provide a myriad of services which are outlined in the ‘Deal Structure’, ‘Film Finance’ and ’Focus & Expertise’ sections of our website.

What is one of the most requested services of a Private Investment Banking Company?
Financing.

Explain that.
Let me start this way: we are not money brokers and/or money finders. We do not “pound the pavement” for money or “dial for dollars”. Those folks take what is given to them by their clients or prospective borrowers at face value, and start the hunt for money. Whatever is in that client presentation is what they accept. We don’t do that! At Samuel A. Longo, we provide capital strategy, capital structuring and funding for transactions typically upwards of $ 10 Million to work within the changing economic climate. Most of our deal making is creative and “out of the box” from the customary method of financing that stopped working or being available about the time Obama took office. It’s important to note that we don’t necessarily rely on the facts for funding provided by the clients because most clients don’t know the business of their business or what it takes to deal structure and fund.

Okay then, how do you describe your work?
As Global Dealmakers we structure deals to fund, which means, in part, that we conduct exhaustive due diligence and through that process it usually becomes clear what is required, letting the facts speak for themselves. Very often, more money is required than what is originally requested. In order to pay back debt or bring about a return on investment, those monies will come through, generally, from well managed revenue. And obviously revenue is generated from marketing and sales. As part of the due diligence process we will test the target markets to ascertain if the client is reaching and maximizing the benefits of his primary target markets. This also includes cost effective print, advertising and personnel as a part of maximizing the benefits-revenue of those target markets.

Can you outline your procedure for deal structuring?
If the client’s objective is for us to arrange financing the goal, then, is for us to develop a Term Sheet which is the result of the complete due diligence process. The Term Sheet is usually two to three pages and reflects the key deal points of the client’s company. It will also reflect the creative application, the result of the due diligence for the credit facility or financing, taking into consideration the current status of the capital markets, domestic or foreign. The Term Sheet is what is submitted and privately placed with a designated lender/investor/institution for funding. In some instances the client may require a financial guarantee and/or some form of a credit enhancement with a minimum ‘A’ S&P rating, as part of the deal structure. Of course, there’s much more involved. I’m only touching on some of the basics to give you an idea how due diligence comes together with the creative application to make it all work.

What kind of time are we talking about to complete due diligence to the point of Term Sheet submission?
In most cases, due diligence can be completed on or before 60 days from the time all request for information and documentation is received from the client; which also includes, legal, accounting, etc. In some cases however the client really has his act together and as a result we are completed much sooner.

Who is your client base?
It is international and includes corporations, governments, banks, financial institutions, insurance companies; “911 Financing”-- companies in dire financial situations requiring immediate solutions. One of our specialties.

How are you paid?
On performance - at the time of successful funding. Our fees for funding are clearly spelled out in our proposal and contract. Our payment is based on the face amount of funding and generally, paid at first draw.

Are there any “upfront” fees?
Yes, there are fees to facilitate due diligence and for the deal structuring upon which funding is based and involves attorneys, accounting (CPAs) and other professionals as the transaction may require. In certain situations we depend upon the client’s attorneys/CPAs and/or other professionals the client has retained or has a working history with. If not, we will hire what is necessary subject to the client’s approval.

What is your time line to fund?
Approximately 60 days, from the time we have signed an exclusive agreement and upon receipt of all information/documentation and the completion of its due diligence.

What is the biggest challenge you face with clients?
Explaining the fact that we are not brokers or money finders but Investment Bankers and what that really entails. Further, that they (clients) are open, receptive and accept change to deal structure for today…this may also include complete capital restructuring, implementing new or different management systems including but not limited to real time cash management and so on.

What is your success ratio?
Once we agree to take on a deal, we structure to fund knowing which financial institutions we believe will accept the transaction before presentation. Therefore, if all of our due diligence requirements are met, with financial documentation prepared according to GAAP standards, together with supporting information/documentation, then financing commitment within the framework of the Term Sheet is expected. From that point forward, it’s loan documentation and closing. Time is money; our profit is your (client’s) successful funding.

Can you summarize your professional services and in doing so inform us of your preferred method of financing - debt or equity or a combination debt/equity?
SAMUEL A. LONGO, INC takes the position, in most transactions, to build a capital infrastructure that provides for debt structured funding. In the capital markets, domestic or international, debt financing holds a much higher standard than investment capital. The result is the due diligence, marketing model, economic model and management disciplines – cash management, also hold a higher standard to meet capital debt requirements.

Fortunately for our clients, we have the capacity to originate credit facilities/loan documentation; privately place credit facility/loan funding through a number of mainline institutions together with companies and individuals that are uncommon to the standard and customary capital markets. We also have the capacity to place financial guarantees, credit enhancement, financial instruments in support of and/or guarantee to a transaction including but not limited to capital surplus. Lastly, we will manage and develop equity for a transaction including sale of securities through licensed security dealers – public and/or private (subject of course to all regulatory requirements). This would include but is not limited to IPO’s, publicly traded reverse mergers, leveraged buyouts, etc.

What is your key to successful funding?
The key to every successful financial transaction is the art of capital deal structuring. In building the infrastructure that governs and directs each transaction is the art of capital structuring and funding. It is a practical creative process that is as unique and individual as is the client in each situation. We do not apply yesterday’s inspiration to today’s deal structuring; each day is a new day (as the economy is teaching us)!

[Note: The above Q&A is an excerpt taken from an interview dated July 20, 2010, with Samuel A. Longo, Chairman & CEO of Samuel A. Longo, Inc, a US Private Investment Banking Company. This interview is to be continued and will be published in future web updates; topics covered include alternative energy financing, independent of government subsidies that free up tax benefits and/or grants as added value; global capital markets and the ever shifting credit markets.]