Operations Manual

It is possible that some readers are wondering – what is different about the MCWB Club? What are they going to do that has not been done before? How will the outcome be any different from the disappointments we have experienced from other service providers?

We are not trying to reinvent the wheel, there are no gimmicks or tricks up our sleeves. We intend to do exactly the same thing that is being done everyday by the mainstream financial services industry with a twist – you (MCFs – middle class folks) will be the boss, as well as occupy the driver’s seat. One thing most of us can agree on is that the mainstream financial services industry is not actively looking out for middle class interests – well, if they won’t, we will.

Transaction Flow

The first step is to join the MCWB Club.
After you join, you will be sent a link to fill out a form in which you advise the club of how much you have available for investment over the next 12 months (subscription period). The beauty of the club setup is that there are no restrictions – some members may not have more than $150 while others may have $15,000, but everyone will have a chance to participate to the extent of their resources. Many of these opportunities are currently open to only wealthy folks from the country club set.
The MCWB Club will add up total funds available for investment from ALL members – this number will be constantly changing as long as we are accepting new members. But the total available at any point in time will determine what opportunities will be presented to members for investment – keep in mind also that we have an obligation to not put ‘all your eggs in one basket’. We will keep you updated on our progress (even if it takes us 3 or 4 months to bring the first opportunity forward, we will remain accountable at all times).
The MCWB Club is also counting on members for leads on opportunities – we consider the diversity of our membership to be our secret weapon. Whatever is going on in terms of opportunities all over the world, be it the sale of a prime commercial property, or oil/gas wells, or gold mines or businesses, there is at least one middle class folk actively involved who can prompt us to that developing opportunity; the more members we can sign up all over the world, the longer, wider and deeper our reach would be in terms of deal flow. It is customary in the business world to pay a finder’s fee for such leads and we’d be happy to pay that fee to our members – as a matter of fact, some of the higher paid MCFs are always on the edge financially and would be hard pressed to come up with extra funds to take advantage of opportunities; they however tend to be high up enough in the management hierarchy to know when opportunities become available and we think this (finder’s fees) would be a good source of investment funds for such MCFs. It would make us happy to see these finders’ fees go to MCFs, some of whom may never have had the chance of earning such otherwise; there is an additional reason why it could make sense. If Joe for example knows that his employer (say a middle market business owner whom we’ll call Jane) is about to retire and plans to sell her company, it may also be in his best interests that the company is bought by MCFs through the MCWB Club because he knows their focus is on keeping employees employed rather than saddling the acquired company with debt and laying off MCFs the way a leveraged buyout private equity firm would typically do. Joe would also know that after MCFs acquire the company, employees stand a better chance of getting a fairer ‘slice of the pie’ (as opposed to when it was owned by Jane and her family or what they would get from a leveraged buyout private equity firm).
When we find an opportunity (for example if we decide to buy Jane’s business), we would go out and use the best resources and/or talents in the marketplace (legal, accounting, tax, management) to explore that opportunity. If we are convinced that we have a credible management team, as well as the necessary backup resources required to acquire the business as well as manage it successfully to provide stable, increasing cash flows to the potential member-owners (MCWB Club members), we will present the opportunity to our members. The presentation would be clear so that members (prospective investors) understand how the company makes money, where it makes money, its strengths, weaknesses, opportunities and threats as well as our ‘going in’ vision of where we see the company in the future. The focus in all this is for members to have a clear understanding of everything about the company, any legal agreements they would be signing in the course of acquiring a part ownership and so on. We would have as many online discussions as is necessary for members to feel comfortable that all their questions have been satisfactorily answered and there is a clear understanding of the risks and rewards – we may also use videos and other aids to facilitate this process.
When a company is acquired, ownership fractions are fixed forever -if you invested $100 in a $10 Million business, you would own 0.001% of the business and any profits or distributions associated with the business. We intend to put in place a structure to enable members sell a part or all of their respective stakes to others if they need to. But the key point we would like to emphasize is that there would be no special treatment – in some publicly quoted companies, a family may own 20% of the shares but have 80% voting rights. With MCWB Club sponsored opportunities, it is going to be completely democratic – one man or woman, one vote; your voting rights would be directly proportional to the size of your funds at risk.
You will get candid quarterly reports on the progress of each business or project you commit your funds to. Furthermore, you would get to know and approve what the executives of these companies are paid as well as the ratio of the highest paid salary/wage to the lowest paid salary or wage within the same company. We don’t think the highest paid employee should earn more than 7 – 10 times what the lowest paid employee earns. This is an idea we got from Ben and Jerry’s compensation guidelines when it was owned by the founders. Some have argued that this policy made it impossible to find good executives to run the company, well we think that with the record unemployment rates of today’s marketplace, that won’t be a problem. Furthermore, we are not against executives making as much money as they need to make it worth their while, we just think every employee should be taken along; what happens right now is that a few (less than 1%) at the top make far more than they need while the rest are struggling and losing ground every year. If the CEO’s pay needs to increase from $150,000 per year to $165,000 (a 10% increase), then the entry-level clerk at the front desk should also see her wage go up from $8 per hour to $8.80 per hour.
A clear majority of directors overseeing any member-owned company would come from the ranks of MCWB Club members chosen in a free vote online. The folks who pool resources to acquire the business will get to choose a majority of the directors to oversee the business – these directors would owe their allegiance to the members who elected them as well as their personal self-interests as investors. They would have as much access as they need to the company’s auditors and any other service providers. There would be no doubt as to who owns and controls the company – everything about the processes, setup, oversight and control would point to the acquiring MCFs as being in control of the company. ALL member owners would always get an opportunity to vote online at every annual (or other special) general meeting of the company in direct proportion to their ownership stake.