We do not view our members as ‘numbers’ but as long-term business partners who have entrusted us with risk capital not to speculate but to invest with a reasonable expectation of future profits. We will at all times act in their best interests and be as transparent as possible in our affairs.
As project sponsors, our long term goal is to ensure that our members recover their invested principal (most of which would be in the form of a loan), along with a reasonable return (contractually binding, set at project inception) for the time value of money, while maintaining a lifetime ownership stake in each project until the project is fully sold off (if ever). We will make money only when our members do and in exactly the same proportion. Should we do something dumb, we would like to know that our financial suffering is proportional to our members’. We have no long term designs to gain an ‘edge’ over our members.
Our long-term economic goal is to enable our members earn above average returns on invested capital. ‘Average’ for this purpose will be the average of the various market indexes and/or benchmarks (e.g. Dow Jones, S & P and so on) applicable to the various markets in which sponsored projects operate. For example, projects and/or businesses in the United States will be bench marked against indexes in that marketplace while similar Canadian undertakings will be rated using Canadian indexes.
We will not follow the ‘herd’ in our business decisions. We will strive to avoid bidding wars and overpaying for member-owned acquisitions and/or projects. We will focus on fundamentals (cash flow, return on invested capital, integrity of earnings) and not hesitate to purchase businesses in out of favor industries as long as we have access to the requisite knowledge and experience required to achieve our business goals.
We will make all relevant information about each business acquired (or project sponsored) available to our members on a quarterly basis. We will be candid about our successes and failures. We will not at any time dilute members’ equity in any business for self- serving purposes. Should the need ever arise for dilution, a case would be made to the owners (members) – if approved, the dilution will proceed, otherwise the wishes of the owners (members) would prevail. When we have disappointments, we will try to be as candid in informing members about those as we are in describing the happier experiences.
We will use debt very conservatively in a proportion that will not threaten the ongoing viability of our sponsored projects (or acquired companies) especially in an economic downturn or recession. We will always do our best, as much as possible, to build business structures/models that create low cost, non perilous leverage via deferred taxes and prepaid sales. We will only do with your money what we would do with our own, weighing fully the values you can obtain by allocating your funds directly to competing opportunities. As much as possible, if and when member-owned businesses borrow, we would try our best to structure it on a long-term fixed rate basis. It is also possible that we structure such borrowings on a short-term, variable rate basis to fund incremental working capital needs (trade receivables and inventory).
Our operating model (for sponsored projects and acquired companies) would not be dependent on breaking up existing operations, laying off employees or any of the more notorious ‘pillaging’ tactics associated with a lot of private equity players. Our focus on long-term value creation is based on protecting invested member capital (principal), growing business net operating income, getting invested capital back to our members within a reasonable time frame, in the most tax efficient/advantaged manner, while leaving them with an ownership stake that should continue to yield dividends perpetually and potentially, capital gains (should the underlying businesses get sold).
We will practice active ownership in the oversight, monitoring, management and administration of our various sponsored (member-owned) projects or acquired companies. We would seek to help management [of such member-owned companies] understand what industry leaders do so that processes and practices in place are consistent with global best practices usually found in larger companies.
We believe that investments in cash flow generating businesses (including commercial real estate) are the most reliable means of building lasting Personal Equity, structured to endure for many generations. We also believe that the MCWB Club is a safe and reliable means of achieving this goal through pooled investments by like-minded members. We will therefore seek to continually provide opportunities for club members to achieve these goals of providing financial security and/or independence for themselves (and families) within a comprehensive framework designed to maximize and protect family Personal Equity through succeeding generations.
We are of the opinion that, for our members to achieve their best personal financial outcomes, they must have unfiltered access to the advice and services of the highest calibre professionals (lawyers, accountants, tax practitioners etc) available in the world. Proven professionals, with requisite knowledge and experience, will provide our members (as well as member-owned businesses and/or projects) with solutions to their various needs promptly, objectively, and with complete integrity. Because those professionals would be hired with member resources, there will be no ambiguity as to whether they are working for the wealthy few or the middle class – as opposed to say, for example, when a mutual fund has majority middle class unit holders, you can trust that the mutual fund’s lawyers, accountants and tax experts are not working on behalf of the middle class, but for the mutual fund managers who belong to the wealthy few.
Our goal is that every investment project we initiate must succeed. We will not purchase businesses that we do not understand – before we recommend any acquisition to members, we will know everything there is to know about the peculiarities of the target business. We will understand its competitive position, barriers to entry and unique selling proposition. We will avoid ‘me too’ purchases where we have no sustainable game plan for differentiation and competitive advantage. Furthermore, we will not engage in any activities that lie outside the competence of our acquisition and management teams, nor will we begin acquisition procedures until we are fully confident in our abilities to negotiate, acquire, and continuously manage the business or project profitably.
We are of the opinion that in the sphere of professional investing, there is no place for speculation. Being mindful of our fiduciary duty to our stakeholders (members, lenders etc), some of whom may have committed significant portions of their net worth to our care, we must never unduly risk losing either their invested capital, or their confidence in us.
MCWS’ compensation (when and where applicable) must be fully disclosed and should be linked to results. Any remuneration should be linked to the increase in income and value created in member-owned investments, the resources expended in acquisition, and the risk and responsibility assumed in management/oversight. Such remuneration must also have been clearly defined (and be contractually binding) before members commit any funds – in other words, (MCWB Club) members must be aware of all (MCWS) compensation (no exceptions) at project inception.
We would be guided by the “Golden Rule” – to do for others, what we would have them do for us.
We strive to be leaders and pacesetters, not followers. We should set newer, higher standards (especially in our stated goals of furthering the interests of the middle class) against which all others are measured, continually evolving and seeking to surpass our previous levels of accomplishment. To lead effectively we must be bold, prudent, and above all, free from the fear of making an honest mistake. When mistakes are made we will acknowledge them openly, correct them immediately, and look upon each as an opportunity to gain valuable lessons from the experience.
As leaders, we must be men and women of inviolable integrity and sound precepts. We must be absolutely sure that in whatever we do, our words and deeds are rooted in the foremost precepts of the highest ethical standards – even when we are our only witness. We would always stand by our word – our yes means yes, and our no means no. We would make no offer nor promise that lies outside our capacity or ability, or which we know we cannot fulfill.
Our word must be our bond, and must always be worthy of trust. Any MCWS representative who does not keep his word, even though given only by telephone, or seeks to evade a contract on some technicality, or willfully misrepresents, or outrightly lies, will not be tolerated, and once found out, will cease to represent us in any capacity.
It is our ethical obligation as well as lawful duty to protect our (MCWB Club) members’ interests as well as the investments we administer, manage or oversee on their behalf. We will vigorously defend our concerns on behalf of all those who depend on us, and when doing so, we will retain the best-qualified professional counsel and legal representation required to guarantee a just result