Business Description
This is an excellent opportunity to acquire an established independent investment research rating system and associated assets with distribution agreements already in place. The business revolves around its advanced StockMarks stock rating system, offering stock ratings via a website as well as distributing investment research reports through major global data providers. The stock rating system provides in-depth long-term investment analysis on more than 16,000 companies in 18 different countries (currently running for 12,000 in 10 countries).

Potential for Multiple Business Models
The StockMarks ratings (described in our site) may be of interest for either proprietary use or for sale to either buy or sell side users.  The rating system and associated portal can be monetized through various revenue models, namely: Investment Research (e.g. independent buy-side oriented as currently offered by SADIF); Risk Management rating and index services (e.g. for rating and index providers, for financial media and data vendors, creditors and issuers); online retail Brokerages and banking services (e.g. to provide customers with own-label research and rating services); and Investment Advisors, Fund Managers and Family Offices (e.g. as a tool for risk management and strategy selection).

Key Strengths
StockMarks is highly flexible and has a diverse range of uses outside those of other stock ratings. It is positioned in a niche often overlooked by stock rating systems – long-term investment, free from the influence of day-traders and scalpers. The system is not limited to a single stock rating, instead using 18 different ratings, each looking at the company from a different angle, The low ongoing costs of the rating system is one of the company’s main strengths. The backbone of the entire StockMarks system can be run for less than the cost of a single equity analyst. Furthermore, the readership base of the equity research reports offers considerable opportunities for word-of-mouth marketing among financial professionals. The rating system has been developed and tested over a three-year period and has been published since March 2008.

Employees
The day-to-day operations of the StockMarks rating system can be performed by a single employee working half-time. Non-operating functions such as IT system upgrades, sales, analyst research will require additional staff or consultants.

Location
The company is currently located in Portugal, allowing labour costs to be kept to a minimum. However, the small size of the company and online base allows for easy relocation to anywhere in the world.

Technology
Currently, the main delivery system for the stock ratings is through a web portal online publication regulated by the ERC (Entidade Reguladora para a Comunicação Social) in Portugal. The data is stored in a standard MySQL database and can easily be displayed and transformed. Key tools are already in place to enhance the customer experience such as an alert system and automated PDF due diligence reports for any of the 12,000 companies covered by the rating system. The company maintains all technology necessary for the normal running of the business, including computer systems and proprietary data algorithms. Research reports based on StockMarks are currently distributed by major financial data providers via professional systems. The reports are also available at various key financial information websites around the web for retail investors.

Expansion Potential
The StockMarks rating system has far-reaching uses and has great expansion potential. The system is scalable, while currently offering ratings for 16,000 companies in 18 countries, the number of companies and countries is limited only by the availability and cost of data. Both these factors are continually improving. The stock ratings can be run and used in-house, or can be licensed to other companies such as online brokers and web portals. Currently, the company only produces a few research reports per week owing to limited resources and manpower. However, the system in place can handle a dramatic increase in report production to hundreds of reports per week with adequate manpower. It is possible to outsource this work to India or other countries with lower labour costs.

Support & Training
The seller provides an updated Operations Manual and key employees have agreed to make themselves available for up to 4 months of transition training and setup for the purchaser. After this period, some employees may offer their services to the company as external consultants on a per-hour basis and the purchaser may choose whether or not to continue to employ other workers.

Reasons for Selling

- Failure to agree with venture capital sponsors on the capital increase needed to hire the sales team and run the marketing campaign required to launch the product among institutional investors.

- Desire of founder to use proceeds from the sale to concentrate on developing and researching new tools for investment timing and stock picking for his InvestorLabTM platform.

- Potential trade buyers with established distribution capabilities will enable greater distribution.

Notes

- The purchaser has the choice of buying the company as a going concern or simply purchasing the stock rating system and associated assets such as the algorithms, web-portal, database and CRM database. An electronic data room has been set up for interested buyers and the system can be tested in Portugal. Access to both requires payment of a refundable token fee and acceptance of our confidentiality terms and conditions.

- The rating system has been developed and tested since Q4 2007. In July 2009 MM&A began its distribution targeted only to buy-side retail clients and reached an audience that is catching up to that of our main peer as shown in the chart below: