vista_20210527110749.pdf

March 2001 This sample business plan has been made available to users of Business Plan Pro,business planning software published by Palo Alto Software.Names,locations and numbers may have been changed,and substantial portions of text may have been omitted from the original plan to preserve confidentiality and proprietary information.You are welcome to use this plan as a starting point to create your own,but you do not have permission to reproduce,publish,distribute or even copy this plan as it exists here.Requests for reprints,academic use,and other dissemination of this sample plan should be emailed to the marketing department of Palo Alto Software at .For product information visit our Website: or call:1-800-229-7526.Copyright Palo Alto Software,Inc.,1995-2002Confidentiality Agreement The undersigned reader acknowledges that the information provided by _ in this business plan is confidential;therefore,reader agrees not to disclose it without the express written permission of _.It is acknowledged by reader that information to be furnished in this business plan is in all respects confidential in nature,other than information which is in the public domain through other means and that any disclosure or use of same by reader,may cause serious harm or damage to _.Upon request,this document is to be immediately returned to _._ Signature _Name(typed or printed)_Date This is a business plan.It does not imply an offering of securities.1.0Executive Summary.11.1Proposal.21.2Objectives.21.3Mission.21.4Goals.22.0Business and Industry Description.32.1The Three Ps.33.0Market Analysis Summary.43.1Industry Participants.53.2The Investment Industry.53.3Target Market Segment Strategy.54.0Product Differentiation.65.0Organization.65.1Portfolio Management Team.75.1.1Positions Being Hired.85.2Operations/Services to be Outsourced.86.0Investment Philosophy.86.1Equity Harvesting/Exit Strategy.96.2Risks/Contingencies.97.0Strategy and Implementation Summary.107.1Sales Strategy.107.2Database.117.3Turnover.118.0Financial Plan.128.1Important Assumptions.128.2Break-even Analysis.138.3Projected Profit and Loss.148.4Projected Cash Flow.148.5Balance Sheet.168.6Business Ratios.16Table of Contents1.0 Executive SummaryOur firms hallmark investment product will be the Vista Total Market Equity strategy and will be initially offered through a mutual fund that is registered by the U.S.Securities Exchange Commission(SEC).Technological advancements also permit for other economically feasible distribution channels,such as separately managed portfolios for large accounts.The details of our particular investment product offerings are revealed in another section of this plan.However,its worth stating up front that we are extremely encouraged by a research piece to be published in the Journal of Portfolio Management,Summer 2001 issue that supports the philosophy behind our primary product offering.Ennis Knupp,a premier institutional investment consulting firm,published a study called,Failure of the Multiple-Specialist Strategy:The Case for Whole Stock Portfolios.One of the underlying tenets is that specialization within equity portfolio management has gone too far;thus resulting in sub-optimal portfolios.VISTA INVESTORS will be structured as a partnership designed to capitalize on industry research performed by one of the founding entrepreneurs,Michael Douglas,during his professional career in investment management research.In 2000 alone,Mr.Douglas conducted research visits at the investment offices of over 30 firms.In addition,he conducted literally hundreds of meetings with key investment professionals from around the globe either in person or via telephone conference.Mr.Douglass team presents this business plan as a start from scratch outline of what a successful investment management organization should look like as the industry evolves in response to political,social,technological,and other influences.VISTA INVESTORS will offer high net worth or angel investors opportunity to assume minority ownership positions in exchange for contributions to VISTA INVESTORS operating capital and for providing seed assets to establish the investment products described herein.This document alone does not constitute an offer of any type,nor does it provide any guarantee,financial,or otherwise.Risks associated with the VISTA INVESTORS business plan are not limited to those detailed in this document.($400,000)($300,000)($200,000)($100,000)$0$100,000$200,000$300,000$400,000$500,000$600,000200220032004SalesGross MarginNet ProfitHighlights(Planned)Vista InvestorsPage 11.1 ProposalThis proposal is unique because it differs substantially from the way most existing investment management firms originated.Most of the firms created in the last 25 years were started by the departure of portfolio managers from the nations largest banks,insurance companies,and brokerage firms.Generally,these individuals were deep in investment research talent but novice as it concerns the business and operating side of running an organization.The business plan for VISTA INVESTORS is different.VISTA INVESTORS is to be created by someone deep in knowledge of all aspects concerning investment management organizations.Investment talent will be acquired and retained by offering key individuals competitive compensation to include equity stakes.Biographies for individuals selected for the management team are enclosed.1.2 ObjectivesThe purpose of VISTA INVESTORS is to create value for owners,employees,and investors via the establishment of an investment management organization designed for the Third Generation.The Third Generation is defined in a cutting-edge research effort by Merrill Lynch&Co.,Inc.and Barra Strategic Consulting Group as a phase in the investment industry requiring a special set of capabilities for success.Our team has drawn upon this study,numerous other studies,and perhaps most importantly,our own experience in the industry,to define a plan for the success of VISTA INVESTORS.1.3 MissionBuy and sell decisions are implemented quickly and efficiently across all portfolios.Where applicable,a trading rotation is used to avoid any type of systematic advantage or disadvantage an account may experience.Under virtually no circumstances would we deviate from our discipline.1.4 GoalsProbably the single most important factor that defines success in the investment management business is performance.Thus,one of our primary goals is the achievement of a rating by Morningstar,an organization widely known by both individual and institutional investors for its marks of accreditation in the mutual fund industry.To be rated by Morningstar,funds must have a minimum performance history of three years.Vista InvestorsPage 22.0 Business and Industry DescriptionThe beauty of investment management is that great economies of scale can be achieved with successful investment product offerings.When organized efficiently and provided with the appropriate technology and support services,the size and number of accounts becomes irrelevant.Essentially,the underlying portfolio(product)is the same.Additionally,related products can be easily derived from the main product platform.At a recent investment conference,the CEO of IOMEGA stated,.derivative products are important in any industry.We would certainly agree.Thus,we have provided for introduction of closely related products to be launched during the later stages of our start-up(see Multi-Product Platform).These derivative products include a balanced product(our Total Market Equity strategy combined with a non-proprietary,fixed-income product),a large stock product(the large cap portion of our Total Market Equity strategy),and an extended market product(the mid and small cap portion of our Total Market Equity strategy).As an investment track record is developed,marketing opportunity expands.Additionally,a successful product can be leveraged into derivative products,thereby increasing asset gathering potential.A study by Merrill Lynch shows that mutual funds with 4-star or 5-star ratings(the two highest levels)accounted for 74%of net asset flows over the last four years;however,there are virtually no guarantees when it comes to investment performance.This is evidenced by the SEC mandated disclosures attached to all mutual fund disclosure.If a firm takes all the steps to stack the deck in its favor,the probability of achieving the desired success is significantly increased.In the following sections we outline a plan that identifies the right people to execute the investment process within an environment conducive to efficient investment management practices.As it pertains to the investment management industry,a properly stacked deck(i.e.the optimal organization)is a competitive advantage that cannot easily be achieved by many of the firms in existence today for a variety of reasons.2.1 The Three PsThere are three Ps commonly associated with investment management organizations:People,Process,and Performance.The prior two determine the latter.While this proposal highlights many areas(market research,financial projections,etc.),there are only two areas that will ultimately determine the level of success achieved by this group.The first is the people.Bright,energetic,talented,and knowledgeable individuals compose the core of the team presented to you.In addition,research explains that the most qualified investment professionals are attracted to efficient firms that are free from bureaucracy and that align interests via equity stakes.Process is the second critical element of this proposal.Cutting-edge research is provided in support of our portfolio management process.The implementation of our process is maximized by outsourcing virtually all functions not related to portfolio management and research,thereby exploiting the firms human capital.Vista InvestorsPage 33.0 Market Analysis SummaryMuch of our analysis focuses on the mutual fund segment of the investment industry because it is such a large component of the overall landscape.We have additionally provided information as it pertains to the management of separately managed portfolios(i.e.separate accounts).To understand the data here,one must understand that separate account managers must register their firms with the SEC.Thus,they are known as Registered Investment Advisors.For VISTA INVESTORS,the technologies we have selected will enable us to capitalize by utilizing both product types,mutual funds and separate accounts.Our analysis supports the 20%to 25%projected growth rates by outside sources.Probably the most important aspect to these projections are the factors that will fuel these rates of growth.The following section contains some of the key variables to creating this growth environment.All are expected to have a positive impact on the investment industry for at least the next three years.Mutual FundsSeparate AccountsMarket Analysis(Pie)Table:Market AnalysisMarket AnalysisPotential CustomersGrowth20012002200320042005CAGRMutual Funds20%4,5005,4006,4807,7769,33120.00%Separate Accounts25%1,1001,3751,7192,1492,68625.01%Total21.03%5,6006,7758,1999,92512,01721.03%Vista InvestorsPage 43.1 Industry ParticipantsThe number of participants in the investment industry is large.They range from providers of a single investment product to multi-product firms with literally hundreds,if not thousands,of investment product offerings.The several-trillion-dollar industry certainly has the size to support a large number of firms.However,many participants are not complete firms as it pertains to the capabilities required for success in todays,but more importantly,tomorrows environment.3.2 The Investment IndustryThe investment industry is a classic example of a traditional industry embracing technology to become more efficient.It is clearly fragmented,and while the past few years have seen some consolidation,fragmentation will remain due to the differentiation in investment products,both real and perceived.Its important not to understate the complexities of this industry.While mature by some measure,a dynamic change(e.g.advancements in communications and other technologies)and a positive environment for investing have created opportunities that will perpetuate well into the next decade.The investment industry is complex.It has many moving parts and its experiencing dynamic change.If this was not the case,opportunity probably would not exist.-Mike Douglas3.3 Target Market Segment StrategyOur target market will be highly dependent on the stage of our product in its development cycle.Most of the marketing opportunity will occur beyond the first year of product development.However,some initial opportunities do exist.For example,the firm can utilize its transfer agents distribution services,which would put the product in a highly visible online platform.Additional opportunities include marketing to programs that invest specifically in emerging managers.Furthermore,the high net worth and retail marketplace can be accessed to a limited degree,even in the early stages,through similar creative opportunities and already-established relationships with clients.Like manufacturing organizations,investment management firms must develop products to provide to their customers.This plan provides substantial market analysis to support the trends expected to occur in the field of investment management and the types of investment products that will be demanded.VISTA INVESTORS hallmark product offering will be the Vista Total Market Equity strategy,an investment product offering based on the evidence supporting investors desires to outperform the overall market via a single,diversified vehicle and to avoid the need to create complex investment structures such as those employed by institutional investors.Vista InvestorsPage 54.0 Product DifferentiationWhile its important to show some level of consistency with the latest trends in the industry,its more important to provide a solution that will stand the test of time.The decade of the 1990s is littered with examples in which individual investors have chased past performance and have sought unrealistically high returns by investing in recently hot investment vehicles,often concentrated in niche areas such as technology specific funds(e.g.Internet mutual funds)or style specific funds(e.g.small company growth mutual funds).The hard learned lessons for individual investors are that past performance is no guarantee of future performance,and that the market tends to favor one area for a period of time only to unpredictably rotate in favor of another area at a later time.Additional support for our strategy comes from the tendency for individual investors to mimic the strategies they see utilized by the nations largest institutional investors(e.g.pension funds and university endowments).Because of their size,institutional investors allocate their assets to various portions of the U.S.equity market(e.g.large cap growth,small ca