Subject: RE: Becker Burke
From: "Neil Callahan" <[email-masked]>
To: "'Hunter Biden'" <[email-masked]>
Date: Fri, 1 Oct 2010 15:56:53 -0400

Hey, no worries and understood.  I have my share of frustrated moments as well, we all do.

So here’s an update/thoughts on Becker Burke, RSA and the “Global Risk” concept:

Becker Burke

1.       4 Due Diligence meetings

a.       They agreed to do due diligence meetings at all of clients - according to Arlene, they will be the 1st ones we’ve able to arrange, so a big win for everybody

b.      BB will schedule them directly with our clients and get all the meeting completed this month

c.       BB will share their due diligence report with us so we can learn what they are looking for which will help us to hone our offerings

2.       Collaborate Ideas with BB

a.       Thought Leadership / Education

                                                               i.      We could be very helpful in education the Public and Union plan boards on the Alternative Investments

1.       Telling the Heinz story of their success in AI investing and giving examples of Public and Union funds that have been successful in the space would be very helpful to the boards, BB and us

2.       Essentially many of the Public and Union boards in the sub $1B space are not sophisticated and look at Wall Street and Hedge Fund through the lenses of the newspapers – and don’t spend the time to become education on the market

3.       And with Public funds adjusting their models (i.e., the NYS projected annual rate of return in being lowered from 8.5%) they will be force to seek higher returns in the AI space, or they will have to raise tax and/or reduce retiree benefits – both of which will hurt the politicians, so seeking AI will likely win out

4.       How it could work:

a.       We develop some educational material and have calls/meetings with BB clients and prospects and other.

b.      We charge a “seminar fee” / training fee – or BB hire us as a research company, etc.

b.      Private Deal Flow

                                                               i.      BB was very interesting in hearing about the Private Deal (i.e, Matador, IB Solar, others)

1.       They mentioned they fill those deals 100% if we had them

2.       Their Public, Corp and Union clients loves those types of deals – basically principle is risk fee and the IRRs of 11-12% are just fine with them

3.       So we could find deals and have BB and other consultants fill them with their clients – something we have talked about, but this gives us a vehicle to try and do it without any incremental cost of overhead

c.       Public Plans

                                                               i.      BB opened my eyes to the Public Plans – there are more of them and they have less stringent governance regulations than the Unions

                                                             ii.      The sub $1B space could be very attractive to introduce our clients to (i.e., City of Syracuse plan, etc.)

                                                            iii.      Is there a reason for us to stay away from the Public plans directly or indirectly?

d.      Introductions

                                                               i.      We could help BB meet Public and Union plans in the sub $1B space (i.e., City of Ann Arbor, Rhode Island Firefights, etc.)

                                                             ii.      We could be paid a research fee or retainer, etc.

3.       Next steps are to follow up and make sure the due diligence meetings happen and to meet up in Chicago to brainstorm on the ¾ ideas listed above.

RSA, Global Risk

1.       RSA

a.       We need time and attention from Curt to develop the offering and test it in the market.  And then to refine our offering as we learn to make it better.  This will take 6-12 months.  And I think we can get clients to pay us to do it.  

b.      Once we start making progress here, we need $ to hire and train more Curt’s – basically a $300k - $500k person when it’s all said and done.  We can either fund those people from the business, or we raise money to do it.  We have incredible key may risk, so to replicate Curt is a priority.  And also replicate a Curt that will be 100% RSA working for us – Curt would not be able to be 100% RSA for the next 12 months at least, if ever.

c.       We will also need to hire “Analyst” or develop a network of contractors that we can use to help us gain insight and write the reports, same logic on funding them – from the business or raise it.

d.      So our best path forward it to get to Formation (executed Term Sheet) – Curt said once that is done he will be able to spend a lot more time on RSA (50% of his time, right now it’s 5-10%)

e.      Our best approach I think is to be the world best hand surgeon for lefty golfers – very specialized practice, and leveraging the story of where RSA/Vide came from with prospects, we will get people to hire us.   We just need to find the lefty golfers who need hand surgery.  We can’t just start offering to everybody, we will confuse them and ourselves.  I think once we get past the test/beta phase of say 4-5 $250k projects, we target getting 5-8 clients who will pay us $1m-5m annually.  And I don’t think any of those clients will be your typical Hedge Fund – it’s going to be Private Investors (i.e., Carlos Slim), SWFs, Select Corporations (i.e., Chevron, AON) and maybe a mega Hedge Fund.

f.        So we only need $ to hire more Curt’s, potentially some Analysts.  And then some cash for a marketing budget, which will basically be only travel expenses.  And we could think about spending money on sales people (i.e., Richardson)

g.       Our approach is different from Bloomberg or Eurasia Group – where they need lots of cash to basically run a newspaper – lots of researchers and writers.

2.       Global Risk

a.       Version 1.0 is where we are with Rob Mitchell – let’s build a black ops services business to make some money (so I can pay my mortgage) and get into a growing sector that the principles of the firm enjoy working in and can leverage their networks very effectively

b.      Version 1.5 may be a Global Risk Fund – something that Heinz generally supports and could meld with his next fund / Merchant bank concept, but not right now.  But if Jay and other pulled it together and had something ready to go, RSP could pile in – which is basically how Rosemont Realty happened – Burrel, Mahoney and Devon did 99% of the work and then bam it becomes part of the Rosemont portfolio

c.       Version 2.0 could be the big idea Jay is talking about – raising money and doing a roll up of people and companies, etc.  This could subsume Version 1.0 and perhaps RSA – but we need to explore that in parallel, not in place of Version 1.0.  Jay, Devon, Rob and I are all on the same page there.  We need to walk before we can run

d.      The good news is Heinz is fully behind Version 1.0 for many reasons, so we should stay on point with that and prove it out before we cut over to anything else.  With that said the “Fund” and Version 2.0 concept can be explored in parallel as long it doesn’t take away from our core set of activities that we need to deliver on.

Let me know if this makes sense and we can set up time to chat or just call me anytime to discuss.

Have a great weekend.

Best,

Neil

 

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Neil Callahan

Rosemont Seneca

401 Greenwich Street, Suite 400 | New York NY 10013 | 212-933-9965 | 212-796-4037

1010 Wisconsin Avenue, Suite 705 | Washington DC 20007 | 202-333-1880

917-945-9516 (mobile) 

866-749-8879  (fax) 

From: Hunter Biden [mailto:[email-masked]] 
Sent: Thursday, September 30, 2010 9:40 PM
To: <[email-masked]>
Subject: Re: Becker Burke

Sorry if I sounded overly pessimistic about this - it's a rainy day and I'll end up having spent 2 nights in my own bed btw wed last week and we'd nxt week.  Nothing we all don't put up with but you shouldn't have to put up with my whining as AB piles on.  These guys are the right idea- we have to make them aware of just how valuable we can be. 

Switching subjects- RSA and talks that J and Rob and you have had.  I am all for empowering people to push forward  as hard as ossicle but before people make irrationally exuberant or dire predictions about RSA's potential I think it is incumbent upon on us to fully spell out all the options for creation and maturation of the product.  That includes organic growth and real capital input. 

R. Hunter Biden

202-333-1880

On Sep 30, 2010, at 3:34 PM, "Neil Callahan" <[email-masked]> wrote:

No, but we can get to them.

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Neil Callahan

Rosemont Seneca

401 Greenwich Street, Suite 400 | New York NY 10013 | 212-933-9965 | 212-796-4037

1010 Wisconsin Avenue, Suite 705 | Washington DC 20007 | 202-333-1880

917-945-9516 (mobile) 

866-749-8879  (fax) 

From: Hunter Biden [mailto:[email-masked]] 
Sent: Thursday, September 30, 2010 3:31 PM
To: [email-masked]
Subject: Re: Becker Burke

Neither of these guys are principals.

R. Hunter Biden

Rosemont Seneca Partners LLC

202-333-1880

212-933-9965

 

On Sep 30, 2010, at 1:10 PM, Neil Callahan wrote:

Just talked to CS – we should be prepared to talk about all of our Alternative Investments “products” as Rosemont Seneca is we want to.  Jeff Black who will be on the phone is the #1 for them in the Alternative Investment space which includes PE, Hedge, Real Estate, etc.

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Neil Callahan

Rosemont Seneca

401 Greenwich Street, Suite 400 | New York NY 10013 | 212-933-9965 | 212-796-4037

1010 Wisconsin Avenue, Suite 705 | Washington DC 20007 | 202-333-1880

917-945-9516 (mobile)

866-749-8879  (fax)