The following article is for a beta feature only available to some of our clients. If you would like this feature added to your MCA Suite instance, please contact us at firstname.lastname@example.org.
Once a deal has been tracked in MCA Suite, users can set up deal syndication to have investors participate in a merchant cash advance deal.
Prior to setting up syndication, you must have Contacts Types in MCA Suite that are "Investors." If your company is one of the syndication participants, you must be in MCA Suite as an Investor contact type.
To syndicate a deal, go to the Deal Tracking page of the funded deal and click on syndicate.
On the Syndication Setup screen, you will first need to add investors. To do so, click on the Add Investor button.
This will open a pop up where you can enter in more detailed information about the investor, how the investor will participate in this deal and add any associated fees. In our example, we'll add two investors: Investor A and Investor B to a deal with an advance amount of $10,000 and a 1.2 factor. Investor A will contribute half of the total advance amount ($5,000) for 50% participation and have two fees, one concurrent management fee of 4% ($240) and another up front processing fee of $120.
Note that you can add up to 4 different types of fees, each with custom names. For Reporting purposes, use the name "Management" to signify Management fees. In this example we're only adding two and setting one fee as a Front End fee, meaning it will be paid up front by the Investor and not be calculated as part of collections. Click 'Save' to add Investor A to our list of investors. Investor B will also contribute $5,000 but will not have any fees.
Click 'Save' to add Investor B and you will be returned to our list of investors with a summary of how they are participating.
If you need to adjust the values for either investor or delete them altogether, you can use the links on the righthand part of the screen. Note that in order to proceed any further and continue syndicating the deal, the total percentage invested must equal 100%. Click Save to finalize the deal syndication and return to the main deal syndication screen.
The primary deal syndication screen provides a quick summary of each of the investors participating in this deal and below that, a breakdown of collections for each investor. If you mouseover any of the fee links, you'll see a pop up with a more detailed view of each fee. Here we see that Investor A will be collecting a total of $5,760 since $240 will be collected concurrently as fees. There is also a $120 front end fee that we've already collected and is part of the Running Collection. Investor B does not have any of those fees so Investor B will be collecting the full $6,000.
When the merchant makes repayments to the deal (transactions applied to the deal), the same investment percentages are used to divide the payment between syndication participants. Let's assume the merchant has paid back $1,000. The breakdown for each investor's collection is as follows:
Note that Investor A will collect 50% of that $1,000 but 4% ($20) will be collected as fees, leaving Investor A with a $480 balance. Once again, since Investor B has no fees, Investor B will have a balance of $500.
Finally, to record withdrawals simply click the "Withdraw" button and fill out the fields in the pop up. In or example, we'll withdraw $200 from Investor A's balance.
Click Add to save the withdrawal. Once that's complete, you'll see the Total Withdrawals and Balance update accordingly on the deal syndication page:
Likewise, you can also browse to Investor A's syndicated deals page and view this deal along with all of Investor A's other syndicated deals:
For information on how to set up investor participation and fees by default, please refer to this article.