If you are considering the FINRA Series 79 Sponsorship program, you’ll want to examine all the potential a sponsorship can provide for the strategic growth of your firm and you’ll want to consider which sponsorship is a fit for your own needs. In order to do so, we’ll provide an overview of the responsibilities of a sponsoring firm and detail how those responsibilities will play out with the growth your organization seeks.
A FINRA Series 79 exam is a thorough and rigorous process, rather than an elementary exam to be taken lightly. To begin the search, an applicant must find a sponsoring firm to take the comprehensive position of instructing, advising and demonstrating the techniques, tools and resulting financial acumen, as the exam will contain the interrogatories of each sector. In 2018, the Series 79 exam was shortened considerably to 75 exam questions within the main sectors of financial practices:
- Data collection (required SEC filings and other documents)
- Various types of securities (debt, equity, options, derivatives)
- Economics and capital markets
- Financial analysis
- Valuation
- M&A process and deal structure
The sponsorship process is calibrated to offer the applicant significant in-house support from the sponsor in each of the areas listed above. One of the crucial ways a sponsoring firm can assist an applicant is via an integrated compliance team. The compliance team, typically composed of experienced and knowledgeable key staff members, instructs, advises, and evaluates the applicant throughout the sponsorship. This leads to relevant and critically valuable outcomes for the applicant. Not only does the applicant receive an exemplary education of sorts; the firm behind the applicant receives the outcome of the integrated approach, as well. This takes several forms, including deal referrals, client relationship-building and other strategic positions that offer advantages to the applicant’s firm.
While a compliance team may be offered by some sponsorship firms, not all have a dedicated team for this purpose. Some firms offer a compliance individual or other forms of instruction-by-rotation of partners. While several sponsors have solid arrangements for applicants in the process, the sponsors who will be able to offer the most strategic growth for your firm will have a full compliance team, available for conversations, direction, and positive results-building, often upon short notice. As you give consideration to the structure for a series 79 sponsorship, you’ll want to note these differences and the potential outcomes produced by each. An integrated sponsoring firm will offer the most potential for strategic growth.
After taking the Series 79 exam, someone who passes may engage in the following activities:
Offering financial solutions of either debt or equity (private placement or public offering). A Series 79 exam applicant should be exposed to and included in several of such offerings during the sponsorship process, with associated research of both pros and cons of these offerings.
Mergers and acquisitions and tender offers. The roles of an organization’s board of directors, shareholders, and acquirer can be critically examined with the strategic support of a sponsorship firm that is active in such transactions. This inclusion can lead to relationship-building and an active role in part of the transaction, which brings strategic growth to the applicant’s firm.
Financial restructuring, divestitures, and other corporate reorganizations. Again, the varied forms of restructuring and reorganization create multiple opportunities for an applicant to absorb a thorough understanding of how and when to use restructuring to achieve the desired outcomes. A knowledgeable compliance team will offer examples-in-process to the applicant, such as:
- Legal restructuring
- Turnaround restructuring
- Cost restructuring
- Repositioning restructuring
- Spin-off restructuring
- Divestment
Asset sales versus stock sales. The nuances between asset sales, with the purchase of individual assets and liabilities, versus a stock sale, in which the owner’s shares of a corporation are purchased, offer numerous opportunities for the Series 79 exam applicant to study and act upon the transactions of the sponsoring firm.
Business combination transactions. The purchase by an entity in purchasing equity or assets of a company with the resulting control the transaction affords is a practice that requires knowledge and experience. As such, the Series 79 exam applicant can gain multiple advantages toward strategic growth when included in such transactions.
As an applicant considering a sponsorship firm that will suit your purposes, you’ll want to consider the firm that offers a compliance team, extensive knowledge-building in the exam sectors, comprehensive exposure to relationships, client-building, deal-making and the potential strategic growth of your firm via the sponsorship process.
