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Just put the final touches on my first private equity deal and I couldn’t be more excited.
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[THREAD]
[THREAD]
Quick back story:
Totally forgot to create or join a fantasy football league this year, and as the first weekend of football fast approached I felt an overwhelming sense of FOMO.
So I approached a friend of mine & asked to see his team.
Totally forgot to create or join a fantasy football league this year, and as the first weekend of football fast approached I felt an overwhelming sense of FOMO.
So I approached a friend of mine & asked to see his team.
Here’s what he showed me.
- 12 team league
- Snake draft
- $50 buy in
- Winner takes all
- 12 team league
- Snake draft
- $50 buy in
- Winner takes all
Now based on bogus point projections, his team/company was destined for failure.
But I saw sleepers. I saw a chance to buy an asset at a discount to my estimate of intrinsic value.
Here’s the rough math...
But I saw sleepers. I saw a chance to buy an asset at a discount to my estimate of intrinsic value.
Here’s the rough math...
A pre-draft enterprise value of $50.
However, due to the drafting of “sleepers”, and the poor projected returns of his team, the enterprise value of his firm dropped 4% to $48.
But based on my appraisal of the team, they were worth at least $52.
So I proposed the following
However, due to the drafting of “sleepers”, and the poor projected returns of his team, the enterprise value of his firm dropped 4% to $48.
But based on my appraisal of the team, they were worth at least $52.
So I proposed the following
- Split the team into 1,000 shares
- I buy 100 shares at a per share price of $0.048
- That’s a 10% stake for $4.80
- I receive 10% of the voting rights & 1 of 10 board seats.
- I buy 100 shares at a per share price of $0.048
- That’s a 10% stake for $4.80
- I receive 10% of the voting rights & 1 of 10 board seats.
- With this stake we enter into an owner earnings agreement
- In the result of a league victory I receive 10% of the payout ($60)
He accepted the terms, and the transaction was completed via Venmo.
- In the result of a league victory I receive 10% of the payout ($60)
He accepted the terms, and the transaction was completed via Venmo.
This means, assuming a league victory, my investment would return 1,150% in roughly 5 months. Not too bad imo.
On a side note, need a new RB2. Any thoughts?
On a side note, need a new RB2. Any thoughts?
