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fi groups Cheat Sheet (DRAFT) by

arrangements and forma.

This is a draft cheat sheet. It is a work in progress and is not finished yet.

mev

- provisions for liabil­ities
- employee and subcon­tractor remune­ration
- directors intere­st-free advances (money you take from your company's accoun­ts that cannot be classed as salary, dividends or legitimate expenses.)
- comp B loses money (a deduction) and gives comp A ability to lower tax burden. (shelt. strata)
- if stock reduce in value, the reduction in the stock value you take to P/L account as a cost.

tradit­ional systems (hidden routes)

underg­round bank
地下钱庄
mirror transfer
对敲交易 (knockout trade)
informal value transfer system (IVTS)

fund management

multiple millions should never be sitting in one bank ever.
other than cash for daily needs, the number should be kept small. keep everything else in a treasury money market account (no bank risk, face the country sovereign)
the cash kept on hand can be in a bank and monitor those instit­utions very carefully.

partne­rships

senior partner = > 25
junior partner = < 25

fee structure (fund)

capital gains on assets:
20%
total assets under manage­ment:
2%
total fees = 20% of profits + 2% on total assets

taxation liabil­ities

- to reduce tax liability. Play junk bonds inside retirement account (or similar vehicle) or otherwise shield any earnings from taxes.
- can invest in various junk bonds via mutual funds to lessen the the probab­ility of losing the principal deployed in the case that the issuing company files for bankru­ptcy.

banking

local bank
daily transa­ctions
private bank
wealth management
intern­ational bank
foreign exchange

quick pace deals (qpd)

knock down price for frozen assets
have assets unfrozen by judge
extract surplus from asset

return on money

trading
for income
investment
more long term horizon
lending
charging at interest
there is only 3 ways to make a return on money you already possess.*

savings should be a portion of income and invest­ments a portion of your savings.*

the furlough problem

the average cost of furlough in the UK was double that in mainland europe.
this created a discou­rag­ement of working. Incent­ivising people to be non-pr­odu­ctive, essent­ially you are diluting the currency of a nation as currencies by default represent value.

opport­unity cost

make:
capital must be produced
multiply:
a method to increase what has been produced
retain:
mechanisms to compound what has been made and multiplied

liability reduction

company structure
non-ta­xable income stream
deduct­ibles
pension contri­butions
shelter income, hire lawyers, accoun­tants, tax deferred income specia­list.*

foreign

explor­ation license
export license
broker license
exclusive trade license

ambani strata.

raise cap. against assets
extend debt maturity
sell equity
obtain fresh lenders
 
borrow money from abroad (long term debt):
@6-7% interest
hedge for (foreign country currency):
@3-5% risk deprec­iation
total cost:
10-11%
government return:
15%
profit:
4-5%

nets

net-60 (ideal)
net-90
2/10 (2% discount if payment made within 10 days) net (otherwise net is due) 30 (in 30 days)

off-shore

- can utilise registered agents for businesses in countries like Bahamas.

ltv rates

90% ltv:
2.99%
85% ltv:
2.85%
80% ltv:
2.39%
75% ltv:
1.75%
60% ltv:
1.59%

credit

If you can’t price for risk, you can’t effect­ively extend the risk.

capital gains

gains:
the profits realised from the sale of an asset. It is the difference between the purchase price (or cost basis) of the asset and the selling price.
 
if the selling price is higher than the purchase price, the investor has a capital gain; if it's lower, they have a capital loss.*
short term:
gains realised from the sale of assets held for one year or less. (typically taxed at ordinary income tax rates, which are generally higher than long-term capital gains tax rates.)
long term:
gains realised from the sale of assets held for more than one year. (taxed at lower rates, done to incent­ivise invest­ment)

tacts

- record revenue from prepay­ments for services as deferred revenue, which is common in subscr­ipt­ion­-based software companies.
- full contract prepay­ments cause non-cu­rrent deferred revenue to decline unless another large prepayment occurs.
- use marketing sponso­rships with indebted resellers and shell companies to replace receiv­ables lost from dropped client negoti­ations.
- marketing expenses 0.5% of total revenue.

acquire control in secrecy (case study)

[X] gave $20 million (N2 billion) to [Y] to acquire UBA shares in 2005.
[Y] persuaded [X] to hold onto the shares despite [X]'s initial intention to sell.
[X] became Transcorp Hotel Chairman in 2007 with a 5% shareh­olding.
[Y] quietly acquired shares in Transcorp without [X]'s knowledge.
[X] went bankrupt in Nigeria in 2008.
[Y] took over [X]'s UBA shares to cover [X]'s loan interest.
[Y] also acquired [X]'s shares in Africa Finance Corpor­ation.
[X] agreed to sell his Transcorp shares to an American firm, which turned out to be [Y].
This revelation led [X] to resign as Chairman of Transcorp Hotel.
In 2012, [X] expressed interest in the power business to [Y], specif­ically Ughelli Power Plant.
[Y] outbid [X] and acquired Ughelli Power Plant for $300M.

deduct­ibles

personal
business
charitable donations
office supplies
medical
travel
mortgage
meals
isa/ira
employee salaries
 
profes­sional fees
 
legal
 
market­ing­/ad­ver­tising
 
salaries
 
licenses

earnings (personal)

primary ->
income
residuals ->
streams

utilis­ation of satellite offices

1 ) parent comp makes profits all around the world.
2) subsidiary receives the profits, then transforms these profits into a loan, which it duly lends to the parent company.
3) the loan is not free.
4) headqu­arters must pay interest on the loans contracted at its subsidiary
5 ) interest payments will be deducted from its parent comps tax returns.
6) and the taxable profits in the country of the parent comp have melted like magic.

domicile vs non-dom

domicile:
country that a person treats as their permanent home.
non-dom:
permanent home - or domicile - for taxes purposes is outside the country.
a non-dom only pays UK tax on the money they earn in the UK. They do not have to pay tax to the UK government on money made elsewhere in the world (unless they pay that money into a UK bank account).*

this presents the opport­unity for signif­icant - and entirely legal - savings, if you nominate a lower-tax country as your domicile.**

efficient ways to extract from llc

director’s salary.
dividend payments.
director’s loan.
reimbu­rsement of allowable expenses.
wages are a tax-de­duc­tible business expense, so your company will not pay corpor­ation tax on the amount you receive as a director’s salary.*
  

first loss lending (first loss position)

a type of guarantee in which the guarantee provider agrees to bear losses incurred up to an agreed percentage in the event of default by the borrower. (great mechanism to attract lenders, if the level of risk could be considered high)

agent deal struct.

amount + [50%][ sell-on clause] + [right to purchase percentage points in the future]

elu strata.

1) make target take loan on a conver­tible note stipul­ation, then convert targets shares to cover the loan in awake of turmoil
2) contro­lling shares interest (voting stock)
3) collect dividends/ remitt­ances/ repatr­iation of dividends

pools

investment made into a pool -> high-tax income -> low-tax capital gains

spv

stock parking companies

p(equity)

 
post annualised returns of 31% since inception.*

deal structure compos­itions

principal [100M] + debt [560M] (660 lot size) -> [1.6B]
[940M] profit

europe

most places can't stealth capital.
anon. companies not permitted.
heavy aml.
all counties within eu have a registry that discloses all benefi­ciary owners.

accounts

ifrs:
 
- does not allow LIFO (last in, first out).
 
- emphasises fair value measur­ement.
 
- develo­pment costs capita­lised if certain criteria are met.
 
- more flexib­ility in presenting financial statem­ents.
 
- no concept of extrao­rdinary items.
gaap:
 
- allows LIFO.
 
- more conser­vative, often prefers historical cost.
 
- generally expensed as incurred.
 
- prescr­iptive format and specific line items.
 
- includes extrao­rdinary items separately on the income statement.
liabil­ities can = mark to market via "fair value through profit or loss" (FVTPL),

art

price inflation:
drive up prices
anonymity:
use various jurisd­ictions and agents, brokers, advisors and other interm­edi­aries to represent buyer.
ultra secure freeport wareho­uses:
use to store art pieces. In these locations, mercha­ndise is classed as “in transit” and is exempt from customs duty, making it a tax haven for legitimate buyers.
changing of ownership:
artwork stored in free-ports can also techni­cally change ownership multiple times through selling and reselling, putting further distance between the latest transa­ction and the earlier ones.
usage of corporate struct­ures:
interm­edi­aries such as shell companies or non-profit organi­sations (NPOs) to obscure the transfer of high-value art, hide the source of funds, and conceal the identities of sellers and buyers.

consortium (group relief)

a trading company where 75% or more of its shares are owned by multiple companies, each holding 5%-74%, qualifies as consor­tiu­m-o­wned.

if a consor­tiu­m-owned company owns at least 90% of a trading subsid­iary, both can be part of the consor­tium.

a company owning 10% of a consor­tiu­m-owned company, if 75% or more owned by another, becomes a link company, extending relief into that group.

trifecta

 

m&a

more money:
can offer a stupid number.
give control:
offer a board seat (you can still run the company indepe­nde­ntly, we won’t interfere with you, we will only give you some advice going forward and ensure you have resour­ces).
 
member of board has a lot more inform­ation than a shareh­older does and has the ability to influence decisions the company is making in a regular fashion*
 
bear hug:
an offer to buy a publicly listed company at a signif­icant premium to the market price of its shares.
 
it is an acquis­ition strategy designed to appeal to the target company's shareh­olders. bear hugs are used to pressure a reluctant company's board to accept the bid or risk upsetting its shareh­olders.*
shareh­older rights plan:
to force a bidder to negotiate with the target's board and not directly with the shareh­olders. (the effects are twofold: It gives management time to find competing offers that maximise the selling price).

cliffe

- buy world class assets for 30 cents on the dollar
- make ~20% return
- reduce fixed cost (20-25% off)
- separate boards (feder­ations)
- small head office
- multiple managers running things with there own style
- dcentr­alise power in the operating business to a point just short of abdication
- minimise the maximum loss (minimax strategy) utilise mixed strategies (random)

take-o­r-pay

a clause in a contract stipulates that a buyer will take an agreed­-upon amount of a commodity from a seller on a certain date or pay a set penalty fee if it does not. (the fee is generally less than the full purchase price of the commod­ity).
[ 50% of the contract price of the amount not taken/­(pu­rch­ased) or “the hole” ]

paymen­t-i­n-kind (PIK)

the use of a good or service as payment instead of cash. paymen­t-i­n-kind also refers to a financial instrument that pays interest or dividends to investors of bonds, notes, or preferred stock with additional securities or equity instead of cash.
paymen­t-i­n-kind securities are attractive to companies preferring not to make cash outlays and they are often used in leveraged buyouts.*

fee simple

full and irrevo­cable ownership of land, and any buildings on that land. Fee simple is the highest form of ownership — it means the land is owned outright, without any limita­tions or restri­ctions other than local zoning ordina­nces.
TEN and 00/100 = $10.00
ONE HUNDRED and 00/100 = $100.00
ONE THOUSAND TWO HUNDRED and 00/100 = $1,200.00
in the instance of condom­iniums or apartm­ents, the owners of individual units receive fee simple ownership that gives them full legal rights subject to an agreement known as a restri­ctive covenant.*

the owners share common rights for the use of public areas and also carry certain obliga­tions toward its upkeep.*

wet (aircraft) lease

an arrang­ement where one airline leases an aircraft, along with its crew, mainte­nance, and insurance, to another airline.
"the deal was signed over the intern­ational waters. It was over intern­ational waters we signed the delivery of the aircraft, before we landed in [X]."*

hairball deal

a complex, messy, or convoluted transa­ction or agreement.
comple­xity:
multiple layers of agreem­ents, clauses, or parties involved.
uncert­ainty:
ambigu­ities in terms or outcomes.
time-c­ons­uming:
requires signif­icant effort to analyse, negotiate, and finalise.
risk:
may involve high levels of financial, legal, or reputa­tional risk.

deal commission

anything you save under the [X%], we can split.

stock options

right to purchase:
right to buy company stock at a certain price.
90 day window:
It's pretty common that when you leave a company you have 90 days to exercise the options (buy your company stock at the strike price - the price listed in the option). If you do not buy the stock, the options expire and you get nothing.
 
once you have exercised your options and you own the stock, unless your company is public, you usually can't sell the stock right away. you usually need to wait for a liquidity event (like the sale of the company, an IPO, or maybe a new round of funding) to be able to sell the stock you now own.*
this is one of the ways start ups can intent­ionally or uninte­nti­onally level you. (once one leaves they can get into a situation where they are required to produce a lot of money to buy stock that you can't sell.). in order to mitigate, determine how far off you think a liquidity event is and whether you're comfor­table spending a bunch of money on stock that maybe worthless for ever.**
  

schemes and t-reliefs

- utilise (EIS) enterprise invest scheme to raise cap.

schemes and t-reliefs

- utilise (EIS) enterprise invest scheme to raise cap.

viatical settlement

financial transa­ction in which a person with a terminal illness sells their life insurance policy to a third party for a lump sum payment, in order to benefit from the process while alive.

cold feet insurance

policy that compen­sates one party for financial losses incurred due to another party backing out of a planned event such as a wedding. (Stipu­lation is that the claim must be made 1 year before the wedding date)

term life insurance

provides coverage for a specified period, paying a death benefit only if the insured person dies during a specified term.
these policies have no value other than the guaranteed death benefit and don’t feature a savings component (as is found in permanent life insurance products).*

whole life insurance

provides lifelong coverage with a guaranteed death benefit and includes a savings component that builds cash value over time.
the cash value of a whole life policy typically earns a fixed rate of interest.*

withdr­awals and outsta­nding loan balances reduce death benefits.*

contracts

a unidir­ect­ional contract clause stating that anything A states is considered public domain where as anything said by B is propri­etary and cannot be repeated or disclosed.
compen­satory and punitive damages for causing “severe and irrepa­rable” harm” through the “egregious misapp­rop­ria­tion” of closely guarded trade secrets, which violates the companies confid­ent­iality agreem­ents.*

term sheet

highlights financial and deal-s­pecific features.

termsheet

a non-bi­nding agreement outlining the basic terms and conditions of an invest­ment. (sets out certain terms of a transa­ction agreed in principle between parties, and is typically negotiated and signed at the beginning of a transa­ction.)
some term sheets contain certain legally binding provisions (for example, confid­ent­iality or exclus­ivity).*

commitment letter

commitment letter
a letter agreement in which a lender sets out the terms on which it is prepared to lend money to the borrower. It is generally accomp­anied by a term sheet which sets out the terms of the loan.
equity commitment letter
the fund commits to the acquis­ition vehicle that it will invest equity in the vehicle at the closing of the transa­ction.
pe firms commonly referred to as debt commitment letter to distin­guish it from an equity commitment letter.*

letter of intent (LOI)

prelim­inary commitment of one party to do business with another, what both parties are seeking to happen, outlines chief terms of a prospe­ctive deal (such as a minimum purchase price.)

memorandum of unders­tanding (MOU)

emphasises object­ives, respon­sib­ilities and the extent of cooper­ation of all parties involved in a negoti­ation.

confid­ential info. memorandum (cim)

a document detailing a company's operat­ions, financ­ials, and investment opport­unities in an effort to solicit indica­tions of interest from potential buyers.
lengthy (typically 50–150 pages) marketing document that provides potential buyers with a detailed first impression of your business before they would meet the selling company in person.*

provis­ional patent apps.

- no formatting rules
- drawings (persp­ective, top, bottom, left, right, front, back, internal, process, before and after.)
- every features specified in claims must be on a drawing, and designated by a reference
- show all necessary views
- don’t need to have all parts drawn exactly to scale
- usually do not indicate dimensions
- in limited cases, photog­raphs can be used.
for regular patent applic­ations: stricter rules and formatting is required.*

broad patent = non-ap­proval or more risk to litiga­tion.*

patent troll

legal extortion (go after a company and claim infrin­gement, strategy is to ask for company accused for just less than it will cost to litigate.)

charges

refers to a security interest or lien on an asset to secure a debt or obligation
 
fixed charges: putting a specific asset down as security. (Asset cannot be sold without the charger holders (lender) approval)
floating charges: covers things that changes, such as stock or cash in the bank. You can usually trade/sell these assets as part of usual business operat­ions. In the event business goes into liquid­ation this floating charge becomes crysta­llised and can no longer be sold)
fixed charges safer and better for the lender, floating charge is better for the borrower*

- a fixed and floating charge over all assets.
- contains fixed charge.
- contains floating charge.
- floating charge covers all the property or undert­aking of the company.
- contains negative pledge = prevents borrower pledging certain assets to other creditors.
- security over cash deposits = using a cash deposit as collateral to secure a loan or obliga­tion.

pledge

pledging stocks involv­es the transfer of ownership of shares from the shareh­older to the lender, as collateral security for a loan.
bank or financial instit­ution holds the shares until the loan is fully repaid.*

collateral

being able to collat­eralise your wealth is a different type of confidence as oppose to obtain debt from fiat.

write-down

an accounting term for the reduction in the book value of an asset when its fair market value ­(FMV) has fallen below the carrying book value, and thus becomes an impaired asset. 
write-down is the opposite of a writ­e-up, and it will become a writ­e-o­ff if the entire value of the as­set­ be­comes worthless and is eliminated from the account altoge­ther.*

awrite down is necessary if the fair market value (FMV) of an asset is less than the carrying value currently on the books.*

ip structure

two part structure;
period payments to X [1M a month for a period of years]
If X is a small public company, this revenue can be valued at a multiple.
a lump sum cash payment. buy a new class of newly created preferred stock (this is registered as an investment for Party B)
X reserves the right to convert the preferred stock to non-di­vidend paying common stock.
newco created retains ownership of patents, 2% of newco revenues, 2% of other companies that newco licenses to.

legal loophole

a gap or ambiguity in the law that allows someone to avoid the law's intent without techni­cally breaking it.

estate planning pro forma

- last will and testament
- power of attorney (poa)
- healthcare proxy
- living will

clauses

[ will be forced to forfeit all and any awarded stated within willed document if charged with a felony, conduct that brings public disgrace or equiva­lent. ]
[ university degree from a particular instit­ution or in a specific field. ]
[ disinh­eriting benefi­ciaries who marry against the wishes of the family or without approval from a trustee. ]

procur­ement

the process of locating and agreeing to terms and purchasing goods, services, or other works from an external source, often with the use of a tendering or compet­itive bidding process.

deal procur­ement [fast-­track]

commission of finders fee in the order of 10% of the project value.
always ensure to factor project overruns.*

increasing shareh­older value (m3)

revenue growth:
increasing revenue through market expansion and new products drives higher cash flows and shareh­older returns.
profit­ability and cost manage­ment:
effici­ently managing costs and improving profit margins ensure revenue growth translates into actual value for shareh­olders.
return on invested cap. (ROIC):
high ROIC reflects effective capital use, leading to increased stock prices and dividends, thereby enhancing shareh­older value.
these three factors - revenue growth, profit­ability and cost management, and return on invested capital - are interl­inked and together form the foundation of long-term shareh­older value creation.*

subsidies

with subsidies, companies inflated the numbers for line items and services rendered on the books

shell/spv

 
registered address
 
regist­ration
 
entity name
route through jurisd­ictions with minimal red-ta­pe/­don’t ask too many questions*

citize­nship by investment (CBI)

in exchange for an invest­ment, like real estate, business ventures, or government bonds, investors receive citize­nship and often a passport.

knack

trade before takeovers.
preferred shares outsta­nding.
condition to redeem.
needs to exceed > [ $X ] for 20 /30 days.

letter of credit (LC)

an undert­aking by a buyer’s bank to pay its suppliers for goods or services, subject to agreed condit­ions.
used extens­ively in financing of intern­ational trade because they offer assurance that both the parties will fulfil their obliga­tions in the trade.*

when applying for an LC

you show your supplier you have the ability to pay for the goods.
you are asking your bank to provide payment security to your suppliers.
you can tailor the terms of shipping, delivery, insurance and quality inspection from your suppliers in the LC.

autonm

can't count revenue from sales that haven’t closed.
can book revenue from software sales as soon as the client has agreed to buy it.
moved its most of its expensive enterprise software directly to he businesses that used it via their internal aggressive sales team and some through a network of ~400 resellers.
take deals that the direct sales team were working on, but haven’t closed yet, sell them to resellers, book the revenue for the sale in the current period and then backdate the purchase orders when the deal eventually close.
artificial accele­rated growth (AAC)*

extraction from state treasure

- unoccupied buildings.