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 |
foreign
exploration license |
export license |
broker license |
exclusive trade license |
ambani strata.
raise cap. against assets |
extend debt maturity |
sell equity |
obtain fresh lenders |
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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. |
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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 |
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professional fees |
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legal |
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marketing/advertising |
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salaries |
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licenses |
earnings (personal)
primary -> |
income |
residuals -> |
streams |
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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 |
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: |
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- does not allow LIFO (last in, first out). |
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- emphasises fair value measurement. |
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- development costs capitalised if certain criteria are met. |
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- more flexibility in presenting financial statements. |
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- no concept of extraordinary items. |
gaap: |
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- allows LIFO. |
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- more conservative, often prefers historical cost. |
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- generally expensed as incurred. |
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- prescriptive format and specific line items. |
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- 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.
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). |
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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* |
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bear hug: |
an offer to buy a publicly listed company at a significant premium to the market price of its shares. |
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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) |
wet (aircraft) lease
an arrangement where one airline leases an aircraft, along with its crew, maintenance, and insurance, to another airline. |
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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. |
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 |
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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 |
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. |
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.*
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