Peter
30 for 30: Big Shot
One of the recent Tycoon Playbook enrollees tipped me off to this program last week. If you’re fascinated by deal-making and enjoy good caper flicks as well, you should get a kick out of this.
Pretend that it’s 1996 and you’re a 32-year-old businessman who’s just discovered that the once mighty New York Islanders are up for sale. The price tag is $165 million. It’s been your dream ever since you were a boy to one day own a major sports franchise. Nothing says that you have made it in America louder than ownership of an NFL, NHL, MLB, or NBA team. The only problem is that your net worth is just south of $200,000 which means that, in theory at least, you shouldn’t have a hope in hell of being taken seriously by anyone.
So what do you do? Most people would pass on the opportunity because an exercise in futility is just that, an exercise in futility. So why embarrass yourself?
Economist Tyler Cowen Explains Why The Future Will Be Awesome — For About 15% Of Us
The future doesn’t look so bright for 85% of Americans. The American Enterprise Institute interviews economist Tyler Cowen about the findings in his new book Average Is Over: Powering America Beyond the Age of the Great Stagnation.
There’s an old platitude that goes something like this: “When one door closes another opens.” I’m on the run today but felt a need to address this issue after reading a magazine article. I will also share a potential business opportunity with you. (Please excuse the quickie job on this post.)
A Door Closes
Here’s another article, this time from The Economist, on a worrisome megatrend that started back in the late 1970s. That’s when wages began stagnating as American companies started offshoring production. Roughly around the same time technology began enabling companies to replace people with software and robots.
Here are a few highlites from All Around the World, Labour is Losing Out to Capital:
Buyout Firms Combing U.S. for Sky-High Sums to Invest
Private-equity funds are in a mad dash for cash.
Across the country, nearly 2,000 private-equity firms are making pitches to state retirement systems, corporate pension funds and wealthy investors in the hope of raising nearly three-quarters of a trillion dollars for their next, new funds — more than what was raised over the last two years combined. The push is part of the life cycle of the private-equity industry, which raises investment pools from large institutions and others that typically last about 10 years. Buyout firms combine the money with borrowed cash to acquire companies over the first five or six years and then sell those companies or take them public — at a profit, if all works out — before the 10 years are over.
How Did Tycoon Meshulam Riklis Make His Fortune?
Money is to look at, not to use. – Meshulam Riklis
One of the questions that I get asked on a regular basis is about the possibility of following the tycoon growth strategy without employing debt. The answer is that it is possible to do so. Over the years I have participated on the buy-side in a number of deals with debt averse buyers. One Russian transportation company comes to mind. The management team had basically been given the company for free by the Russian government shortly after the collapse of the USSR in 1991. The managers then threw themselves fully into growing the company internationally, including in the USA. However, their steadfast rule remained “no debt.” Every acquisition had to be financed with internally generated cash.
The downside to avoiding debt is that it will take longer to get started and, thereafter, growth will be slower. However, some people just prefer to avoid the use of debt. In the Playbook we focus on those who utilize well-managed debt to grow because it’s easier to start that way and the growth rate is far higher. If you are starting out without a large war chest, it’s imperative to be creative about financing. If you wait for the heavens to drop your grubstake into your lap, you will be waiting forever. The lesson is start small and fast, then build momentum.
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