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2013 Entrep Class

Spentrep and Mentrep Guest Entrepreneurs

Sunday, August 21, 2016

Buying a business is like analyzing, reviewing a strama paper.

Every generation needs a revolution - an entrepreneurial revolution

Rizal Philippines
August 21, 2016.

Everything is so sudden. While I do not have the formal mandate yet that I would be an executive director of a holding company, a thick folder was sent to me to study the viability of buying a school.  (Elem to Senior High School)   There was a communication that contains a letter of intent to sell and the suggested closing is end of the month.

I reviewed the documents and found out that most of the information are for a loan transaction:  appraisal of the real property and FS (which I think looked funny)  If ever there is a valuation report, it has to be valuation of the business based on the FS?  They do not add up. Well the FS shows a school that is losing money.

If the purpose of the exercise is to buy the business, a lot more data is needed.  It is like a strama paper.   The objectives have to be defined and the strategy of how to make the school profitable, how to achieve ROI has to be defined.  A due diligence study has to be made before cogent decision can be made.

I did not realize that I am comfortable and at home in this kind of work.

These are the excerpts of my thoughts/communication to the Chairman of the Holding company:

Thursday, August 18, 2016

Charitable work or vulture investing - betting on the life of terminally ill

Every generation needs a revolution - an entrepreneurial revolution

Rizal Philippines
August 18, 2016

From Guardiian - Gambling on the life expectancy of terminally ill

Some would say that this is charitable work ie channeling idle funds for the terminally ills by discounting the life insurance.  The shorter the life expectancy the higher the discount.   The investors buy from life insurance auctioneers of the terminally ill patient.  Since life insurance is actually the reverse, the insured never get to enjoy the insurance while alive, the investors discount the life insurance and make themselves the beneficiary. The investor continues to pay the premium The insured enjoys part of the money to buy the things he needs especially for his health care, and even prepare for his interment.   The buyer gets the details down to the address of the seller and makes an assessment of the investment based on conversation of the doctor on the life expectancy of the seller.

Some say that the discount takes advantage of the difficult situation of the ill patient.  What do you think.

The buyers/investors generally make 40% returns per annum on their investment.

However there is an expected twist that those who encash their insurance live longer or even have a remission.  The seller generally when declared as terminally ill live between 6 months to 6 years.

In the US, they have firms that professionally does this called viatical settlement firms.  Insurance companies neutralized this by having a rider:   accelerated death benefits.

Lean Start up management

Every generation needs a revolution - an entrepreneurial revolution

The management of a start up is a critical thing.  This presentation covers the business model and the risk of having a start up   This is about lean start up, and business model.