Brilliant deal making from seasoned and veteran businessman

Every generation needs a revolution - an entrepreneurial revolution

Rizal Philippines
March 8, 2017

One of the companies which we oversee a memorial park in the north, is being wooed by a leading memorial park.   The first offer was rejected by my joint venture partners because it was  single digit million arrived at using present value.

The next offer which we discussed yesterday, made the offer 5x  the original offer, to be paid  levedl payment, over a period of 72 months.   If we do a PV of that payment, there would be about P12 million discount.  Our JV partners were salivating and wanted to grab the offer, except that they wanted to have at least 20% dp and the term reduced to 48 months

We have over 5,200 items worth over P40,000 each.   When they take over, they would sell our lots to pay us off.

Looking back analyzing the deal:

1.  We would lose about P96 million GP over the next say 20 years.   (that is after the op ex)

2.  We could do the same;  Discount our products down to 30T and they would sell fast, and generate over y amount of cash, flow, which would be 50% more than the payments to be made to us of x amount.  In other words the deal  is guisado with our own fat.  That is why they are balking on cash payment.  

Brilliant.  Whoever can think of such a deal?  One of the veterans of the trade, the former head of a chem company was thinking along that line all the time:   OPM and using 0 of their own money to get a business deal

However our marketing staff there is not that capable to sell the inventories fast