An invitation from the municipal councilor to lecture and mentor on entrepreneurship

Every generation needs a revolution - an entrepreneurial revolution

Angono, Rizal  Philippines
September 20, 2016

I was invited this morning by a new councilor of this town. He used to be the tourism officer and now chairs committee on human rights. He said the meeting was about a project.

It turned out that the project was about the subject that I used to love teaching about - entrepreneurship.

The school where he teaches history and Rizal (ESA) wants to invite more students graduating from high school.  He plans to generate interest on entrepreneurship and ESA by having lectures and mentoring on the said subject.   He got me there and said I was willing to do (pro bono as usual)  Because I wanted to leave a legacy

When do we start?  January 2017.   Just let me know

The spirit of enterprise lives - even at NBP

Every generation needs a revolution - an entrepreneurial revolution

Rizal Philippines
September 20, 2016

The spirit of enterprise is alive and well even at New Bilibid Prison as we listen to the tale of Herbert Colangco (later on he was adjudged Kulang by his protector) He finished only grade 6 but he has tremendous business sense (and even honor)

In order to meet his monthly quota of P3.00 main protector, and the P1.2 million to the prison director, he had to be very enterprising to meet his objectives (he was very much goal driven) he engaged in a variety of businesses/racket:

1.  Aside from drugs, he did the concert.  He got 300 case of beer when he had concert, got them them for mere P700 each case, and sold them P10,000 each case for a gross of P3 million.  He gave the P1 million allegedly to his patron, the 2 million he spent for his production crew and rental of equipment

2.  He profited from the transfer fee.  In order for inmates to move from medium security to the maximum security (where facilities are a la Las Vegas) with first class amenities -  bath room, wine room etc, he would be charged by certain personality, say P500,000 and charge them P800,000 pocketing the difference to pay for the monthly PR Payola

3.  He had a lending operations charging as much as 10% per week.  Very enterprising indeed.

4.  Hospitality business.   Through his talent manager allegedly named Reynante Diaz, he got models for P25,000 each and sold them to drug lords for P75,000 each pocketing P50,000 each cool margin for 20 models or P1 million.  At the end of the day in the usual tale of greed and deceit, the P3 million + P1.2 he gave monthly were not enough to have him removed from his enclave, and transferred to NBI and lost all his sources of revenue, hence the change of heart.

His bosses want him to  increase his quota, buy from the Chinese and later have them transferred to far away places.  Herbert did not want to have any of those dishonesty. (estafa)

What needs to be done at the school to be acquired?

Every generation needs a revolution - an entrepreneurial revolution

Rizal Philippines
September 18, 2016

I was tasked by a holding company to help evaluate a school that is being negotiated for sale.  All ready, a downpayment  in the form of a P12,000,000 loan good for 6 mos has been granted to remove the TCT from escrow, and pay off the SSS premiums loans, Pag ibig.

A group has been tasked for a Due Diligence. The task of the DD group are two fold:

1.  Financial verification.  Are the revenues and expenses correct?

2.  Outside of the  financial, what are the drivers of the business:

      1. Internal analysis (management, delivery of the service, morale, leadership, facilities, MVP)

     2  External analysis:   competition, key factors for success, other business opportunities

The DD result is critical for the determination of strategies to cement the deal, and ensure ROI for the investors.

The deal would be something like this:

  Total purchase price:     P50 million

  Down payment:   P12, million

  Retirement             13 million

Balance                  25 million

    Since the property worth P70 million is in the name of an individual person, this will be transferred to a holding or real estate company and borrow P30 million for 10 years at 10% interest.  The monthly amortization would be P413,000 per month  Why P30 million? So that the balance would be used in upgrading the  school.

Some initial findings:

1. The revenues of the school P2 million a month (P24 M for 2014)

2.   The expenses seem to be overstated.  The interest expense amounting to P800,000 is lodged as direct expense (wrong entry)

3.  The total monthly expense  is P1.2 million (without interest expense)  thus if we add the P400,000 to the cash outflow, there would be P400,000 left for P4.8 million income for the year.  That is P48 million for the next 10 years + owning the land and building

4.  Now if you can look at other business opportunities:  collateral business related to the school (what are they.  This is subject to the research by the DD team.  They could have been hidden from the FS or is a business within the business or is overlooked by the owners)

What would be the strategy?

Is this a good buy?