Kim Lisa TaylorSecurities Attorney, Founder, Syndication Attorneys, PLLC · Corporate Securities Attorney, 2x Best-Selling Author, Nationwide Speaker | Private Placement

Is Your Deal Really Viable? Crunch the Numbers First!

2 Oct 2024 · 0 min

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In this segment, the speaker outlines a two‑step framework for evaluating whether an investment deal is viable. First, they explain that once you calculate the deal’s annualized return, you can test if the return is large enough to satisfy both the investors and the sponsor. This serves as the initial viability check. Second, they describe how to determine the appropriate profit split: you decide what percentage of the return must go to investors, and the remaining percentage is what the sponsor retains. The speaker emphasizes the importance of performing these calculations to confidently assess and communicate the deal’s feasibility to stakeholders.

Once you figure out what your annualized return is, now you can figure out how much you have to give to your investors, what percentage of that do they need to get, and what percentage is left over for you. So that's your first test. Is the deal even viable? Does it generate a big enough return for us and for them? And 2, then you've got to figure out, you know, and explain to them how that's going to work.