This is a YouTube video titled "Equity Investment Deal Fair Risk & Reward" containing a detailed monologue or presentation discussing the structure of an equity investment deal, focusing on fair risk and reward distribution, equity percentages, debt structure, compensation for operators, and financial projections for running a business. The speaker explains the rationale behind investment returns, operational costs, and profit margins in the context of building a business enterprise. There is only one speaker involved, and the content is financial and investment-focused.
It has to be a fair and equal deal at the end of the day. That's why when we do it, we do the 10% down, we get 15% equity in the company. So then that way, in this case, it's $1.8 million. Your equity position, it would be automatically, you put 200 in, you get 270 on the valuation. Okay. I'm working for equity at the end of the day. And I think that, I think people forget the debt structure and the reasonable comp salary and the working capital that needs to go into a deal. And so then they go, well, Kyle's to putting 15 on his money in debt and 15 of my company, like, wrong, right. My investors are putting the money down for the down payment, which, you know, in your case would be you. So you have to pay, you have to get a premium on that money because you could put your money in the S and p and make 10%. You could put your money in gold and make 10%. You can put your money in anything and make 10% relatively risk free. Right? And so for you to take all the risk in this deal, and you know, we have to work for the equity only, that is pretty much illiquid and rides and dies on this person's operational skills to build the business is not a fair risk reward scenario for you. Right. And so that's why we do that like that. So, so it's 15% coupon on the money that we lend into the deal. So in your case would be $200,000. You want a 15% annual return on that. And then for the profit share of the business, we need to figure out what's the reasonable compensation that's going to go back to the operator. Right? Because they got to get paid. They're going to run this business. And you don't want to cut corners here because if your operator is starving and can't make a living and can't do well, like, it's like nobody wins, right? Like your whole investment is at risk. And so I always make sure, is this fair? Is this good enough? Are you able to live on this? And within this constraint, if I give you more here and more there and more here and more there, we're working together to build the enterprise, but I need to make sure that you can live off of this 70, so we need to confirm that first. Also, who's gonna bring more money for marketing? Who's gonna bring working capital? Let me show you something really quick. If your working capital is. It was 1945 and I'm just using blocks of four here. 1.9452485 in 23. And if I prorate out that 1335 times two is 2670 to run this business divided by 12, it's going to cost $222,000 a month in gross top line sales. Okay? Now the margins here are 20% profit margins. So I'm going to take that 222 in sales and I'm going to times it by 0.8 because that's my cost to actually run the business. 222 times 0.8. It cost me 177amonth to run this business. Okay. Now you're going to have to buy materials, you're going to have to replace materials.
