After we established the RMG's Corporate in 2014, from the providing and selling of financial services to funds and assets management, What we have learned about Growing and Nascent Business to 8 digits?
As A CEO and President, I decided to pack for your knowledge and information, with a value that is worth a lot:
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Let’s start with Financial Leverage Definition:
Financial Leverage is the use of debt (borrowed capital) results from using as a funding source when investing to expand the company's asset base and generate returns on risk capital. Financial Leverage is an alternative investment strategy of utilizing Debt borrowed funds specifically, the use of various financial instruments to increase the potential return of an investment. Financial Leverage can also refer to the amount of debt a company uses to finance assets.
The financial leverage ratio is one of several financial measurement analyses that calculate the risk of how much capital comes in the form of debt or assesses the ability of a company to meet its financial obligations.
How Financial Leverage Works:
When purchasing assets, four main options are available to the company for financing: using equity, debt, leases, obtain IPO's. Besides equity, the rest of the options involve costs that should be lower than the income that the company expects to earn from the asset/project.
Private Equity (PE) and Venture Capital (VC) funding are both considered Alternative Investments, but there are significant differences between the two.
What Is Private Equity (PE)?
PE is an Alternative Investment class. PE is composed of funds and investors that directly invest in private companies, or that engage in buyouts of public companies, Real Estate Acquisitions, and Management. Institutional and retail investors provide the capital for private equity, and the capital can be utilized to fund to create cash flow & balance sheets, mergers & acquisitions, expand working capital, and more.
A Private Equity fund has Limited Partners (LP), who typically own shares in a fund and have limited liability, and General Partners (GP), who have full liability. The latter is also responsible for executing and operating the investment.
What is Venture Capital (VC)?
VC is a form of Alternative Investment and a type of financing that investors provide to startup and high-tech companies that are believed to have long-term growth potential, Pre - Initial...
Real case, about a friend who was living in Arizona, USA. A story about a successful businessman who collapsed financially, health, and mental overnight on the eve of the 2008 crisis, and today is Breathing wide and Prospering.
The Financial Crisis - The "Sub-Prime" Real Estate began in July 2007 in the United States and led to a global crisis in 2008. On the eve of the crisis, the friend (then 36 years old) was the proud owner of a building company in Arizona. The company had 200 employees. The main activity was the land acquisition, construction of villas, and renting them to the public. The leverage (total mortgages against the assets) was about LTV 90%, the value of all the assets of the friend on the eve of the crisis was estimated at USD 17 Million. And he reached this achievement within 6 years from the moment the company was founded.
After the crisis and within less than 6 months the...
Establishing a new project => learn more
If you are an Entrepreneur or Developer, one of the required skills is deep knowledge in finance, and economy in addition to the other skills required for the project.
Moreover, surround yourself with the right counselors.
The developer company from Chicago, the project is a commercial combination of luxury hotels and residences in one of the coveted areas.
The client request for licensing Standby Letter of Credit (SBLC) 100M USD, in order to be qualify, the client needs to provide BCL from his bank, therefore, the client submit a request to the Bank - credit committee to issue BCL that includes payment of fees 13% and undertake to return the SBLC 15 days before maturity. His bank refused.
Why did the bank refuse?
What is the type of project?
Why you need SBLC?
Who is your adviser?
The client answer, we are Real Estate Developers, our project about 200M USD, the bank give us approval for Senior debt 150M USD, so we...
American, European, and Israeli investors are voting on Alternative Private Funds Investments like Hedge Funds, Private Equity (PE) Firms, Venture Capital (VC) funds, Real Estate Investment Trust (REIT), Family Offices, and today more than ever in Debt Companies. They know why.
In the year 2000, about Five (5) Trillion USD/Euros, today about Twenty (20) Trillion USD/Euros are managed, This is the estimated volume of American investments in 11,500 Private Funds in the US alone, and European investment in about 14,000 Private Funds managed in Europe, mostly in London and Switzerland. The vast majority are wealthy investors. More than Twenty (20) Trillion Euros/USD of "smart" money can not go wrong over time.
In the future, according to forecasts by 2025, the investments may grow by an additional Ten (10) Trillion to a total of about Thirty (30) Trillion USD/Euros.
Private Funds are an exceptional way to invest in the short and long term. because the Private Funds can invest in a variety of sophisticated financial...
Establishing a new project requires substantial financial expenditure especially large-size projects. Given today's reality without an entrepreneur's liquid capital for the possibility of financing, the possibility to establish and revive the project almost zero.
Sometimes the bank funding options do not fit the developer profile or the type of the project or the bank, Senior debt requests needed high equity. One of the solutions is to raise funds from investors to leverage developer equity as the bank requested. Many project developers are convinced that their project is excellent with great profitability, in their mind they see how they succeed in finding worthy investors, who will be happy and quick to pull out a checkbook. Reality is far from it and different from the far east to the west. The approach to investors mainly for "smart money" owners is a complex issue, requires early preparation. To do this successfully you will need professional business diagnostics and analysis, due diligence, feasibility testing processes,...
To obtain Deferred Purchase/Acquisitions SBLC the price is 115%, the client pays only 15% within 5 days and the balance 15 days before maturity, so he can utilize the SBLC during the year and renew for another year, the bank can give credit facility usually between LTV 75% - 85%, an interest rate of about 3%.
Example: obtain SBLC in the amount of $100 million, the price is 15% must be paid within 5 days after delivery of the swift MT760. then you need to submit the project/business to the credit committee of the bank, in order to get the credit request, in the end only the credit committee will approve the LTV 75% to 85%, assuming you get the maximum credit then the credit will be $ 85 million, most likely the interest rate about 3% on the $ 85 million. (When we deduct 15% already paid a payment of the SBLC, and receiving bank fees of about 2%, therefore, bank the...