Audience Decision-Making Expertise 13
qp y p y
Two is complete. Monies from the sale of interests in the Partnership will be expended on design
of the MBA modules ($11,500), legal services ($10,000), advertising expenses ($240,000),
production equipment ($60,000), and other ($28,500), for a grand total of $350,000.[12.
So you’ve got 350 thou’ but he’s raising 900.]
No person is authorized to give any information or representation not contained in this
memorandum. Any information or representation not contained herein [13. Etcetera, etcetera.]
must not be relied upon as having been authorized by the Partnership or the General Partner.[14.
Blah, blah, blah.]
[15. This guy wants to raise 900 thousand dollars. He’s going to spend 350 thousand on
this. He says if Phase One isn’t successful based on the test market, that the Partnership
will be disbanded. There’s no mention of what happens with the difference between 900
and the 350 thousand.
- He doesn’t have anything to risk. I mean how much incentive is there for this guy? How
heavily tied is he to the success of the project? What’s his incentive to watch expenses? - This is a lousy deal.
- Wait a minute. It says 350,000 Partnership interest, I misread this. They’re going to
raise 350,000 initially, and then they can sell additional Partnership Interests to bring it up
to the 900,000. I see. - But still he has nothing at risk. One of the things I look at is what the General Partners
have at risk. If they don’t have anything at risk, move on. It reflects how enthusiastic he is
about his idea. I mean a guy like this ought to mortgage his home. - I want to see “John Doe”, his background in the business, what he’s done. Now his
background is back here, you could dig it out. - Telling you who their market is, is a good idea.
- But I want to see right out front what kind of money this Srisuwanporn guy is putting
up of his own. - I’d like to see what the tax ramifications are right up front. If you buy a 50,000 dollar
unit, how much of a tax write off, if any, do you get the first year or the second year? - I want to know what the project is, the amount of the required investment, what the tax
ramifications are, projected revenue and profit. - The expenses he lists aren’t necessary to include. I want something on him.
- I want to be able to look at this and say, in five years, my $50,000 will be worth
$250,000 or whatever. I want to look at ventures that will potentially give me five times my
investment within five years, that’s an extreme example. What I would say is that I want to
look at projects that will give me a 20% return on my money in four years at the very least.
Today I can get 12% and 13% in a mutual fund, why should I go into a venture that doesn’t
double my money in four years? - So I want to know right off the top what the profit potential is.
- Once you know what the profit potential is, how do you get out of this thing?
- These are the things that would tell me how much I want to dig into it.]