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You would be pleased/shocked/disinterested/whatever to know that this works for professionals to. There's this guy responsible for a $80 billion balance sheet. One of its revenue streams is a $300m per annum royalty that was growing at around 2% pa and was essentially a AAA rated risk. The guy wants to securitise the $300m pa royalty and hires an investment bank to provide advice. The investment bank says I think its worth $1.5 billion here's a cheque, we'll structure and package it ourselves. The guy was borrowing money at 4% pa. The guy says OK. I said dude wtf $300m / 4% is $7.5 billion - and that assumes zero growth. If you do this you will burn your shareholders by over $5 billion. The guys said we trust our investment bank, they are advising us. I said they are not your advisor they are your fking counterparty dude. They are taking it on their own balance sheet not even packaging it for their investors. That's how badly you're getting fked here. Guy says don't worry there are no probity issues here. I said you've gone down to a ford dealership and paid the guy $5 grand to tell you whether or not you need a new car and if so which one to buy. Then you've bought a Taurus for $150K because he said it was a great deal. Conversation repeated with the guy's board who killed the deal. Haven't heard from the guy since. Hypation fucked around with this message at 13:02 on Jul 13, 2013 |
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Jul 13, 2013 12:59
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| # ¿ May 14, 2024 19:48 |
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