Without using debt? Debt and credit are a little different, and for buying a company, you're not going to put that on a Master Card. Yes, of course you can buy a company without debt. But, you don't want to do that. Look up LBO (leveraged buyout) modeling and you can pretty quickly understand the benefit of your debt ratio and its ability to increase your returns. Here's a quick and simple example. I buy a $2M company with $2M in cash. Over 5 years, I pay myself $150k/year on average from the company and I grow it 25% year over year, and sell the company for $6M. I make $4.75M. Return is 237% over 5 years, or just below 19% year over year. Alternatively, I buy a $2M company for $200k and take on $1.8M in debt. Over 5 years, I pay down some of that debt ($300k) while I grow the company 25% year over year. I sell the company for $6M. I use $1.5M to pay off the rest of my debt. I have made $4.5M on a $200k investment, 22500% return over 5 years, or annual return of 86.3%. Those numbers are simple and the examples ignore tons, but it should show you how debt affects the return on your investment.
Awesome interesting info for business management 🔥impressive pod
Great talk!
Hi man, isnt This The Brian jacobs playbook ?
Love from Portugal🇵🇹🇵🇹🇵🇹🇪🇺👍🙏
Awesome thank you for sharing this!
Thank you
Kinda late but the information in this show is amazing. Taking notes for sure!
Thanks Adam you are a great teacher
Give this to the pubic schools thanks.🌎
Can u do all this type of stuff without using credit?
Without using debt? Debt and credit are a little different, and for buying a company, you're not going to put that on a Master Card. Yes, of course you can buy a company without debt. But, you don't want to do that. Look up LBO (leveraged buyout) modeling and you can pretty quickly understand the benefit of your debt ratio and its ability to increase your returns. Here's a quick and simple example.
I buy a $2M company with $2M in cash. Over 5 years, I pay myself $150k/year on average from the company and I grow it 25% year over year, and sell the company for $6M. I make $4.75M. Return is 237% over 5 years, or just below 19% year over year.
Alternatively, I buy a $2M company for $200k and take on $1.8M in debt. Over 5 years, I pay down some of that debt ($300k) while I grow the company 25% year over year. I sell the company for $6M. I use $1.5M to pay off the rest of my debt. I have made $4.5M on a $200k investment, 22500% return over 5 years, or annual return of 86.3%.
Those numbers are simple and the examples ignore tons, but it should show you how debt affects the return on your investment.
Danko
Moore Laura Thomas Sarah Lee Angela
Please please please help 5000