The Alternative Investor

6/20/2019

Grayson is Finally Buying a Company!

Ep. 50
Today is an incredibly big day! Grayson may be closing on a huge deal tonight. It’s been a long time coming but it’s finally happening! He quit his last job about 3+ years ago and since then he’s been looking to buy a business and has gone through about 5000 different companies, sorted through many different websites, and talked to lots of different owners — but it was all worth it, because he’s finally found one that he loves and is super excited about. He’s completed all of the purchase agreement documents and soon… all will be finalized!So today’s episode is going to provide as a recap for what Grayson has been up to for the last couple of years. Hopefully it will serve as both inspiration — but also as a cautionary tale for those of you who want to get out there and buy your own deal! Today we’re going to be sharing the good, the bad, and the ugly. So tune in to learn some of the ins and outs of buying your first deal!Key Takeaways:[:11] All about today’s episode![3:18] So what is Grayson buying?![6:33] How Grayson and his partner found this deal.[7:58] What does the transition look like after purchasing this deal?[10:34] What Grayson learned from being an investor![15:30] The importance of balancing investing and operations.[19:03] What’s next for the podcast? Topics we’ll be focusing on in future episodes.[20:58] Opening it up to you! What would you like to hear from us next? Email us!Mentioned in this Episode:Performio.coBrad@EvergreenCap.comGrayson@StablesPartners.comFor More on The Alternative Investor, Check Out:TheAlternativeInvestorShow.comThe Alternative Investor on iTunes — Leave us a review!
5/23/2019

We Talk about a Purchase Agreement

Ep. 48
After 2 ½ years of looking for a software business to buy with my partner, I think we’re finally getting towards the end! And at the end of the due diligence process when you’re going to buy a company… you’ve got to sign a purchase agreement. This purchase agreement is the big contract; it’s the document that lays out all the final terms and conditions. And when it’s signed, the money is wired — and it’s official: you own the company.So because this is all so timely for us, today we’re going to be talking all about purchase agreements! In fact, we’ll be going through the actual 57-page document I received for this software business to explain each section to give you all an idea of what to expect when it comes to negotiating your first purchase and sale agreement!Key Takeaways:[:11] About today’s episode on purchase agreements![2:22] We begin looking at the 57-page purchase agreement word doc, starting with an overview of the table of contents and section 1, the glossary.[5:09] Reviewing section 2: the purchase and sale of parent shares.[9:40] Reviewing the following three sections that cover representations and warranties — first up, those concerning the company.[16:30] Next up, we take a look at the sections covering representations and warranties of the sellers.[17:55] Taking a look at the representations and warranties concerning the buyer.[18:58] Reviewing the section that covers the additional agreements.[19:52] Checking out section 7: identification and related matters.[23:03] Wrapping up the podcast with some final points about purchase and sale agreements![24:54] What should you be focusing on when negotiating these documents?[28:14] Thanks for tuning in!Mentioned in this Episode:Purchase and Sale AgreementFor More on The Alternative Investor, Check Out:TheAlternativeInvestorShow.comThe Alternative Investor on iTunes — Leave us a review!
4/25/2019

How to Read a K-1

Ep. 45
Today’s episode is all about taxes! Specifically, we’re going to be talking about K-1s. A K-1 is a tax form that you get from private investment (typically an LLC.) on an investment you’ve made. This is the tax form you’re going to get yearly from that sponsor so you can pay your taxes on that income.If you’re ever going to be making investments in alternative assets, most likely you’re going to be getting a K-1. Be sure to tune in to get all the basis on what exactly a K-1 is, how they work, the key pieces of information within them, their benefits, and our tips!Key Takeaways:[:12] About today’s episode![:48] What is a K-1?[3:54] The key pieces of information in the K-1; covering box 1 and 2 of the K-1.[10:21] Discussing box 19 of the K-1: the distribution (the actual cash flow you receive that year from your investment.)[13:07] Discussing box L: the partner’s capital account analysis (which keeps track of your basis in the investment.)[14:53] Working through an example to illustrate how a K-1 works.[15:26] When do you get a K-1? How should investors investing in alternative assets be thinking about K-1s? And are they a huge headache or are they pretty straight forward?[16:44] Our tip for if you’re receiving many K-1s.[18:41] The bottom line of K-1s![19:12] How to go about doing your K-1s.Mentioned in this Episode:K-1Pass-Through EntityFor More on The Alternative Investor, Check Out:TheAlternativeInvestorShow.comThe Alternative Investor on iTunes — Leave us a review!
4/11/2019

How to Raise Debt for a Real Estate Project

Ep. 43
We’ve talked about finding deals, sourcing deals, putting a pitch deck together, raising money, and all that stuff — but we haven’t yet talked about how to go about raising debt for a real estate project.So today, we’re going to outline how to get debt from the more conventional (or traditional) sources. We’ll be covering: seller financing, regional banks, agencies that are representing Fannie and Freddie, and large commercial mortgage-backed security loans.Pull up a chair and join us for this real estate-centered conversation on raising debt!Key Takeaways:[:12] Reading our favorite funny review from the last couple of weeks![1:45] About today’s episode.[2:25] The first step to raising debt for a real estate project: obtaining a loan.[8:11] If you’re just looking to borrow money for a deal, how much should you care about the structure of the loan?[10:16] What information is a balance sheet lender or regional lender going to need to know in order to make a decision about whether or not they’re going to lend you money?[14:24] So which loan should you take — an agency loan or a CMBS?[18:18] How do you know if you’re getting a CMBS loan? And what do these types of lenders look like?[19:32] How big does a deal have to be to qualify for a CMBS loan?[20:05] Where do the big costs come in with a CMBS loan?[21:31] Summarizing the four sources of debt mentioned in this week’s episode and giving some final, additional pieces of information.[23:04] In conclusion: our take on what the best options are.Mentioned in this Episode:Balance Sheet LenderFannie Mae and Freddie MacBellwetherCMBSCDOFor More on The Alternative Investor, Check Out:TheAlternativeInvestorShow.comThe Alternative Investor on iTunes — Leave us a review!