So here is what I wrote a couple days ago after doing the research on why Toys R Us is being dismantled because of a private equity group who bought them in 2005 using “equity” from their portfolios of investing other people’s money and leveraging 80% of the price which was then charged to Toys R Us to pay off ultimately destroying them as they threw $400 million out the door every year to service loans which shouldn’t have belonged to them since they were made to purchase the company in the first place.
That is a long winded sentence and I was about to change it – but damn, that’s exactly what they did. It can’t be said in two or three word sentences.
So, rather than tell you all about how to make a great art business and share with you what all I’ve learned about it, from fine art to illustration, art publishing and surface design, showing in art festivals to showing in galleries, to the amazing online opportunities which are mostly work and not really opportunities – I’m going to share what I’ve learned about really making money – if you’re going to –
The Anatomy of Business in America –
- Open a firm. Make it an LLC and get a nice address for it, even if it is shared.
- Print a bunch of slick looking brochures and paperwork. Buy some nice desks and expensive chairs.
- Hire some men and dress them in very expensive suits.
- Get people to give you their money to invest. Borrow against the money they give you to invest more than you have available.
- Charge them for investing their money and every time the investments are handled, traded, bought or sold.
- Use their money and portfolios as collateral to buy up an existing company in the US – one that has been around for years.
- Borrow 80% – 100% of the price the company purchase would be by using these other people’s money and portfolios as you “equity”collateral on the loan promising the company will payoff the loan from its cash earnings inflow
- Pay yourself several million dollars for making the deal by taking it from the company you are buying.
- Put the entire purchase price of the company you are buying into debt owed by that company and not you and not your company even though you did the borrowing to get ownership of it.
- The collateral wasn’t yours, the equity stake put up never moved anywhere and is paid off by the company being bought plus paying for its own purchase by you without any of your money ever being used.
- Rob all the cash resources and assets that you can possibly liquidate from the company you now own without ever having to pay anything to get it.
- Charge management fees to the company you’ve bought while you dismantle its assets and cash diverting them into your pockets and those of your firm.
- Force the company you now own to borrow from you and from your firm some of its new loan money that will satisfy paying off your debt for having bought it, so they are effectively paying you interest on the money you did not actually borrow to buy the company in the first place which is now owed by the company you “bought” who is paying for its purchase price.
- After 2 – 5 years of bleeding all the cash possible from the company, either A.) sell it by taking it public and then finding a buyer for it to cash you out, or B.) going into bankruptcy as the company is then required to pay you again three times over in the bankruptcy process.
- Get payouts again from any credit default swaps you took out on the loans your firm made to the company that you forced the company to take to pay the money off that you “borrowed” to “buy” them. Make sure you get hundreds of millions from the bankruptcy of the company while its vendors, landlords contractors and many other creditors get nothing.
- Make sure executives are given big fat bonuses by the bankruptcy court because they are your friends and any pension funds or other employee benefit funds are depleted so they get nothing but a layoff notice, (or not even that.)
- Enjoy the hundreds of millions of dollars that now are yours which you never built in the first place through hard work, gaining market share, challenging the competition or any other basic tenets of capitalism and market based economics.
- Do the same thing to as many companies as you can while continuing to run your firm convincing people to give you their money to invest and charging them while using their money and not yours to be the “equity” / collateral to buy these companies and do the same thing to them to bleed them of all cash resources which you didn’t earn.
- Tell everybody how great you are and how nobody else in the United States is worth anything unless they are like you.
- Deny you put tens of thousands of families in economic hardship by taking their jobs away, destroying their communities by shutting down large employers and cutting the income from contractors and landlords who had provided real services and goods to the company. And, run for public office.
- cricketdiane, 03-13,18
Well, that’s it – that is how money has been being made in America since the 80’s.
- cricketdiane, 03-17-2018