From: "Jeffrey E." <jeevacation®gmail.com>
To: Gianni Serazzi
Subject: Re: Options
Date: Wed, 07 Mar 2018 17:31:27 +0000
Specific s? I know the theory
On Wed, Mar 7, 2018 at 12:17 PM Gianni Serazzi < > wrote:
Dear Jeffrey,
here's a few bullet points on model investment optionality
OPTION A: BUY LARGE NETWORK
+ Brand name recognition
+ Trophy company on day one
+ Top models on day one
- Large investment on day one (20-60M for big names)
- Difficult to finance with debt because they have very limited profitability
- Low IRR, even with a great manager (not necessarily me but whoever you think will be at level) profitability
will be 2-5% of the investment if they do a great job. Many of them have negative returns at present once you
scratch the surface
- High risk profile because you buy overpaid agents. When/if they leave the franchise loses value
OPTION B: ORGANIC GROWTH, BUY A MEDIUM COMPANY AND INVEST IN GROWTH
+ Much lower starting investment (3-5M and 1-2M investment for a few years that can in part be financed
with profits after initial years)
+ Optionality, when IRR increases also investments can increase
+ Higher IRR
+ History tells us that who created companies and networks made money, not who bought the existing network
+ We have connections with mother agencies and agents since 20 years, know who to hire (not to buyout) or
partner (minority stakes in mother agencies)
+A disruptive business model similar to what I was doing with John Casablancas in Starsystem can change the
rules of the game
- Brand name needs to be created or grown to a strong global basis
- Trophy company needs to be created, not present in day 1
Just a few thoughts, you have the luxury to have way more money than what you can spend in this life so for
sure have a different point of view.
Best
G
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