How do the ultra-wealthy structure deals around what each side wants?
Short answer: The Dental Club seller cared about one functionality the buyer didn't need. In the medical IP deal, Wilson used a 2x ceiling to define the investor's share of the upside.
At a Family Office Club event, Richard C. Wilson walks through deal examples for attendees in real estate and operating businesses.
Richard on deal priorities
Richard C. Wilson says to find out what the other party cares about and is most worried about. He gives monthly income, collateral, preferred return, and profit split as terms that might matter differently to each party. (at 5:07)
Richard on the Dental Club deal
Richard C. Wilson says the seller asked $3 million for a social media asset, but wanted to keep one feature. His team did not need that feature, so they left it with the seller and paid over $400,000 and change. (at 4:40)
Richard on the downside case
Richard C. Wilson says he had invested $150,000 in a group of medical intellectual property assets before an investor put in $350,000. He described a structure where, if the assets sold for $350,000, he would get nothing and the investor would get their money back. (at 6:30)
Richard on the 2x return cap
Richard C. Wilson says the investor's return was capped at 2x. If the assets sold for $700,000, they would share the upside in proportion, and if they sold for 5x, Wilson would keep the amount above the 2x cap. (at 7:23)
"figuring out what the other party cares about, what they're most worried about, what they're most focused on"
From Richard's exclusive Billionaires.com interviews
Lessons from Richard C. Wilson's one-on-one interviews, as published on each interview page.
- Binod K. Chaudhary: Never chase a deal out of desperation. Stay cool and look at every part of the deal. Have your advisers and your finance team review it critically. Your counsel should review it too.
- Serg Bell: Success comes from many decisions. He does not see business as one winning bet. He sees it as a long game, like poker or bridge, built on many smart choices over time.
- Tim Draper: Make your customers your sales force. Hotmail put a message at the bottom of the screen inviting people to get free email. It spread to 11 million users.
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Frequently asked questions
How do the ultra-wealthy structure deals around what each side wants?
The Dental Club seller cared about one functionality the buyer didn't need. In the medical IP deal, Wilson used a 2x ceiling to define the investor's share of the upside.
What financing did Wilson mention for practice rollups?
At 6:03, Richard C. Wilson said the group used very little money down and seller financing.
What structure did Wilson describe for a joint venture?
At 5:34, Richard C. Wilson said a deal that came through another billionaire via Billionaires.com would use a pure joint venture structure.
Sources
Quotes are copied from the video captions and checked against the transcript. Timestamps link to the moment in the video. General information only, not legal, tax or investment advice.