Reborn Action Star: Starting in Hollywood

Chapter 270 Are we really partners?

Fei Yang was not surprised to hear Lin Yuan's blunt refusal.

"Brother Lin, you misunderstood me. I'm not that greedy. Here's my proposal. Would you like to take a look first?"

After saying that, Fei Yang took out two documents and handed them over.

Lin Yuan reached out to take them, handed one to Liu Yufei, and opened the other one.

After reading a few pages, Lin Yuan's brows relaxed.

In this plan, Fei Yang proposed that he would use another company as a shareholder to invest in Lin Yuan's CBD investment and construction company.

He frankly pointed out that the company in which he is a shareholder is actually an equity pool company, and all the shareholders, big and small, in it are "friends" with considerable power in various places who were recruited by him.

That's why he has the confidence to deal with the obstacles that the company may encounter when expanding in various places in the future.

Lin Yuan's acceptance of investment from this equity pool company means he is sharing profits with a large group of people with deep backgrounds. This is a one-time solution and a necessary step.

At the same time, Fei Yang proposed a plan to acquire shares in stages.

The agreement stipulates that in the first phase, the equity pool company will invest RMB 15 billion to acquire a 5% stake in Linyuan CBD Investment and Construction Company.

In the future, every year, subject to Lin Yuan’s passing of the assessment, the company can continue to increase its stake by 5% at a price of RMB 5 million.

Until the end of the third year, the maximum shareholding of the company can be no more than 20%.

Linyuan, a high-quality CBD construction company, currently has assets of around US$60 billion, which is approximately RMB 500 billion.

Of course, this does not mean that Lin Yuan currently has a wealth of 500 billion, because this is the total amount of assets after leveraging fund investment and risk betting.

It can be simply understood that Lin Yuan used a super large leverage and obtained the right to operate a huge asset with a small amount of capital.

However, if the business fails, the equity-debt betting agreement will make Lin Yuan lose everything.

(See Chapter 160 for details)
Many inexperienced project managers think they are borrowing money from investors when doing this type of equity financing.

This is not the case.

When you borrow money that you must pay back no matter what, you are essentially borrowing money from your future self.

This is easy to understand with an example:

You borrowed 5 yuan from the bank for current consumption.

Excuse me, is it essentially borrowing money from the bank?

Of course not. The essence is to borrow 5 yuan from your future self.

The bank simply discounts your future cash flow to you now.

This is called discounted forward cash flows.

Unless you have the ability to default on the bank's money and refuse to pay it back, borrowing money from the bank is actually borrowing money from your future self.

As for refusing to pay back the bank's money? Most people in the country don't have the ability to do that.

We don’t have a personal bankruptcy system!
In any case, the 500% equity value of Lin Yuan's company with an asset scale of 5 billion yuan is 25 billion yuan.

Fei Yang proposed to use 15 billion RMB to purchase the 5% stake, which seems unfair, but is actually very reasonable.

Because he has the "energy" to resolve the company's development bottlenecks, this must be taken into account in the valuation.

Otherwise, where will the benefits and profits be shared with the people behind the scenes?

Fei Yang did not propose to take away 20% of the equity at once. He split the transaction into four parts.

The first deal had the lowest premium, as Fei Yang hadn't yet proven himself capable. Therefore, he initially took 15% of the equity for 5 billion yuan. Then, after proving his worth, he would gradually acquire the remaining 15% over three years. Each transaction involved a small, symbolic investment to mitigate potential legal risks.

Because he used the agreement to lock in the company's current valuation, he will not face legal risks caused by "unfairness" when conducting low-priced equity transactions in the future.

In general, Fei Yang's plan is equivalent to using 30 billion yuan, plus resources to resolve all problems, in exchange for Linyuan Company's equity worth 100 billion yuan.

From the current perspective, this is equivalent to Lin Yuan giving up 70 billion yuan in profits.

But in the long run, as the project becomes profitable, these benefits will expand exponentially, enough to create a large number of billionaires.

Lin Yuan did not feel sad about giving away so much profit. Those who eat alone will not go far.

As long as Fei Yang can really do what he said, then it would be totally worth sharing this piece of cake.

In fact, the fact that Fei Yang was able to come up with 15 billion to purchase 5% of the equity in the first phase has already proved his considerable strength.

Therefore, Lin Yuan was also willing to give him a chance to prove himself.

I have to say that this plan has a strong sense of proportion, with reasonable and measured advances and retreats, which makes people feel full sincerity.

Fei Yang's initial statement that he wanted 20% of the equity was also a negotiation tactic.

First throw out a condition that seems unacceptable to lower the expectations of the negotiating opponent, and then give a moderate plan, which will appear much more acceptable.

This negotiation method cannot be used casually, because it can easily give people the impression that you are asking for too much, which in turn leads to resentment and distrust from the negotiating opponent.

The 20% stake that Fei Yang initially offered remained unchanged in the end.

The reason why Lin Yuan could accept it was not the proportion of equity transfer that changed, but the conditions of transfer.

In general, the level of performance that Fei Yang demonstrated in today's negotiations definitely impressed Lin Yuan.

This is completely different from the super bootlicker look he had when he met Lin Yuan last time.

Lin Yuan closed the proposal and looked at Liu Yufei: "Xixi, what do you think of this agreement?"

If he wanted Liu Yufei to gradually help him manage domestic assets, he had to let her gradually adapt to the business game.

Lin Yuan didn't understand these things originally. It was only because Mr. Eisen had been cramming him with knowledge from time to time over the past two years that he had the current vision and ability.

At this time, Liu Yufei was in a state of confusion.

She is just a freshman and a newcomer who has filmed two film and television dramas.

Although she is still learning about equity investment, law, and finance, her knowledge is still very limited.

However, when Lin Yuan asked, she still replied: "I think there is no problem in the general direction, but the equity required is a bit too much. I think the maximum I can give away is 16%."

In fact, Liu Yufei didn’t quite understand whether this agreement was good or not, but she understood Lin Yuan.

Lin Yuan directly asked for her opinion, which meant that he basically agreed. Otherwise, he would not have asked her but would have answered Fei Yang directly.

Since it wasn't a big problem, she just wanted to give it a try to see if she could help her boyfriend bargain a little.

When saying this, Liu Yufei was not very hopeful.

Unexpectedly, as soon as Liu Yufei opened her mouth, Fei Yang immediately agreed: "Since the goddess has spoken, of course I agree, let's do as you ask!"

Lin Yuan’s inner thoughts: “!!!!”

"You're giving up 4% of your equity in just one sentence? That's equivalent to 20 billion! The profits could multiply several times in the future!"

A licker, still that licker!

(End of this chapter)