Today at a Glance

• Let's buy a business together and remove competition.

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Let's Buy a Business together

Hey there, before I start, I want to let you know an absolute fact that many people still don't understand. The U.S. tax law is heavily rigged in favor of business owners and people who buy real estate. To put things in context, Warren's Buffet assistant pays more tax than he does. Thus, I highly recommend participating in owning or investing in a business and buying and investing in real estate.

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Being a health and wellness enthusiast, the key aspect to staying mentally and physically healthy is knowing I don't have an enormous tax bill every year and having a machine working with me at all times to grow my enterprises.

If you're new to this newsletter, this will be very compelling.

For context, all my writings come from my first narrative experiences. I'm an avid real estate investor across 3 asset classes, and I have invested in several cash-flowing businesses.

🔑Couple FACTS I want you to know:

1. QSBS: Any business that is held in a C corp for 5 years you pay no tax up to 10 million dollars of gain or 10x or basis. (what you pay for your shares)
2. REP: Real Estate Professional Status: Spend 50% of your personal services toward real estate and validate 750 hours a year toward real estate. This is a wild, you can use this to off set active income. If you are a W2 or a doctor, lawyer or a high earning individual I highly recommend you find the fastest way to achieve this.
3. 83B: Enables recipients of restricted securities (including stock options) to potentially lower their tax burden by paying taxes on the total FMV of the award at the time of issuance (early exercising). You want to fill this out and send it to the IRS as soon as you start a company

Now let's buy a company, by the end I want you to tell me if it's a good buy or bad buy.

P.S. Here's several hundred businesses for you to look at:

​Link to businesses​

I'm underwriting a landscaping company in Florida today:

ANNUAL:

GROSS SALES: $9,102,578

NET PROFIT: $2,587,735

ASSETS/FF&E: $1,012,025

ASKING PRICE: $6,750,000

KEY POINTS:

*Over $1M in assets & up to $750K in working capital included in the sale

*Experienced and reliable management team in place

*Currently has over $4M in upcoming contracts in place

Initial Thoughts:

A 2.6 multiple( Asking price/ net profit) is fantastic to be under 3x at first glance.

There's a high enough gross sales and net profit for room for error. (Yes you always want to bake up some fucking up cost when investing in anything new)

There's an extensive arbitrage to hire labor at a relatively inexpensive rate in a state that has a ton of green commercial hotels and homes to landscaping.

The question I always ask 🧐 : Will robots and AI take over this business in the next 5 years?

I personally don't think so.

A business like this has great room to hire an awesome operator that you can put your full trust in.

We'd find an operator for $250,000 who can be an integrator for your visionary thinker.

When raising money for a deal like this, I could have very favorable terms for investors to get their principal and cash flow returns from day 1.

Investors love day one returns ( :

Here's how I would structure this:

Seller Carry: $1,500,000 at 5% Interest and paid off in 5 years.

Loan amount $5,250,000

85% Loan to Value: $4,462,500

15% Down payment: $787,000

Monthly payment 8.5%: $55,927

Interest only: $6,250

Monthly Cash Flow:$215,644 a month

Monthly Cash Flow after Debt: $153,467.

Capital raise: $1,200,000 ( Down payment, operating cost, loan cost)

Let's target a 80/20 split and target a 15% return back to investors pro rata, ( they get paid first) then we can go 50/50 on profits till we pay them off.

Key Note:

1. On these cash flowing businesses, they must be more enticing than a real estate deal to your investors.
2. Make the terms in favors of the Limited Partners to show good will as LTV( Life Time Value) is critical.

Assuming 0 Growth and 0 decline:

I would pay $180,000 a year back to investors.

That would be $15,000 per month

We would still make $$138,467 a month.

Math: $153,467- $15,000 per month= $138,467

I don't know about you, but making $138,467 without any of your own capital sounds epic to me.

Now lets grow this company and here's how:

🚀 Brand 🚀

Below are logos of 3 businesses that serve burgers or coffee. (I'm a huge Philz Coffee fan FYI.)

The first thing I think about these 3 logos below is

• They will make sure you love their product before you leave.

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"That is the distinction between the mom and pop burger or coffee shop"

• Every time I go to In and Out, I ask for 10 special sauces, and they give them to me with a smile.
• If you don't like the milkshake at Chick Filet, no worries; they will make it until it's right
• At Philz coffee, I couldn't leave the counter until I tried it and said, "This tastes great."

In a landscaping or any service base business, why would you not always make sure you speak to the person in charge at the job and ask them, "Did I do everything to a 100% of your liking?

You are validating your success of your work leaving no room for errors, no room for bad reviews, and no time for a customer trying to come after you.

Employees: I got fired from my first job in retail. I worked at Hollister when I was 16, I know here's when you giggle 😆

The tag line to every single person who walked into Bettys 1( Left top corner of the store) was : Hey What's Up Welcome to Hollister.

My manager comes in.

I say : "Hey Hailey How are you!" It was first instinct because I know her.

She said "Hi" with an awkward stare and walked to the back room.

When I got off my shift at 2pm that paid me $8.50 cents per hour, I was fired that day.

I didn't follow the chain of command.

I was confused at the age of 16 but grateful at the age of 32 to understand why I was fired.

Large companies are large for a reason. They have systems that everyone must follow like an army.

If you don't follow you should be let go.

When the system gets to loose so does the business and things fall between the cracks.

Hollister, I thank you for letting me go.

So then I got a job at Abercrombie at 17 and remembered the tag line...

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Till Next Friday,

Sam Mahmood​
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P.S. There are 2 ways I can help you 🔑🚀

• I invest and buy businesses that I find attractive. If you do have one please email me and I will be happy to discuss.
• We buy cash flowing companies and raise capital from investors to build and scale these. If you're interested in learning more fill this out.

Click Here​

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