Eli, you can consider me a fan of this newsletter! Thank you for sharing.
I’m having some trouble understanding the 1.818 step-up. How does it work to provide 81.8% more equity? Is this a rebalancing after clearing promissory and standby notes, or is it an equity purchase at a discount? Or is it something else entirely?
It is sort of a rebalancing or a sweetening of the deal for investors. If not for the step up, investors would have gotten 11% - that’s just not enough. This, the step up sweetens the deal for investors and now these have become the expected terms for self funded deals.
Eli, you can consider me a fan of this newsletter! Thank you for sharing.
I’m having some trouble understanding the 1.818 step-up. How does it work to provide 81.8% more equity? Is this a rebalancing after clearing promissory and standby notes, or is it an equity purchase at a discount? Or is it something else entirely?
It is sort of a rebalancing or a sweetening of the deal for investors. If not for the step up, investors would have gotten 11% - that’s just not enough. This, the step up sweetens the deal for investors and now these have become the expected terms for self funded deals.
Great question and thank you for the positive feedback.