Want to know how to triple your money in 3 years? There is a proven method to make money over a 4 to 6 year term, provided you have some equity to start with.
This is effectively what Private Equity companies do on a larger scale.
And I’m going to tell you how to do it. Just watch this video to find out how.
Firstly, identify an industry where you have excellent know how, can add value and show a track record.
Then decide how much equity you are prepared to invest, either as cash or by freeing up equity in your home.
Find-out how much the bank will lend you against the right business. It may be up to 50% of the value of the business.
This will depend on several factors such as:
Your experience in the sector
The sector you are purchasing in.
The security of the cash-flow in the business
The asset base of the business and
Any capital in your home, up to 80% of the home value, which the bank can use as security.
Next, find a business which you can buy which can be purchased on the sum of your equity and debt you can raise.
Finally, try to buy on a multiple of returns to the owner of 3 or less.
So assuming you have $250,000 in capital and you can raise $250,000 in debt. Based on paying a 2.5 multiple you can buy a business that is currently returning $200,000 to the owner.
If you can grow this by 10% per annum, then you will be generating profit of $322,000 per annum.
Then, if you pay yourself $130,000 per annum and pay the residual net amount on your loan, the business will be debt free in 6 years.
In other words, the negative debt has repaid your own borrowings or cash input.
As you have grown the business, added in systems, to made it easier to manage, put it under management and created a much more reliable revenue stream,
you may now be able to sell this asset for a multiple of 3-4 times profit. This would be between $966,000 and $1,288,000.
As you have repaid both your debt and your initial investment you will have made a million dollars before tax.
That’s four fold your initial cash investment on top of getting your money back.
There are several ways to reduce the tax impact you should talk to your accountant or financial adviser about,
such as CGT allowance, roll-over provision and contribution to superannuation.
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