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Jerry Siddichi used a friend as a nominal buyer for a hotel, then had the friend immediately 'sell' it to him on paper for a much higher price ($14M to $24M). This tactic established a new, higher valuation, likely enabling more favorable financing for his redevelopment plans.
To justify high valuations for SaaS companies, private equity sponsors would contribute larger-than-usual equity checks (e.g., 40% vs. a typical 20%). This gave lenders a false sense of security, persuading them to extend significant leverage on businesses whose enterprise values were already inflated.
A unique "Double and Keep It" model helps business owners double their company's value by using external capital from family offices to acquire other companies. This creates a larger, more attractive group for a future sale, increasing the owner's payout without them taking equity dilution or adding debt to their original business.
A controversial fundraising tactic involves a lead VC investing in two tranches: one at a lower, previous valuation and one at the new, higher valuation. This creates a discounted 'blended price' for the investor while the founder is encouraged to only message the higher price.
In a competitive M&A process where the target is reluctant, a marginal price increase may not work. A winning strategy can be to 'overpay' significantly. This makes the offer financially indefensible for the board to reject and immediately ends the bidding process, guaranteeing the acquisition.
To secure a building that wasn't for sale, Jerry Siddichi offered to buy the owner's meat-packing business as part of the deal. He structured it with seller financing and kept the owner on staff for a transition, making the offer irresistible and ultimately getting the real estate he wanted.
VCs may invest in two tranches at different valuations (e.g., $500M and $1B) but allow the founder to publicize only the higher number. This practice can make the company seem more valuable than its blended price, potentially misleading employees and future investors.
Sequoia sometimes invests in two tranches at different valuations. This allows founders to market the round at the higher valuation, while Sequoia benefits from a lower, blended price. This practice, while common, can mislead employees and other investors about the true deal terms if not properly disclosed.
A guest funded his gambling by treating loan applications like a sales negotiation. He would purposely request a higher amount than needed (e.g., $10,000), anticipating the underwriter would reject it but counteroffer with a smaller, more achievable amount (e.g., $7,500), which was his actual goal.
Aspiring business owners can overcome capital constraints by negotiating seller-financed deals. The original owner effectively loans the buyer the purchase price, often in exchange for a share of future profits, making acquisitions more accessible to individuals.
Tranched rounds involve an investor buying shares at two prices (e.g., $250M and $1B) in the same financing. While the investor gets a lower blended cost basis, the company gets to announce the higher valuation. It's a financial engineering tactic that satisfies egos but creates an optics trap.