It might seem like a big forest at first! But if you think about it like a track the bread crumbs each crumb leads to the other, I’m sure it’ll be much easier. So shall we begin.
Let’s assume that you have a really big company and as big as your company is, there’s a great competitor in the same market. For some reasons and maybe a few wrong paths led to wrong decisions, your competitor will announce his bankruptcy in the couple of months.
It’s good news, agree on that!
BUT there’s a big but here. Your competitor has a few good products, the customers are still loyal to him. And you are concerned that it might all the company end with someone continuing the legacy.
So you meet up with your team, trying to figure out the available scenarios here: And after few hours of all the discussions, you got to a conclusion of 3 choices:
1. First is to buy the whole company to conquer the whole market, and it seems the ideal choice to you.
2. You can buy some stocks of the competitor company so you can effect on the decisions.
3. One member of the team came up with something called “Real estate syndication”, and in a simple way it means to buy PARTS of the company and cover PARTS of the liabilities.
And when you analyze each point of those, you reached to these results:
1. First option is so good to be true and it can’t happen, because you can’t afford to pay all of that, enough that you don’t have in this quarter this amount of liquidity. Plus liabilities tight the business.
2. Second choice is a good one but you’re thinking of possessing a certain product from the competitor's closet, and this option doesn’t give you this luxury.
3. The final one: it suits your needs.
And let’s break through what’s the meaning of real estate syndication. It means that in case you want to buy a certain company. You don’t actually buy its stock. But you buy certain assets and certain liabilities. In our example, we know that our manager is interested in a particular product from the competitor company! Also it will help in a totally different way, which is by using the technique of syndication you get rid of the competition & conquer the market.
Real estate syndication is a really good way to enrich your company, except to play this card in a good way. You need to have a big team of geniuses to do the math and research for you.
Finally let’s summarize what we have learned so far:
- Real estate syndication is about buying a company asset & liability not its stocks.
- Real estate syndication guarantee to keep your equity power on top and also push new blood to your company.
- It helps to expand your company as well.
I hope you get this big concept in its simple shape!
Author: Rewan Eman