How i lost a deal and gained a mentor

Did you ever notice when you start looking at things from a different perspective?

Some convenience store or some other shop. It was always there, but now you actually started looking. You are actually paying attention this time. This is what happened to me when i was waiting for my wife in this large shopping mall in Portugal. I was sitting on a bench, and was this kiosk. They must have served 100 people in like 10m. No fuss, no pay you later in 30 days, no quotes being sent out back and forward. It was straight in your face. Stand in line, get what you want, leave. Money in, money in, money in.

I said to myself. "Ok, let's get a receipt and find out the company's fiscal number". And so i did. Super excited, i ran the number through one of these online service providers you pay $20 and get the complete financials from any private company. <drum rolllllllllllllll>

debt to equity ratio near perfection. They had twice as much equity as they had debt. 

No long term debt to speak of, and they were sitting on $2M in cash and cash equivalents.

See? Almost perfect. But then i saw something that caught my eye. Their LOC(Line of Credit) was tapped out. Why? Why would a company sitting on cash and with this type of business would need to use a Revolver account. I said to myself. "They must need cash to do something else" So i picked up the phone and cold-called this company: "Hello?", "I there. I am interested in acquiring your company" And a silence just installed itself. "I am sorry, i am only the assistant. Can you say that again?" "I would like to make an investment in your company. Can you pass me to the owner?" "Send us an email at [email protected], and i will pass it through the owner". 1 hour later, i got an email from the assistant with a direct email and cell phone number of the owner. Wooooow. Cool. They are taking me seriously. So i called, and he said: "Would you like to meet us here tomorrow?" I just said to myself i was in heaven.

Next day i went there, brought my A-game and explained why i thought we could invest with them. and then we uncovered that he was actually in need of cash because they were investing in a new business, so they were in need of cash. See? Carlos Slim always says that the numbers are talking with you. So, he said that he could consider my offer if it made sense for them. Since i did not have the funds lined up, i cold-called every single rich person i knew and did not know and explained the deal. Every single one of them. Even VC firms in California. Like i said: Every single person. I must have sent out 400 emails and cold called 200 people. As you might guess i got "NO" all over the place, but then i got a maybe. This was the son of a hotel owner that liked the business and understood my logic behind the investment. But it took too long. Between the first contact and the meeting with the backer i got to do it, the business owner had time to recompose himself from the ropes, and was blunt by saying. "Thank you, but no thank you". Out of that meeting he was always smiling at me, like he was saying. "Look, kid, i like you, but this is not going to happen". Do the deal fell apart.

Lesson learned? Don't get in a deal unless you already have your investors backing lined up, and never, ever, ever, ever be dependent on anyone, because you will lose great deals.

The positives from this? I got the direct contact to a millionaire. Someone i look up to, someone i respect, and who knows, if some future opportunity presents itself in the near future, i can actually call him again and have a new investor in our Real Estate deals.

Be great, because nothing else ever pays.

DM