What is practical & pragmatic & what is blunt & rude?

[Katymac]

Someone has offered to invest in my nursery - basically offering a 16.5% investment against a 37.5% share of the equity

I am about to write back to say no chance....but is this polite enough??

"Things I Katymac, bring to the nursery:
? £30,000 of my own money
? £25,000 long term loan from my parents (but he has made me sign a loan agreement - the rotter)
? £15,000 Asset finance from Lombard
? £28,000 business loan from Natwest secured on the un-mortgaged part of my house
? £32,000 unsecured business loan from Natwest.
? 4 years management experience in a childcare setting
? NVQ3 in Early Years Childcare and Education
? Core staff (already trained and motivated)
? Variety of training courses (including Food Hygiene, first Aid and Birth to Three ? these are legislative requirements)
? 18 months of set-up research
? Won dispute with Highways agency
? Sourced appropriate experts

Financially these add up to £130,000 (72%) of a business needing £180,000. However my input far exceeds the financial outlay.

Investors input to the business
? £30,000
? Some marketing/advertising experience (not quantified)
? Some general business/staffing experience (not quantified)
? Website (reasonably website up & running for about £2,000-3,000)

Even allowing for an annual wage for your input to the business I think a 37.5% share is over generous. I would however, consider a 20% share for a £30,000 investment."

Is that rude??

Hmm it does seem a bit blunt. Is there any need to spell it all out - couldn't you just say thanks but I think the 37.5 is too high, 20% would be more reasonable considering my share of the input.

are you shitting me?

....that = rude

Well I could but I worry that he won't understand & think I am being un-necessarily awkward (iyswim)

Can we make it polite but still emphasise that it's a ridiculous offer

Is this any better?
"I am bringing to nursery@walnutcorner:
? £30,000 of my own money
? £25,000 long term loan from my parents (but he has made me sign a loan agreement - the rotter)
? £15,000 Asset finance from Lombard
? £28,000 business loan from Natwest secured on my house
? £32,000 unsecured business loan from Natwest.
? 4 years management experience in a childcare setting
? NVQ3 in Early Years Childcare and Education
? Core staff (already trained and motivated)
? Variety of training courses (including Food Hygiene, first Aid and Birth to Three ? these are legislative requirements)
? 18 months of set-up research
? Won dispute with Highways agency
? Sourced appropriate experts

Financially these add up to £130,000 (72%) of a business needing £180,000. However I feel my input far exceeds the financial outlay especially with regard to the day-to-day running of the nursery.

Investor?s input to the business
? £30,000
? Marketing/advertising experience
? General business/staffing experience
? Website

Even allowing for an annual wage for your input to the business I think a 37.5% share is over generous. I would however, consider a 20% share for a £30,000 investment which is far closer to the actual percentage of the total investment."

Flip it around.

Start with thank you for your proposal. However, I think that a share of 20% for an investment of £30,000 would be more - think of another word for acceptable - !!

I have reached this conclusion based on the following.

List it.

I look forward to hearing from you, after you have considered my offer.

Regards

---

someone can word it better, but you get the gist.

Like this:
"Thank you very much for your offer to invest in my nursery. I really appreciate you confidence in me. However, I think a 37.5% share is over generous. I would consider a 20% share for a £30,000 investment which is far closer to the actual percentage of the total investment.

The reasons behind my decision are that I am bringing to nursery@walnutcorner:
? £30,000 of my own money
? £25,000 long term loan from my parents (but he has made me sign a loan agreement - the rotter)
? £15,000 Asset finance from Lombard
? £28,000 business loan from Natwest secured on my house
? £32,000 unsecured business loan from Natwest.
? 4 years management experience in a childcare setting
? NVQ3 in Early Years Childcare and Education
? Core staff (already trained and motivated)
? Variety of training courses (including Food Hygiene, first Aid and Birth to Three ? these are legislative requirements)
? 18 months of set-up research
? Won dispute with Highways agency
? Sourced appropriate experts

Financially these add up to £130,000 (72%) of a business needing £180,000. I feel my input far exceeds the financial outlay especially with regard to the day-to-day running of the nursery.

Your input to the business would be
? £30,000
? Marketing/advertising experience
? General business/staffing experience
? Website

An alternative possibility might be ........"

Don't say overgenerous, it's a personal word, iyswim.

"Thank you for approaching me with your offer to invest in my nursery. I appreciate your confidence and am pleased that you recognise this business opportunity.

However, in light of my own imput, I would consider a 20% share for a £30,000 investment to be more equitable.

My personal investment in this business is detailed below

? £30,000 of my savings
? £25,000 long term loan
? £15,000 Asset finance
? £28,000 secured business loan
? £32,000 unsecured business loan
? 4 years management experience in a childcare setting
? NVQ3 in Early Years Childcare and Education
? Core staff (already trained and motivated)
? Variety of training courses (including Food Hygiene, first Aid and Birth to Three ? these are legislative requirements)
? 18 months of planning, including sourcing appropriate expertise and resolving a potentially threatening dispute with the Highways Agency

Financially these add up to at least £130,000 (72%) of a total required outlay of £180,000. This is not considering my input with, for example, the day-to-day running of the nursery.

I would propose that for a 20% share of the business, you would commit the following
? £30,000
? Marketing/advertising experience
? General business/staffing experience
? Website

I am sure that, having already identified my business as a suitable investment, you will give due consideration to my offer and I look forward to hearing from you.

Regards

You are good aren't you?

That is so much better & it still says Piss off - just nicely

How about this?
"An alternative possibility might be a ?ratchet deal? which could be structured like this:

7.5 % interest pa over a repayment period of 5 yrs. After 5 yrs 5% residual interest in company with right to buyout based on independent valuation, unless I fail to meet repayment. In which case your residual interest in company would increase by 3% per year that I failed to meet the repayment terms to a maximum of 20% residual interest in company. "

actually, thinking about it, they don't need to know at all, at this stage, how the money is broken down, so I would just add it up and give the one figure as your cash investment!

Ran my own business for 4 years!

7.5 % interest pa over a repayment period of 5 yrs. After 5 yrs 5% residual interest in company with right to buyout based on independent valuation at that time.

Take out the bit about if you fail to meet repayment!! Don't even raise that as a possibility, are you bonkers!! It can be in the contract, but don't include it in a proposal!

"An alternative possibility might be a ?ratchet deal? which could be structured like this:

20% equity based on 7.5 % interest pa over a repayment period of 5 yrs, reducing by 3% each year resulting in 5% residual interest in company after 5 years with right to buyout based on independent valuation."

Reads better.

Final??
"Thank you for approaching me with your offer to invest in my nursery. I appreciate your confidence and am pleased that you recognize this business opportunity.

However, in light of my own input, I would consider a 20% share for a £30,000 investment to be more equitable. My personal investment in this business is detailed below:

? £130,000 Cash investment
? 4 years management experience in a childcare setting
? NVQ3 in Early Years Childcare and Education
? Core staff (already trained and motivated)
? Variety of training courses (including Food Hygiene, first Aid and Birth to Three ? these are legislative requirements)
? 18 months of planning, including sourcing appropriate expertise and resolving a potentially threatening dispute with the Highways Agency

Financially these add up to at least £130,000 (72%) of a total required outlay of £180,000. This is not considering my input with, for example, the day-to-day running of the nursery.

I would propose that for a 20% share of the business, you would commit the following
? £30,000
? Marketing/advertising experience
? General business/staffing experience
? Website

I am sure that, having already identified my business as a suitable investment, you will give due consideration to my offer and I look forward to hearing from you.

An alternative possibility might be a ?ratchet deal? which could be structured like this:

20% equity based on 7.5 % interest pa over a repayment period of 5 yrs, reducing by 3% each year resulting in 5% residual interest in company after 5 years with right to buyout based on independent valuation."

Your non-financial contribution would normally entitle you to what's known as 'sweat equity' i.e. you get a larger proportion of the equity than what would be dictated by the relative cash input. Just thought I would mention it in case you want to use it in discussions with them.

Is the loan from your parents to the business or to you?

The debt that is on the business is their risk as well as yours, but the one that is secured on your house is definitely your risk!

I don't think you can say you bring in a 130 000 investment if some of it is debt secured on the business. Sorry.

Thank you for approaching me with your offer to invest in my nursery. I appreciate your confidence and am pleased that you recognise this business opportunity.

However, in light of my own input I would consider a 20% share for a £30,000 investment to be more equitable. My personal commitment to this business is detailed below:

? £130,000 cash investment
? 4 years management experience in a childcare setting
? NVQ3 in Early Years Childcare and Education
? Core staff (already trained and motivated)
? Essential training courses, including Food Hygiene, First Aid and Birth to Three
? 18 months of planning, including sourcing appropriate expertise and resolving a potentially threatening dispute with the Highways Agency

Financially, these add up to at least £130,000 (72%) of a total required outlay of £180,000. This is not considering my input with, for example, the day-to-day running of the nursery.

I would therefore propose that for a 20% share of the business, you would commit the following
? £30,000
? Marketing/advertising experience
? General business/staffing experience
? Website

An alternative might be a ?ratchet deal?.

Initially, 20% equity based on 7.5% interest pa over a repayment period of 5 yrs, reducing by 3% each year, resulting in 5% residual interest in company after 5 years with right to buyout based on independent valuation.

I am confident that, having already identified my business as a suitable investment, you will give this due consideration and I look forward to hearing from you.

Me personally

"Sweat Equity" that's good

So that would be the asset finance £15,000 plus the unsecured business loan, £28,000(that is as a result of my existing business)?

Which bit is secured on the new business?

I am getting confused

I think you can say that you bring that amount of finance, just not that it is your investment iyswim.

But £83K is my personal debt (isn't it - my cash, my parents & my house)

I assume the asset finance is secured on the business? And the other loans are to the business (apart from your parents')

So you have a business which is financed

55 000 your equity (the fact that your parents lent you some of it is irrelevant)
28 000 debt secured on your assets
47 000 debt (secured and unsecured) on the business

They will argue that 30 000 is 35%ish of the equity, so they should be entitled to that. You should point out that the debt secured on your house is your risk and that given the sweat equity you have invested in the business 20% seems more appropriate.

Sorry if I'm only confusing the issue, but I bet that's how they are calculating their share.

I thought the bank one was to me personally as the company is limited?

Gosh I am so dim