It is not uncommon for me to meet a client for the first time and them to explain that they have four different projects that are all very different from each other. And want to know should they put this under one umbrella or how
to organize everything. It's my name is Tilden Moschetti, I am a syndication attorney with the Moschetti syndication Law Group, I'm gonna go through how I would if I were them organize those projects so a lot of times private equity funds will look at a series of projects and try and make a decision on whether or not to put them all in one under one umbrella, or to separate them
out. So I'm going to talk to you about the pros and cons about putting them all under one or the how to how you do it, or separating them out and why you'd make that decision for your own. Now, it doesn't have to be a private equity fund or a syndication or whatever it is, put those terms beside. So let's say you've got five, four different projects that you're all trying to raise money for, and you're trying to figure out the best way to do it. So that's the most pragmatic way to think
about it, just put the terms aside. So let's open up a whiteboard. Because that will make it a little bit easier to explain. So let's make up for projects. Let's say you have a a business that you want to raise money for it's in the services sector. And I'm making this up as we go. Number two, let's say you have a, a crypto mining that you want to do. So you have a business that wants to do it, it's professional services, or
some sort of services. Number two, you have a crypto mine that you want to raise money for number three, you have a an apartment building. And just for fun, we're going to make one also in real estate just so that we can talk about that a little bit more extensively. So then let's say we've got a triple net, which is you can think of like fast food restaurant or something like that. So we're gonna pay is all of the operating expenses of
everything. So you've got these four different business lines that you all want to raise money for. But you need different things, let's say each one needs just first, let's say each one needs one a million dollars, just because each one needs a million. So you can either do what $4 million arrays, which might seem like the easiest thing to do, right? So you would have your entity your investment entity here. And it would have all four projects that you are raising that $4 million for.
Now, you could do that. But I want you to think of also or actually let's talk about the the other alternative. Or you could have four different entities that people invest in to write each for a million. And just because we can, let's say you also have this one where you have the option of an entity, just a real estate, one that also invest in both of them. That's also a reasonable way to shape it. So those are sort of
the three different structures that you can think of. Now the very first thing I like to think of when I'm putting together any kind of deal is my founders investment theory. Again, if you need to watch it, I've got videos on here that describe founders investment theory, but essentially what it is, is you can think of it as that story that makes you why somebody should invest in you, right. So why somebody should give this
money. And so if you put yourself in the thought process of what an investor would be hearing is that that would be the way I would think about it. So if I was trying to pitch this first deal, right if I was trying to pitch this $4 million he'll, then I would have to go to my investors and say, look, I've got a conglomerate, I've got four different things that I that we're going to invest into, and you're gonna get distributions in these four different ways for these four
different business lines, you can do that, but it's going to be kind of confusing to an investor. Why four different things? I mean, you've got things all over the map here, don't you specialize in anything, you know, what's special thing are you bringing to the table here, it's gonna be a really real big challenge to raise money, raise $4 million for four totally different things, or at least three very different things. And two of those things are fair, two, new
two things are somewhat similar. Or you could go to them and say, look, I've got, I've got three investment vestments that I'm looking to raise money for. One of them is a business is a services business, and you're going to get a piece of the equity. But we're going to do that on you'll have an option to convert it into the prefer into the that into it, because we're going to pay you a fixed percentage of 10% a year. And then after two years, when we've shown we're successful, you can
convert it into real equity into the business. It's a great business, here's what it does. The second thing that I'm raising money for is a crypto mine, and here's how it makes money. And you're going to immediately own equity in that business and just be getting the profits off of what what we've invested. And we'll have, we're also raising money for an
investments. Now we diversification is important. So we're going to do something that's kind of unusual, we're going to invest in an apartment building, and we're going to invest in this fast food triple net. And the reason that we're doing that is because should something happen in the economy in these uncertain times, we want to be able to balance and
make sure that you know, you're always making money. And so if fast food suddenly stops making money at a at a reasonable rate, if the appreciation and just isn't happening, you know that that apartment buildings still gonna go up. Or if you know that, because of some new laws about rent control, or whatever it is apartment buildings start to stagnate, we've now got this fast food business that's going to carry that load and make sure
that you have a good investment. So at the end of the day, you have a nice balance between two different types of real estate that are just ultimately going to make your portfolio more valuable. That would be how I'd pitch it. In that scenario, in the fourth version, over here, it separate them out into individual things, you just talk about apartment buildings and triple nets in a different way. Now, obviously, the number two and number three way is the easiest way to pitch a pitch.
And it's probably the way that you're going to be most successful. So I would probably recommend that almost always you're going to separate them into distinct different units. Now, sometimes you will have distinct units within one individual investment. So you could in your business services, say look, we have two different mechanisms here. So in this business, let's move this off here. In this business, that's a certificate, we've got two different ways of paying you and
one is a Class A preferred. And one is a class. A common and what that means to you investor is that the class a preferred, they're going to get paid first no matter what. So they're always getting paid. But they're only getting paid 10%. Right. So even if this company starts making a trillion dollars per unit per, per share, you're only going to get 10% of the money that you invested on top of it. So you're going to be making
that return. Why if you think this is a great business, maybe you want to come in along this class a common now we're not going to pay out a preferred return at all, we're not going to pay 10% There's no no guaranteed income, it's probably not going to pay anything out over the next two or three years. But you know, we're planning on doing or planning on going public in in three years. And you've seen boy IPOs go and you'll probably all that equity is going to be equity you're
going to be carrying in to the IPO before it even happens. So that means you're going to get this huge amount of appreciation in the value of the company and then you can sell the stock at that point. So those are the kinds of pitches that you would do. Now here you've got two different classes of shares. So sometimes the point is, is that you'll have something that is two very distinct kinds of investment. But that's under
what that still goes under one umbrella. So we'd still net probably put this under one offer, as we call it. Insecurities language. So I hope that helps describe, well, why I would separate these into multiple classes like this into I mean, into multiple investments, multiple offers different things entirely, is the reason again, is just that you want to make the story as clear as possible to investors.
Now, here's an asterix. Just a disclaimer, yes, I'm a real, I am a syndication attorney, I put these offers together, and I do get paid more by splitting them out into four parts. But at the end of the day, your investors are probably the ones paying my fees. They're the ones that you get reimbursed for it. But also,
it's gonna be that much easier for you to raise funds for. I always leave the actual decision making completely up to my clients, if they want to do it like this, with this $4 million raise. Absolutely, I'd be happy to write it. We can make it as good as possible and give you every opportunity to be able to raise that $4 million. My advice if you want an easier time raising money would be to split it up into four units or three
units. So I hope that helps describe what you do in those situations where you've got four different things you want to raise money for and they're all very different. My name is Tilden Moschetti. I am a syndication attorney with the Moschetti syndication Law Group.