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Is this possible?

 
forum comment
#0 Is this possible?
 
Young Consultant
20.05.13 00:00
 
This is an internal consulting-type question, and how to get compensated in such a situation... Assume for a minute:I'm a CEO at "Company" XYZ, MKT CAP $1 BB. So far, my input to the board of directors and the company directly has helped improve the company greatly.I reckon that, going forward, my ideas/direction can turn the company into a firm worth 2 Billion Dollars (i.e. double it's value).However, I want to profit substantially off of this, if I am able to double the firms profits.Here's my current plan on how I might profit:1, First, I would purchase long-term call options (from "Company XYZ"). These would be considered exotic options. I would purchase (with the help of a "Lender ABC") 25 million dollars worth of these options from Company XYZ.Then comes the hard part- I double the companies value through my ideas and direction.Then, once the stock options are worth exponentially more, I sell them back to the company, or an outside source, after paying back lender ABC, say $50MM.My questions to you all:1. Would it be feasible to obtain a lender to help me buy the $25 million worth of exotic call options in such a scenario?2. Assuming the company's board of director's believed I could double the company's value, would company XYZ likely sell $25 million worth of exotic options to me? Would they be able to sell exotic options to an employee?3. Has anything like this every been done? Has a key employee of a corporation ever had so much faith in their ability to turn a company around, that they PURCHASED stock options from their employer? Can it be done?
 
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#0 RE: Is this possible?
 
$0.02
20.05.13 00:00
 
Read this first:http://en.wikipedia.org/wiki/Insider_tradingCovers the salient points. Long before you go out and find yourself an "investor" you will need to get some way out of the fact that your investment is based on non-public knowledge. Your current list of assumptions indicates that this has yet been covered.
 
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#0 RE: Is this possible?
 
Bushy Eyebrow Partner
20.05.13 00:00
 
I'd focus more on making the business plan work and less on the minutia of "exotic stock options" and the like. Double a company's market cap from $1Bn to $2Bn and I am sure they will happily give you a $25M bonus. As CEO, why not just get the bonus clause written into your contract?Your post reminds me somewhat of what it's like when lawyers or accountants review a business plan. They go into mega detail and make extremely in-depth comments, but miss the fundamentals - i.e. what it's all about. Keep it simple, Young Consultant, keep it simple.
 
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#0 RE: Is this possible?
 
TopCons
20.05.13 00:00
 
Are you the guy working for a recruitment company who has been making suggestions to the management and now it keen to get into strat consulting?Apologies if not, the writing style seemed familiar.
 
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#0 RE: Is this possible?
 
marsday
20.05.13 00:00
 
Do you actually understand these terms you are throwing around? Do you know what a call option is and how it works?
 
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#0 RE: Is this possible?
 
Mr Cool
20.05.13 00:00
 
What you are describing is a leveraged buy out, except that it won't be a buy out, cos the CEO wouldn't have a controlling interest. Other than the line of credit to fund it, what you are describing happens all the time in various forms and flavours.
 
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#0 RE: Is this possible?
 
Charliefleabag
20.05.13 00:00
 
In other words, you are looking to persuade the company to grant you performance based employee stock options. This is bog standard - technically this would be a complex call option but nobody would call it that.I can't imagine that anybody would offer you a loan of that amount unless you had a rock-solid business case, substantial collateral and a water-tight contract with the company. Pie in the sky.
 
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