the one in which TFS bitches about getting a 6x return on his money

May10
by TFS on May 10, 2018 at 8:16 am
Posted In: Investing, Random Thoughts, TFS Updates

TFS Jr will have a lot more money to count sometime soon!

 

We had some great news the other day. And I mean super-fan-f**cking-tastic great news!

So apologies for the following post which probably shows the worst of human behaviours (greed, regret, entitlement… the list could go on). However, please bear in mind while reading that I am immensely grateful for the windfall in question, my gripe is merely on how the opportunity was presented to us in the first place.

First of all though, the good news!

TFS Mega Corp’s ass has been sold

The company I work 1 for has been sold on from the private investor group that bought it a good few years ago. They’ve made out like absolute bandits and are looking at 8-9x on their initial investment. Luckily, I participated in the staff investment scheme they offered at the time the investment group bought it to the tune of £2,500. They’ve said the minimum we should expect back is a 6.5x return on our money. We’ve already received £2900 as a “dividend” last year so that should mean a minimum payout a bit later this year of:

£13,350!!!!

(Less any CGT tax that needs to be paid, although should be minimal judging from the online calculators I’ve used)

This is awesome and will provide a real boost to the ole FI coffers, no doubt about it! Or at the least cancel out any of the Crypto losses I may make when that crashes to zero sometime in the near future 🙂

And it means of course I will have to adjust our savings rate targets way upwards.

Hell… we might even treat ourselves to a nice holiday, you never know! 2

 

#salesfail

So look, my one gripe is how this investment scheme was “sold” to us. Information was very light on the ground and the main points that kept being put across were simply:

  • “This is a great opportunity!”
  • You will likely make 3-4x your money in a few years!
  • If you put £1 and the company grows 4x, you will get 4x your money.

There were also some negatives, mainly:

  • Obviously don’t know how long it will take to perform the exit strategy and you get your money back.
  • If you leave the company you get your money back and that’s it.

All sounds fair enough I suppose, but here are my main two gripes with two of those points:

  • “This is a great opportunity/You will likely make 3-4x your money in a few years” – It just came across as almost like a con salesman’s spiel to be honest. As mentioned there was hardly any information on how or why they thought the company could grow so much in such a short time. The company had grown a lot in the previous few years but nowhere near that amount. The best I thought it might do rationally is grow 2x in say 3 years, which is still a great investment of course! But at the time my long term future at the company seemed unsure at best (which is admittedly not their fault), so it seemed silly to throw too much money into it only to get my money back a year later or whatever.
  • “If you put £1 and the company grows 4x, you will get 4x your money” – I can’t find any emails or docs from the time so I can’t say if this was literally what was said, but they certainly gave the impression that this was the case – to me at least, and definitely the handful of other people I’ve spoken about it with since. The thing is that this was categorically not the case. The investment was leveraged pretty highly by a low interest bank loan and roughly geared up at 2x. So my rational thought that the company might double in value meant that your investment would pay out 4x… which is a massive f**king game changer IMHO. Why wasn’t this extremely important part of the deal explained correctly? I fail to believe that it was because the top guys in my office who were explaining it to us didn’t know about. I’m sure they realised it was the deal of the century and had 10’s if not 100’s of thousands invested. I just can’t think of a reason apart from incompetence to be honest. The first I actually heard of the gearing was at least a year later when one of the top finance guys came down from head office and explained it to us. I was like…”WTF?!” and realised at that point I’d missed out on capitalising on a great opportunity.

 

let’s be stoic

Whining about that over with, it probably wouldn’t have made much difference to how much we put in anyway because of two reasons:

  • We were in the middle of a house move so cashflow was tight.
  • As I said, I wasn’t sure I’d stay at the company for much longer than a year at the time anyway.
  • Hindsight is 20/20 whereas at the time, I didn’t know when the company would be sold on or for how much.

On the other hand, maybe I would have liquidated all of our ISA’s and stuck £20K into it (OK very unlikely) or borrowed some money off the bank of mum and dad and split any profits with them? Who knows… I guess I never will, so writing this post is the last bit of thinking about it I will do (promise!) and get on with investing (and admittedly spending a bit of) the money elsewhere.

Also it is worth thinking about the people who joined the company just after the cutoff date who didn’t even get the chance to invest… they’ve done 3 years of hard graft and not had this windfall at all. Let alone people at other companies who don’t get such investment schemes, and others in even shittier jobs or without jobs at all. Stoicism is great! I feel better already! 🙂

So yes on balance I am overall over the flipping moon and very grateful of the final outcome, and appreciate the good fortune of being offered the investment the first place.

 

conclusion

I’ve been wanting to write about this for a while now, but have been hesitant as it obviously makes me look like an ungrateful twat.

But it is surely quite shocking if large companies can’t even explain really quite important things like this to their employees. How are we supposed to make sensible financial decisions and grab opportunities as they come up if all of the facts are not available to us?

What do you think? Am I just a big Whiney-McWhineface? Or do you think they’ve acted a bit… I dunno… “shit” in this whole thing?

Notes:

  1. I’m still not going to say what the company is but I’m sure anyone doing a tiny bit of searching could easily find out. If you do please refrain from saying what you think it is in the comments! Thanks! ↩
  2. Still no new car Mrs TFS though… If you are reading :p ↩
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