Crystal Orange Hotel financing those things'Entrepreneur' magazine asked me to write a manuscript on the financing. I seriously thought for a moment, in fact, this financing as each financing or trading companies, afterwards I did a little happy or unhappy, surprisingly little regret, I thought I should do better. I try to do some regret these years and can also be done in the local corporate finance, mergers and acquisitions are sorted out, we hope we can be helpful. Crystal Orange Hotel Group financing reasons this financing is really a strategic decision. Crystal Orange Hotel Group's two brands Orange Hotel Crystal Orange Hotel and operation very well, cash flow is also very normal, to make a new round of financing decision was based on two reasons: 1) The hotel is a capital-intensive The industry, if you want to speed up the development of external capital injection is necessary. As for the relatively high-end Crystal Orange Hotel, the demand for funds is even greater. Crystal Orange Hotel per room cost almost $ 200,000, while the average Orange Hotel has reached nearly 10 million, according to the 150 rooms calculation, a Crystal Orange Hotel needs 30 million yuan, an ordinary oranges hotel also needs 15 million yuan. 2) Cash flow from operations can only be maintained by low-growing company, may lose market opportunities. Crystal Orange Hotel's two brands work well, cash flow is also very good, but each hotel construction required enormous capital requirements with respect to more than 20 hotels by the current contribution of cash flow obviously can not keep up, so we have financing. Consider financing for existing investors, the introduction of new funds is our consensus, and the introduction of funds in the form but there are differences, we take into account the financing include the following: 1) the existing shareholders continue to invest an additional it looks It is the easiest way, but from my point of view basically difficult to achieve, mainly due to valuation issues. Different strength of each company's shareholders, and each shareholder to the size of the expected long-term development is different, so some shareholders are willing to pay more money, and some can only be a part of the money. For optimistic about the company's financial strength and potential shareholders, they naturally want to take this opportunity to increase shares. But they have enough motivation try to do underestimate the value, thereby enabling further increase their stakes. As for the financial strength of the weaker investor or investors to keep up to the final round, they naturally expect relatively high valuation of the company, thereby minimizing the dilution of their shares. So this way I do not consider, because I know the company's shareholders are more strength is different, this program will eventually form an internal valuation and financing limit on argument, affect the company's financing. In addition, we have competing interests that could affect the company's development in the short term. Of course, if the business is running well, but also more difficult external financing, internal financing will then become the only option. Then, in front of the company's life and death, all of the company's valuation does not care much about. 2) to find the money by making bonds and other forms of debt in the form of do my priority, because this form of diluted shares for the old shareholders at least. As with most no fixed assets of private enterprises, large domestic banks to obtain loans is certainly not possible, so I only consider foreign banks, of course, including Chinese banks and Chinese banks overseas institutions for alternative investment companies. Several forms of debt include: Debt (debt) + Warrants (license, commonly known as turbines) and Convertible (convertible bonds), these two forms is essentially no different, investors will eventually need to calculate IRR (internal rate of return). From our experience, the two forms, although there are differences, but in the IRR are similar. I give a few Scenario (possibility) under every form gave a probability value, such as the probability of the company after three years of different probabilities of different estimates of debt financing when required will not be listed, as well as the market, so it backwards can calculate the company's current valuation, so that you can perform with a direct equity financing contrast, of course, need to consider the risk of market unsatisfactory debt in the calculation, this time should be given the possibility to underestimate the value of a higher probability. 3) financing through equity financing in the form of money in the form of equity from the company's survival is no doubt in terms of the risk is minimal, because the risk of this approach is dilute existing shareholders equity and no debt repayment. The biggest difficulty financing is determined by the form of equity valuation. For these three forms of financing, according to the existing shareholders of the company structure and features, I abandoned the idea of internal shareholder financing, and the choice of the latter two, the company will no doubt have different views. Because no matter how valuation, risk debt without considering the circumstances, the debt must be minimal dilution of existing shareholders, for the old shareholders will undoubtedly have great appeal. My selection is actually from the managers point of view, these two options exist some conflict of interest, because: 1) make the debt, then managers will consider the company debt pressure, and in case the market does not do well or very bad When the pressure will be very big for the company, but as a manager must bear heavy responsibility in terms of survival of the company. At the national economy and capital markets is less clear cases, managers do not tend to choose debt. 2) The remuneration of the general manager with opiton (options) related to equity investments made, the new shareholders will be an additional option, so managers do not have much equity Nike Air Yeezy financing for dilution concerns. 3) As regards the management authority, in fact, as a mature manager, in this context do not worry too much, as long as they find a rational investor and the industry have some experience, in the case of the manager well he (she ) absolutely should not worry about their management rights, management rights and fight for doing a good job at their own situation is very boring things. My position in the company special. First, I was the founder, I also have a little investment, I act as both investment's role also played the role of managers. I think that my ability to grasp the market for the company and should be much stronger than the investors do not participate in operations. So, in my opinion should be dominant. At the same time, I consider myself as a manager to have a conflict of interest, although I personally never put his own interests before the interests of the company and shareholders, I also worry about their subconscious will tend to determine their own personal interests. So, I put myself to the company and market understanding and investors fully communicate, listen to their Air Jordan 14 Retro views. My first choice is to do this debt, and with several major international investment banks were contacted, and almost all got the Term Sheet (letter of interest). At the same time, I also performed with a number of PE equity investments (private equity) were contacted, and also got their Term Sheet. Term Sheet is something, Term Sheet may also be an ass. For our company, take Term Sheet easier, because of the unique Orange Hotel Crystal Orange Hotel and positioning Crystal Orange Hotel has been in the market leader, and the entire group's operations better. So, I basically talk time and investors after got the Term Sheet. However, Term Sheet thing itself is not the responsibility, potential investors can easily find a reason to breach of contract, so for entrepreneurs, take a Term Sheet was nothing to be proud of. First look at the terms of how, more importantly, you do not know that they are not intended to talk to you and sign a binding Term Sheet. In addition, the final can not give you money is the real thing. Spread over the market hit investor piss in the toilet to get the story Term Sheet, and this is hardly surprising, I believe that pulls He Air Jordan 3 Retro just told you he wanted to vote, a urine of time not to let him in Term Sheet Write provisions on investment, especially in the valuation. So, in addition to a urine of time, it is estimated to spend at least three hours you chat with people and do arithmetic model. Such a urine get to hear it when financing myth. We got four international investment bank Term Sheet, there Debt (debt) + Warrants (license) form, there Convertible Air Jordan Fusion (convertible bonds) form. Meanwhile, several PE gave us they want valuation. However, the capital market by the end of 2011, great changes have taken place, some investment banks have started with me entangled in the details of the Term Sheet. Meanwhile, the international investment bank is also growing Nike Shoes pressure on myself, layin, they also face meet Basel Capital Accord on capital adequacy requirements, I am worried that they do not give money to debt themselves, but act as a substantial FA (financial advisory) role, finally they find PE money. I am increasingly worried Term Sheet becomes a fart, and he is becoming more cautious. I said at the board of directors of my worries, in the form of two kinds of investment we still have differences, but it is a gesture of goodwill, based on the full communication differences. Finally, the board vote, I vote for a key to do equity financing, which is consistent with long-term investment in people and my biggest advice contrary. In fact, before the vote, we had a full communication, both sides understand each other's ideas, and the decision will be known once the direction toward the board agreed to work together to move forward. The fact, too, in determining equity investment program, we biggest investors and I work together to complete this round of financing. After the Spring Festival this year, I start again with preliminary PE institutions we are interested to make contact, which involves the Carlyle. After making several rounds of discussions terms, I choose to focus Carlyle goal, the following main reasons: 1) Carlyle is the world's second-largest private equity fund, Blackstone investment fund than the Chinese Government is also large, they have the strength Exclusive to complete our huge investment. And we are talking about the Carlyle fund, because the fund Carlyle investment is 75 million dollars or more generally, they have invested CPIC (referring Pacific Insurance Company) 410 million US dollars, an estimated 4 billion profit last --50 billion dollars . If we find a relatively small investors cast such a big amount, they will be very difficult, in the daily management will be very careful, there is a tendency by the urge to participate in the company management. 2) a long-term strategic investor Carlyle. Because Carlyle biased in favor of long-term investment, which is very important for managers, managers will not be made for the listing of short-term behavior. Pre-budget hotel in the case management system is immature because of the pressure to join the blind development of the capital market. 3) There Carlyle hotel investment experience. They have invested the largest five-star hotel group - Century Hotel, also in foreign investment over the hotel. Carlyle responsible investment our team itself Kaiyuan investment team, they understand very hotel even know when is the hotel's short season, which greatly reduces the cost of communication managers and investors focused on enterprise development for managers Very good. In fact, after Crystal Orange Hotel Carlyle, Carlyle organize Century Hotel and we communicate, both sides learn from each other, this is the largest investor in addition to the money value to the enterprise. Financing and financial model when communicating financial data supported investor model is undoubtedly the most convincing thing. I always thought that the data will speak, and the model itself will eventually be implemented in the data, so they all inferences about the model should have data to support such a model will be made loudly and proudly words. I personally think that the model should be done very professional, I said professional refers not only your own business model transformed into a professional degree, including your financial data into professional degrees, including your people into investment habits valuation The specialty of the model. I can, but I have not spent this financing much thought in this regard, the company's financial staff complement to modify what I do when filling in data models and some small flaws, I did not check, but fortunately, not very different from the final data without much impact. Also, I personally think that sensitivity analysis is very important, this can help them understand the different circumstances in the case and the amount is expected to operate under different circumstances Nike Air Force 1 may require financing. At the same time, this valuation is very valuable for investors, so it can then do their own valuation clearer understanding. Business model because our business model has matured and been proven market talk is relatively simple, but in the description of the advantages of their business model, the still need a certain amount of insight and analytical skills, and be able to speak with a relatively simple language come out. I think that when you talk about the business model must not be a story, but you can use a more efficient form of story to speak out, that's a few examples of Nike Air Max what I say: talking about their position when I did a comparison vivid metaphor, 'China The hotel brand is dumbbell-shaped, one end is an upgraded version of the economy as a guest house hotel, while the other end is an international luxury hotel in the middle of no brand, so we have a greater opportunity to become the first brand in the market segment. ' When talking about competition in the future, they are mentioned in the budget hotel plans to enter the market and even high-end market, my answer is:. 'Crystal Orange Hotel you recognize our high-end brand positioning, like a BMW if you recognize the Crystal Orange Hotel metaphor for the BMW 5 Series, BMW 3 Series Orange Hotel, the budget hotel is the equivalent of the Chery QQ, even if they wanted to build a better car, even if they can build a better car, they Chery production car production in China's Chery Chery car or better than the BMW. 'spoke of the five-star Crystal Orange Hotel alternative location, they include the five-star international luxury swimming pool, an example of a gym, a restaurant lights facilities. I except that 'more than 95% of the guests never have a pool, gym but want to pay for the' conventional argument to explain to the facilities for 95% of the guests is useless, I also used the 'Ferrari VS Mercedes limousine' examples to illustrate our alternative. Crystal Orange Hotel is Ferrari, Mercedes-Benz her space may not be large, she could not run quickly spacious seating comfortable, but we seek is as Ferrari alternative feel, music and innovative design of our hotel room is like a sports car personality. I believe there are Mercedes-Benz sports car, like pursuit of the heart, so, Mercedes and Ferrari can never be compared to each have their own appeal. In addition, I also talk about some of the characteristics of the product used in the form of the story. For example, Crystal Orange Hotel sound system supports iphone, iPad while charging while playing, support ipad movies, sounds and images from the audio out from the TV out. The biggest difference is that I have developed on-demand music features. I took an investor visiting Beijing Crystal Orange Hotel, when he opened the door, the room automatically play sound from the music, and I told him: 'Let's say you and your wife wedding anniversary, you can quietly point a song for her then listen to you when love song. to the hotel when you tell her that you buy a pack of cigarettes, advanced her room, she opened the door the moment, the rooms will be broadcast sound when you listen to when you love that song song, I believe she will tears. 'After hearing this story, investors who once told me that my wife tonight to Beijing, I want her to live in your hotel, help me point one' because of love '? I personally have always thought to dull the complex model with vivid story out, certainly allow investors in the shortest possible time to understand your business model and positioning, and top decision-makers in their own investment companies, especially foreigners When the brief meeting to speak more efficient, because they might not be able in a very short time to understand things in their country have not seen before, and allow them to quickly understand a story. I remember the first time I've seen Carlyle founder William Conway, is the wedding anniversary of Mrs. point story of the song I was talking about, he immediately understood our creativity and innovative spirit, he was asked Carlyle responsible for our project Person: I like it, you decide the right course, the story can not replace everything, I naturally have to speak Chinese market and the company's situation, etc?. Financing is always just another start after the end of the financing, a lot of people say a lot of words of blessing and congratulations. Honestly, no one financing are just a new beginning. Financing course can explain investors made for recognition of your achievements at this stage, but investors want you for their money, the money you invested in the company will not take a penny for their own personal enjoyment, you have one just bigger targets, greater responsibility, more pay. So, to get the financing nothing to be proud of. This is just another beginning.