How to Be an Alpha Male

How to Be an Alpha Male

Copyright: Alpha University www.UniversityAlpha.com


HOW TO BE AN ALPHA MALE Michael Herlache MBA Doctorate in Business Administration Candidate 2020

Alpha University Publishing www.UniversityAlpha.com



For my wife, Svitlana, whom is my treasure.



About the Author: Michael is a natural when it comes to picking up women. Even at the youngest ages, Michael was comfortable approaching and escalating with girls and always had a girlfriend. By high school, Michael was managing multiple relationships with women from different schools. While an undergraduate, he found himself in a long term relationship and wanted to learn about how to be more dominant in the relationship. Despite having love, he found himself supplicating in the relationship. After becoming alpha, his girl began to chase him and loved him even more for it. Michael is also a natural when it comes to finance. He is the co-founder of a boutique investment bank at the age of 25 (www.AltQuest.com). AltQuest Group focuses on M&A for middle market businesses with $2M to $100M in enterprise value on the sell side. On the buy side deals may go north of $1bn. Physically, Michael has been bodybuilding for almost two decades. He focused initially on maintaining a mectomorph body type since he could not gain weight, but as his body changed he now maintains a mesomorph body type and has benched 400 lbs. He believes in the importance of increasing your strength every day. Academically, Michael got a 3.89 in undergraduate at University of Massachusetts Amherst and earned a scholarship to Texas A&M University for its MBA program. Michael is happily married to a beautiful and feminine Ukrainian girl, the love of his life. He currently works in M&A in the middle market and is the founder of Alpha University. Michael spent a year being an assistant for a PUA in Chicago. He was there in field, for bootcamps, & talks. He mastered game and found it most rewarding to build love and game in the context of long term relationships with women. Michael has been accepted into a Doctoral program for business where he will specialize in finance. Copyright: Alpha University www.UniversityAlpha.com


TABLE OF CONTENTS ALPHA MALE METHODOLOGY: Chapter 1: Alpha Male Methodology

ALPHA IN PHILOSOPHY: Chapter Chapter Chapter Chapter Chapter Chapter Chapter Chapter Chapter Chapter Chapter Chapter Chapter Chapter Chapter Chapter Chapter Chapter Chapter Chapter Chapter Chapter Chapter Chapter Chapter Chapter Chapter Chapter Chapter Chapter

2: High Value Models 3: What is an Archetype? 4: Gender Archetypes 5: Alpha Male vs. Beta Male 6: Beta Female vs. Alpha Female 9: Where to Find Beta Females? 10: The Love Archetype 11: Behavioral Modeling 12: The Value Spectrum 12: Alpha and Beta Model 13: The Purpose of Life 14: Principles of Alpha & Beta 15: Ego 16: Reason vs. Bias 16: The Natural Organizing of Society 17: Protecting the Natural Organizing of Society 18: The Dominant Narrative 19: The Non-Dominant Narrative 20: Dealing with Accusations from Beta Males & Alpha Females 21: Objectivism 22: Epistemology, Reason & Philosophy 23: Biased Philosophies 24: Objective Behavior vs Biased Behavior 25: The Reason Reward Cycle 26: Value & Values 27: Intellectually Dominant vs. Intellectually Submissive 28: High Value vs Low Value 29: Clarity vs Agreement 30: Reasoned/Objective Culture vs Biased Culture 31: Femininity vs Feminism Copyright: Alpha University www.UniversityAlpha.com

Chapter Chapter Chapter Chapter Chapter Chapter Chapter Chapter Chapter Chapter Chapter Chapter Chapter Chapter Chapter Chapter Chapter Chapter

32: 33: 34: 35: 36: 37: 38: 39: 40: 41: 42: 43: 44: 45: 46: 47: 48: 49:

How to Be an Alpha Male Protecting Your Girl from Feminism & Moralism Standards Search Costs & Relationship What Should a Male Look for in a Girl? What Should a Girl Look for in a Male? Bioelectricity & Evolution Value & Pleasure Attraction Positive Tension Model Game Game in Relationship Marriage: The Sex Perpetuity The Horniness Principle Assume Horniness A Day in the Life of an Alpha Male The Alpha Code The Alpha & Beta Lifestyle Winning the Game

ALPHA IN FINANCE: PERPETUITY SCIENCE: Part I: Perpetuity Methodology Chapter 50: Perpetuity Methodology Part II: Standard of Living Chapter 51: Standard of Living: Perpetuities & Investment Part III: Perpetuities (Value) Chapter 52: Perpetuities: Build or Buy Part IV: Perpetuity Science (Value Creation) Chapter 53: Business: The Science of the Perpetuity FOUNDATIONS OF FINANCE: Part V: Tracking Value (Accounting) Chapter 54: Tracking Value with Accounts Part VI: Analyzing Value (Finance) Chapter 55: Analyzing Value with Finance Part VII: Modeling Value Chapter 56: Finance with Excel Chapter 57: Financial Statement Modeling


How to Be an Alpha Male BUILD-SIDE: Part VIII: Perpetuity Analysis Chapter 58: Perpetuity Science Chapter 59: Perpetuity Analysis Chapter 60: Market Analysis Chapter 61: Value Chain Analysis Chapter 62: Gap Analysis Chapter 63: Product/Platform Analysis Part IX: Perpetuity Building Chapter 64: Perpetuity Building Part X: Perpetuity Management Chapter 65: Perpetuity Management Chapter 66: Valuation Methodologies Chapter 67: Framing Valuation Chapter 68: The Market for Perpetuities Chapter 69: Index Building & Analysis Chapter 70: Financial Data Sources Part XI: How to Become a Billionaire Chapter 71: How to Build a Unicorn Chapter 72: The Four Habits of Billionaires Chapter 73: Total Theme Monetization Chapter 74: Venture Capital Valuation SELL-SIDE: Part XII: Perpetuity Exit Chapter 75: Investment Banking Part XIII: The Middle Market Chapter 76: Middle Market Breakdown Part XIV: M&A Multiples Chapter 77: M&A Multiples Part XV: M&A Origination Chapter 78: M&A Origination Methodology Part XVI: Mandate/Target Matching Chapter 79: Mandate/Target Matching Part XVII: Deal Structuring Chapter 80: Deal Structuring Part XVIII: M&A Process Chapter 81: M&A Process Part XIX: Firm Management Chapter 82: Running the Boutique Investment Bank Part XX: Deliverables & Coverage Chapter 83: Investment Banking Deliverables Chapter 84: Coverage Chapter 85: Index Building & Analysis Copyright: Alpha University www.UniversityAlpha.com

Chapter Chapter Chapter Chapter

86: 87: 88: 89:

How to Be an Alpha Male Financial Data Sources Industry or Sector Newsletter Industry or Sector Report Rolodex Building

BUY-SIDE: Part XXI: Buying a Perpetuity Chapter 90: The Operating Model Chapter 91: The Financial Buyer aka Private Equity (LBO) Chapter 92: The Strategic Buyer aka Corporation (Merger) PERSONAL FINANCE: Part XXII: Cost of Living Chapter 93: Passive Income vs. Expenses Chapter 94: Target Countries Part XXIII: Education Chapter 95: Undergraduate Chapter 96: Graduate Chapter 97: Post-Graduate Part XXIV: Career Chapter 98: The Value of a Career Chapter 99: Wall Street Career Paths Part XXV: Portfolio Management Chapter 100: Own Portfolio Chapter 101: The Market Portfolio Chapter 102: Alternative Investments Part XXVI: GP/LP Portfolio Management Chapter 103: Micro Venture Capital Chapter 104: Lower Middle Market Private Equity

ALPHA IN HEALTH: Chapter 105: Archetypal Body Types Chapter 106: Developing an Archetypal Body Type Chapter 107: The Alpha Diet

ALPHA IN LOVE: Chapter Chapter Chapter Chapter

108: 109: 110: 111:

Alpha and Beta in Love Methodology Positive Tension Methodology Network to Love Methodology Relationship Methodology


NEXT STEPS: Chapter Chapter Chapter Chapter

111: 112: 113: 114:


How to Be an Alpha Male Course Get Beta Girlfriend/Wife Get Investment Banking Internship Get Mectomorph or Mesomorph Body



PREFACE: Seeming vs. Being Alpha The majority of the alpha male books are concerned with how to seem like you are alpha rather than how to actually be alpha. Thus, they speak about social situations, body language, and framing. This text and Alpha University are concerned primarily with how to be an actual alpha male. Alpha University has created a methodology for doing so. This is the Alpha Male Methodology:

Alpha in Philosophy

Alpha in Health

Alpha Male

Alpha in Love

Alpha in Finance


How to Be an Alpha Male From this methodology, Alpha University has built a body of knowledge which turned into the course, How to Be an Alpha Male. The book, How to Be an Alpha Male, is meant to accompany the course which can be taken online, in the weekend workshop, or in the month-long training.

When asking the question, “How to Be an Alpha Male?”, we are really asking four questions simultaneously: How to use reason, remain unreactive, and confidently pursue your intentionality in any situation? How to select, attract, escalate, have sex with, and commit to a beautiful feminine woman? How to become a millionaire before 40 years old without sacrificing quality of life by building a perpetuity? How to build an athletic and muscular body for life? For each question, Alpha University has developed proprietary methodologies which are the basis for building a capability which is the ultimate answer to the question.


How to Be an Alpha Male When the male implements these models in their life on a regular basis and builds the capabilities in philosophy, finance, love and health, they may say that they have become an alpha male. This book and the course is truly my life’s work, and I hope that you find it as transformative as it has been for myself and countless others. Alpha males add value. The value spectrum is the following: reason philosophy commodity logistics network advocacy consulting/decision frameworks transaction execution engineering manufacturing platform liquidity governance

Beta males do not add value and are focused on taking others value via political (ingroup/outgroup bullying/threats) means.

Regarding Portfolio Management:

the goal is not simply to diversify among asset classes, but concentrate wealth in perpetuities. this is a paradigm shift between diversified gambling on price volatility to principled investing. the principle of investing is to invest only in perpetuities or risk free assets. Copyright: Alpha University www.UniversityAlpha.com

How to Be an Alpha Male the majority of books/courses claim that man is a social being (where decision making is towards the ends of popularity to the ingroup). thus content is focused on social situations, framing, histrionics.

alpha university is concerned with actuality being alpha. man is a reasoned and loving being. The alpha male and the beta female are perpetuities that continuously add value. The beta male and alpha female bring zero sum (politics with defined winner and loser) to their interactions.

Reason (value): Concentrate only on perpetuities and ignore everything else. Philosophy: Objectivism, Alpha & Beta Finance: Perpetuity Science Health: Alpha workout & diet Love: Alpha & Beta in Love

Bias (defering to ingroup authorities in exchange for 'popularity' to ingroup): Diversify and spread focus to things other than perpetuities. Philosophy: Progressivism/multiculturalism Finance: Modern Portfolio Theory Health: Love: Pickup as a lifestyle. 'Liking' based upon conformity to ingroup; where human's value is based upon 'social' (i.e. utility to the ingroup) rather than reason & love. The regressing of humanity.

having a job and adding value are two entirely different things.


How to Be an Alpha Male Michael Herlache MBA Doctor of Business Administration Candidate 2020 Founder of Alpha University [email protected]



ALPHA MALE METHODOLOGY



Chapter 1: Alpha Male Methodology This text and Alpha University are concerned primarily with how to be an actual alpha male. Alpha University has created a methodology for doing so. This is the Alpha Male Methodology:




How to Be an Alpha Male Alpha in Philosophy

Alpha in Health

Alpha Male

Alpha in Love

Alpha in Finance

From this methodology, Alpha University has built a body of knowledge which turned into the course, How to Be an Alpha Male. The book, How to Be an Alpha Male, is meant to accompany the course which can be taken online, in the weekend workshop, or in the month-long training.



When asking the question, “How to Be an Alpha Male?”, we are really asking four questions simultaneously: How to use reason, remain unreactive, and confidently pursue your intentionality in any situation? How to select, attract, escalate, have sex with, and commit to a beautiful feminine woman? How to become a millionaire before 40 years old without sacrificing quality of life by building a perpetuity? How to build an athletic and muscular body for life? For each question, Alpha University has developed proprietary methodologies which are the basis for building a capability which is the ultimate answer to the question. When the male implements these models in their life on a regular basis and builds the capabilities in philosophy, finance, love and health, they may say that they have become an alpha male.



ALPHA IN PHILOSOPHY

Alpha in Philosophy

Alpha in Health

Alpha Male

Alpha in Love

Alpha in Finance



Chapter 2: High Value Models In order to understand how to be an alpha male, one must first understand value as it relates to the sexes. Namely, what is high value for the male and female and what is low value for the male and female. We use the High Value Model as shown here:

From the High Value Model shown above, a number of key questions arise for the male:







From the key questions and component questions regarding how to be an alpha male, we can develop an understanding of what defines progress for the male:



From the High Value Model, a number of key questions arise for the female:





From the key questions and component questions regarding how to be a beta female, we can develop an understanding of what defines progress for the female:

After understanding what high value for the female is, the male naturally asks, “where can I find beta females?”



Due to the rise of feminism in the West, we need to identify country by country the level of femininity of the average female which we have done in the Female Value Scale below:

As you can see, the level of feminism in the country has a negative correlation to the level of value of the average female in the country. The higher level of feminism means a lower level of value in the average


How to Be an Alpha Male female due to the female adopting more masculine behavior and being less feminine. Feminism is quite an Orwellian word! After we determine where the beta females are located, one has to understand what the goal with a beta female is. This means asking the question, “what is the ideal relationship?”

Remember, alpha is high value for the male and beta is high value for the female so naturally, the alpha male being with a beta female is the ideal relationship. For alpha male and beta females, this means avoiding relationships with beta males and alpha females:

When the alpha male and beta female are together, this yields true love:



True love is the goal of all healthy human beings and is truly the purpose of life. By following the methodologies in this book, we are going to be you there sooner than you think!

In order to obtain true love and the alpha & beta way of life, you are going to need to utilize reasoning. We can apply the High Value Model to reasoning in the following manner:


How to Be an Alpha Male As you can see, high value behavior is consistent with reason and low value behavior is derived from bias. From reason we can analyze the system of reasoning known as philosophy. Applying the High Value Model to philosophy yields the following model:

As you can see, the biased driven philosophies include: Progressivism Feminism Moralism

The philosophies that are consistent with reason include: Philosophy of Objectivism Philosophy of Alpha & Beta

From philosophy, we can then use the High Value Model to analyze perspectives on individual sovereignty:



As you can see high value males and females see the individual as being sovereign unto themselves and that their own self-interest is the highest moral purpose of their lives. The biased see the sacrificing of another’s self-interest as a necessary component to advance their agenda. From perspectives on individual sovereignty, we can then analyze views on the nature of true love:



As you can see, applying reason to true love means that love is selfinterest/ego-based and is truly synergistic meaning that the two come together to yield something more than when they were separate. The biased see love as requiring sacrifice which is not consistent with reason and is thus not true love. The biased see all aspects of life as zero sum meaning that for there to be a winner there has to be a loser. They extend this to imply that the winner therefore is a victimizer and the loser is thus a victim. The biased extend this flawed reasoning to male/female relations (hence feminism), to economics (hence Marxism), and politics (hence Progressivism):





Chapter 2: What is an Archetype? When we discuss high value, we are ultimately learning about what is archetypal for a particular sex. The definition for archetype is: The original pattern or model from which all things of the same kind are copied or on which they are based; a model or first form; prototype.

An archetype provides an ideal that evolved through time. We can apply archetypes to male/female relationships to understand selection, attraction, escalation, sex & commitment. Namely, there is an archetype for the male and an archetype for the female. Archetypes explain selection, attraction, escalation, sex & commitment. The archetype for the male is masculinity. We call this archetype alpha. The archetype for the female is femininity. We call this archetype beta. The key to success for a male is to become the male gender archetype, alpha. The key to success for a female is to become the female gender archetype, beta. Alpha has to do with excellence in philosophy, love, finance & health. Beta has to do with excellence in philosophy, love & health. The rest of this text will thus be broken down into the components of the male archetype alpha. From there we will do a deep dive into each and how they relate to creation of a high value male.



Chapter 3: Gender Archetypes Continuing to extend the concept of the archetype to the sexes, we get gender archetypes. Unfortunately, in the Western world, we have a relatively new phenomena in the past few decades, the fall of gender archetypes. Gender archetypes provide the ideal for both the male and female and provide an initial distinction that guides human behavior. The initial distinctions that are provided by gender archetypes is represented in the Alpha & Beta Model taught at Alpha University. The Alpha & Beta Model states that the gender archetype for the male is alpha (i.e. masculinity) and the gender archetype for the female is beta (i.e. femininity):

The distinctions in the Alpha & Beta Model are foundation and provide the core to developing philosophically.


How to Be an Alpha Male The instruction of gender archetypes used to occur at the level of the family, community, and institutions. This no-longer occurs in the West and in fact, we now see the opposite of gender archetypes being reinforced and held out as heroic by university, media, and politicians. The main themes portrayed in the West are the female being alpha portrayed as a hero and the male being beta portrayed as a hero. This conflicts with the Alpha & Beta Behavioral Model taught at Alpha University. The Alpha & Beta Behavioral Model teaches us traditional gender archetypes (alpha for the male and beta for the female) and the love archetype (alpha and beta in love). Archetypes are important as they indicate a society’s primary philosophy and shapes behavior which translates into culture. As archetypes become neglected, the social fabric of society begins to erode and biased culture fills the void. We see this today with progressivism and feminism in the West:



This is the leading challenge to Western civilization; the erosion and demonization of our ideals, and it provides an opportunity for men and women to take responsibility for change and to teach ourselves, families, communities and country about gender archetypes. The best way to do this is by using the Alpha & Beta Model:



Chapter 4: What is an Alpha Male?





Alpha is the gender archetype for the male. Alpha is masculinity. Masculinity is defined by the male’s focus, passion, and intensity in philosophy, love, health, and finance. An alpha male sees his primary role in life as love with a beta (feminine) female as well as the building of a perpetuity. Alpha is synonymous with high value for the male. The female is evolutionarily programmed to select, have sex with, build love with, and commit with an alpha male. Philosophy: The Alpha Code: The alpha male does not cheat on a beta female but is free to be with other women if the female is not beta. The key is to determine if the female is beta or not. If she is not beta, then the male should simply enjoy sex with her and then spend his time looking for a beta female. When he finds a beta female he should be exclusive with her and enjoy alpha and beta in love. Advocates and espouses gender archetypes (alpha for the male and beta for the female) and the love archetype See the individual as being sovereign unto themselves and that their own self-interest is the highest moral purpose of their lives. Love: Alpha males look for high value girls rather than just any girl. Alpha males have standards and hold their women to standards.


How to Be an Alpha Male Know and advocate that there is no "wrong" or "sin" or “victim” in male/female relations and sex is natural and healthy. Possesses game (cocky, teasing, sexual): know and implement the positive tension model in the pickup phase and in relationship True love is his goal Takes the lead in sexual encounters Finance: Strives for good grades and actually cares about learning the material to then become a thought leader in his field Pursues learning outside of the classroom, reading on his own time Knowledgeable regarding Perpetuity Science and builds/grows/sells/buys perpetuities Health: Has or is building a mectomorph or mesomorph body type Bodybuilds: Workouts that include the major masculine muscle groups including: bench, arms, shrugs, back/lats Diet of no sugar, low carbs, low fat, high protein



Chapter 5: What is a Beta Male?

A beta male is the opposite of the gender archetype for the male (i.e. feminine). A beta male is synonymous with low value. Beta males do not possess optionality. Beta males do not see their primary role as love with a beta (feminine) female nor the building of a perpetuity. Philosophy: Primary method of influencing others is bias in the form of framing, ingroup/outgroup bullying, censorship and histrionics Beta males possess a biased philosophy (progressivism or moralism) and model the opposite gender archetype (i.e. femininity) See all aspects of life as zero sum meaning that for there to be a winner there has to be a loser. They extend this to imply that the winner therefore is a victimizer and the loser is thus a victim. They further


How to Be an Alpha Male extend this flawed reasoning to male/female relations (hence feminism), to economics (hence Marxism), and politics (hence Progressivism) Are intellectually submissive has to do with the male or female’s advocacy of the philosophy of bias including progressivism/feminism and moralism. Philosophical submissiveness conveys low value for the male and female. Advocate that there is no objective reality. Moralist (the concept of “sin” and non-scientific view of God) Progressive (hostile to reason, gender archetypes and the love archetype) See the sacrificing of another’s self-interest as a necessary component to advance their agenda. Love: See love as requiring sacrifice which is not consistent with reason and is thus not looking for true love. Has no game and does not want to have game Relies on the female to take the lead in sexual encounters Pickup as a lifestyle with no standards for women Sees impregnating a woman as a means to keeping her Finance: Does not care about grades or learning the material Does not know Perpetuity Science or care to build perpetuities Does not attempt to add value Health: Does not work out Does not eat healthy Does not attempt to dress well and does not care about appearances



Chapter 6: What is a Beta Female?





Beta is the gender archetype for the female. Beta is femininity. Femininity is defined by the female’s focus, and passion in philosophy, love, and health. The beta (feminine) female sees her primary role in life as love with a male. Beta is synonymous with high value for the female. The male is evolutionarily programmed to select, have sex with, build love with, and commit with a beta female. Philosophy: Applies the philosophy of objectivism and the philosophy of alpha & beta. Feminine women possess reason and behaviorally model their gender's archetype, beta Understand that women’s rights and feminism are entirely different things. Women’s rights come from nature and are protected by reason. Feminism comes from the philosophy of Marxism and views the world in terms of victimizer/victims especially in male/female relations. To feminists, relationships are zero sum meaning that there is a clearly defined winner and a clearly defined loser. Thus, feminists view true love as something that is not real and ultimately a negative thing for a woman. Advocates and espouses gender archetypes (alpha for the male and beta for the female) and the love archetype Possesses reason and alpha & beta philosophy


How to Be an Alpha Male See the individual as being sovereign unto themselves and that their own self-interest is the highest moral purpose of their lives. Love: Prioritizes love over career Love with the male is her number one priority Passion for pleasing the male There is no "wrong" or "sin" or “victim” in male/female relations and sex is natural and healthy. Health: Works out by running and fitness training Eats well by not eating sugar and eats low carbs, high protein and low fat Feminine body type with target weight 95 lbs (for shorter girls) to 140 lbs (for taller girls) Enjoys wearing feminine clothing such as dresses and skirts



Chapter 7: What is an Alpha Female?

An alpha female is the opposite of the gender archetype for the female (i.e. masculine). An alpha female is synonymous with low value. The alpha female does not see her main role in life as love with a male. Philosophy: Primary method of influencing others is bias in the form of framing, ingroup/outgroup bullying, censorship and histrionics (i.e. victimizing themselves to others) Alpha females possess a biased philosophy (progressivism/feminism or moralism) and model the opposite gender archetype (i.e. masculinity). See all aspects of life as zero sum meaning that for there to be a winner there has to be a loser. They extend this to imply that the winner therefore is a victimizer and the loser is thus a victim. Furthermore, they extend this flawed reasoning to male/female relations (hence feminism), to economics (hence Marxism), and politics (hence Progressivism).


How to Be an Alpha Male Feminism comes from the philosophy of Marxism and views the world in terms of victimizer/victims especially in male/female relations. To them, relationships are zero sum meaning that there is a clearly defined winner and a clearly defined loser. Thus, they view true love as something that is not real and ultimately a negative thing for a woman. Advocate philosophy of bias including progressivism/feminism and moralism. Advocate that there is no objective reality. Feminists are hostile to reason, gender archetypes and the love archetype. Moralist (the concept of “sin” and non-scientific view of God) Progressive (hostile to reason, gender archetypes and the love archetype) See the sacrificing of another’s self-interest as a necessary component to advance their agenda. Love: Prioritizes career over love Love with the male is not her number one priority Unwilling to please the male See love as requiring sacrifice and is thus not want or believe in true love Health: Does not attempt to work out or care to Does not eat well or care to Does not attempt to dress feminine nor care to.



Chapter 8: Where to Find Beta Females? As a male, you are looking for high value rather than just any female. So the natural question becomes, “where are the beta females?”

Due to the rise of feminism in the West, women in the West nolonger see their primary role in life as love with a male. Since the alpha male sees his primary role in life as love with a beta (feminine) female, this is a major problem. Thus, we need to identify country by country the level of femininity of the average female which we have done in the Female Value Scale below:



As you can see, the level of feminism in the country has a negative correlation to the level of value of the average female in the country. The higher level of feminism means a lower level of value in the average female due to the female adopting more masculine behavior and being less feminine (not seeing her primary role in life as love with a male). Feminism, being both masculiphobic and feminiphobic, is quite an Orwellian word! Ultimately we find beta females in countries that have cultures that reinforce gender archetypes (i.e. objective cultures). Some of these countries are: Ukraine Russia Poland Czech Republic Japan China India

We can see the culture based upon what the country's media, education, and politicians portray as heroic (ideals). In the West, the female being alpha and the male being portrayed as beta is held out as heroic. Beta females will not be found here. Women prioritize career over love in the West. The cultures in the West (progressivism & feminism) are in fact


How to Be an Alpha Male hostile to gender archetypes. Just ask your average Western woman what she thinks about gender archetypes. So here is the main question you have to ask yourself regarding your love life: Would you like to spend your time picking up low value women that do not love men (PUA in the West) or having a lifetime of true love with a high value woman (Alpha University)? Herein lies the difference between Alpha University and other pickup literature (PUA). Alpha University focuses on selecting high value women instead of low value women. Other pickup literature assumes that all women have equal value. They do not make the distinction between alpha and beta females. Feminism is synonymous with low value for the female as it advocates the woman being alpha. Due to feminism in the West, low value women even think that they are high value. You can also observe the effects of feminism in the spike in the divorce rate in the USA to 50% of marriages. The rise in feminism coincides with the rise in the divorce rate. Beta females do not get divorced as love with the male is her number one priority. Men with beta females experience this love and stay in love. If you are interested in staying in love and being married, selecting a beta female is going to be key. Having sex with low value women can be fun, but I suggest that you raise your standards. Having sex and love with a beta female is much more rewarding than simply pursuing endless same night lays with low value women. I would know, I have successfully done both and I can tell you that waking up next to your true love is priceless. I tell my wife every day that she is my treasure and I truly feel, believe, and know it.



Chapter 9: The Love Archetype After we determine where the beta females are located, one has to understand what the goal with a beta female is. This means asking the question, “what is the ideal relationship?”







Chapter 10: Behavioral Modeling So what do with do with the High Value Model and the Alpha & Beta Model? We behaviorally model our own gender’s archetype! In order to become successful, we model other successful people's behavior. The best practice of behavior for a gender is called an archetype. Gender archetypes are thus the ultimate guide for those pursuing success. The Alpha and Beta behavioral model is a gender archetype model allowing both the male and female to identify successful behavior and eliminate low value behavior. Behavioral models allow us to model successful behavior and obtain love and significance. Modeling your gender archetype is ultimately the decision to become successful in life. Alpha is success for the male. Beta is success for the female. The Alpha and Beta behavioral model also allows us to identify low value behavior; namely the male being beta and the female being alpha. We are to use the Alpha and Beta model and apply it to any situation. The key question to ask is: “Am I being alpha or beta with my behavior?”


How to Be an Alpha Male Or regarding a mate: “Is she being beta or alpha with her behavior?” The male should be being alpha and the female should be being beta.



Chapter 11: The Value Spectrum


How to Be an Alpha Male So what do with do with the High Value Model and the Alpha & Beta Model?



Chapter 11: Alpha and Beta Model The core model that we are going to refer to when behaviorally modeling our gender archetype is the Alpha & Beta Model:

The alpha and beta behavioral model guides the male and female in determining what behavior is ideal and what behavior is not ideal. Alpha (i.e. masculinity) is ideal behavior for the male. Beta (i.e. femininity) is ideal behavior for the female. Alpha for the male (sex drive). The male should be striving towards alpha. Alpha maximizes bioelectricity (i.e. pleasure) in the male. Beta for the female (love drive). The female should be striving towards beta. Beta maximizes bioelectricity (i.e. pleasure in the female.



Chapter 12: The Purpose of Life







An alpha male and a beta female in love is the love archetype. This archetype is what we should be striving towards. The love archetype maximizes bioelectricity (i.e. pleasure) in both the male and female. Alpha and beta in love will bring you more happiness than any amount of money. It truly is the purpose of life.



Chapter 13: Principles of Alpha & Beta From the High Value Model and Alpha & Beta Model, certain principles emerge. One can have principles without being a moralist/religious. The following are the principles that form the foundation for the alpha and beta philosophy: The Principle of the Gender Archetype: The male and the female should strive to be their gender archetype The male should be alpha (i.e. masculine) and the female should be beta (i.e. feminine) The Principle of the Love Archetype: Both the male and the female should strive toward the love archetype The love archetype is monogamy between an alpha male and a beta female Being monogamous with a beta female is alpha The Principle of Providing: The male should provide for the female in finance and the female should provide for the male in love. The male should build a perpetuity in order to do so. The Principle of Bioelectricity Maximization: The male and female should strive to maximize bioelectricity rather than money.

Bioelectricity for the male is maximized with health, love, and finance (i.e. perpetuity + meaningful work) The Principle of Love: Copyright: Alpha University www.UniversityAlpha.com

How to Be an Alpha Male The male and female should have sex, cuddle, and commit daily. True love is the ultimate goal of both the alpha male and the beta female. The Principle of Perpetuity: The male should build or buy one perpetuity in life and use this to pay for expenses (i.e. passive income) The Principle of Health: The male and female should workout daily The male doing bodybuilding (and running when a mesomorph or endomorph) The female doing cardio The male should build and maintain an alpha body type The female should build and maintain a beta body type The Principle of Style: The male should wear business casual or business formal or be wearing fitness clothing The female should wear feminine clothing (i.e. dresses, skirts) or be wearing fitness clothing


How to Be an Alpha Male The Principle of Focus: That which you focus on you invest in and receive returns from The male should focus on philosophy, health, love, and finance The female should focus on philosophy, health and love The Principle of Culture: Each person carries with them culture Culture consistent with the High Value Model and Alpha & Beta Model is known as an objective culture Culture not consistent with the High Value Model and the Alpha & Beta Model is known as a biased culture



Chapter 14: Ego Ego is the highest moral purpose of one’s life. The larger the ego, the more attractive the male. Alpha is the male ego. Alpha is associated with the sex drive and value drive. Beta is the female ego. Beta is associated with the love drive and beauty drive.



Chapter 14: Reason vs. Bias





Chapter 15: The Natural Organizing of Society From the different egos of the male (alpha) and female (beta), there comes the natural organizing of society. The natural organizing of society is that high value males (i.e. alphas) have sex with high value girls (i.e. betas) and the high value males (i.e. alphas) build/buy perpetuities to support the high value girls. This is the Alpha & Beta way of life that emerges from the Alpha & Beta philosophy. There is no victim in the natural organizing of society. There are those that simply have less value and those that have high value. It is upon those with low value to do the work (behavioral modeling) to increase their value.



Chapter 16: Protecting the Natural Organizing of Society Instead of working to raise their value, the beta males and alpha females sought to change the definition of what is valuable by attacking gender archetypes, reason, and attempting to change the natural organizing of society. The beta males and alpha females even created their own philosophies including progressivism and feminism.



Chapter 17: The Dominant Narrative The dominant narrative is the high value males having sex with high value females, building perpetuities, working out, and being reasoned. This is the Alpha & Beta way of life. This way of life is under attack from the biased, including moralists/religious and progressives that seek to do away with the natural organizing of society (i.e. capitalism). There is no victim in the natural organizing of society. There are those that simply have less value (beta males and alpha females) and those that have high value (alpha males and beta females). It is upon those with low value to do the work (behavioral modeling) to increase their value. The beta males and alpha females decided that instead of becoming high value by becoming objective, behavioral modeling and building perpetuities, they would organize to change the natural organizing of society to reward beta males and alpha females. This is what has happened in the West to corporate America, education, politics.



Chapter 18: The Non-Dominant Narrative The non-dominant narrative claims that there is a “victim” in the natural organizing of society (beta males and alpha females) and that this justifies changing the natural organizing of society via soft and hard coercion. The non-dominant narrative is now propagated in progressive/feminist and moralist families, education, media, corporate America, and politics.



Chapter 19: Dealing with Accusations from Beta Males & Alpha Females Since there are so many of them, one is bound to run into low value people (i.e. beta males and alpha females). Since they are hostile to reason especially when applied to the sexes, these beta males and alpha females will often make accusations against alpha males and beta females. Alphas know how to remain unreactive, tease the frame, and continue with the dominant narrative. Alpha females and beta males are merely frame trolls.



Chapter 20: Objectivism 1. Objective reality – nature, to be commanded must be obeyed. Wishing won’t make it so. 2.

Reason – objectivity rather than bias

3. Self-interest – man is an end in himself. Man’s own happiness is the highest moral pursuit. 4.

Capitalism – value trading without coercion.

Philosophy and human nature: Metaphysics – nature of the universe as a whole, pertaining to existence What is the essence of human nature? The objective view of man is living being with an objective identity with reason as the means of survival. Things are not given to him automatically by reality. He can obtain value only by his own action (by production). What is the nature of reality? Reality exists outside of consciousness. What is man’s nature and means of human knowledge (epistemology) To survive, man must use reason by integrating conceptual knowledge with material from the senses. Life requires the achievement of values which requires actions, which requires productivity, which requires conceptual knowledge, which requires reason.


How to Be an Alpha Male The biased try to rewrite the nature of man to be biased (ex. “collective”, “altruistic”). From there they created a set of values in line with this frame. Actions achieve value. He needs knowledge to determine which actions yield the most value. Reason – the faculty that integrates conceptual knowledge and the material provided by the senses. Values flow from the nature of man. Ethics – values to guide human choices Politics – role of government Aesthetics – proper standards of art 20% production of food in society 80% other productivity towards advancement. The role of the creators and innovators Life expectancy is higher in countries with objective cultures and lower in countries with biased cultures Reason is an attribute of the individual. There is no collective mind. The biased claim that there is collective thinking or a collective mind hence their emphasis on consensus. Thought is not collective. No work is done collectively. It is under the guidance of a single man’s thoughts. Man is an entity. The biased (ex. Collectivists) are wrong metaphysically. Collective is a frame. The only kind of thought which exists is individual thought. The private process of thought. The biased frame that there is another type of thought. A metaphysics not consistent with reality. Integrating sensory data to conceptual knowledge. Man is autonomous and rational.


How to Be an Alpha Male Man’s means of knowledge. Reason is the means of man’s acquisition of knowledge. God is a word for the infrastructure of reality (ie. Dark matter) What is capitalism? The social system proper for man consistent with man’s nature: Rational faculty (reason) to gain conceptual knowledge then to apply concepts to material from the senses in real time. Reason is an individual mind, not a collective mind/brain. Action required to sustain human life is intellectual. Production is the application of reason to the problem of survival. The struggle: Biased vs The Objective Man’s survival requires that those who think be free of the interference of those who don’t. Freedom is the fundamental requirement of man’s mind. The rational mind does not work under compulsion. It does not subordinate its grasp of reality. It does not sacrifice its knowledge of the truth. A mind cannot be forced. A gun is not an argument. The social recognition of man’s rational nature is the concept of individual rights. “Rights” are a moral principle defining and sanctioning a man’s freedom of action in a social context. 1.

Right to life

2.

Right to property

3.

Right to be objective without fear of punishment

What is a social system? A social system is a set of moral, political, and economic principles embodied in a society’s laws, institutions, and government which determine the relationships, the terms of association among the men living in a geographical area. Key questions: 1.

Does a social system recognize individual rights?


How to Be an Alpha Male 2. Does a social system ban physical force from human relationships? 3. Is man a sovereign individual or is he the property of the tribe (state, society, collective)? 4.

Is man free?

Capitalism is the only system that answers yes. Capitalism is a social system based on the recognition of individual rights including property rights, in which all property is privately owned. In a capitalist society; no man or group may initiate physical force or the threat of force against others. Political correctness is the threat of force against the objective. The only function of government is to protect man’s rights; protecting him from physical force. Government is the means of placing the retaliatory use of force under objective control. In a capitalist society, all human relationships are voluntary. Men deal with one another only by reason, discussion, persuasion, and contractual agreement. Private property protects and implements the right to disagree. Capitalism keeps the road open to the creative mind. Moral justification of capitalism: Only system consistent with man’s rational nature, its ruling principle is justice, protects man’s survival. “common good” and “public interest” are frames that has served as the foundation for all tyrannies. There is no such entity as the “tribe” or the “public”; they are only a number of individual men. Good and value pertain only to an individual living organism. Schools of thought on the nature of the Good: 1.

Moralist – good inherent regardless of context or consequence


How to Be an Alpha Male 2. Subjective/relative – good bears no relation to facts of reality. Good is created by man’s consciousness 3. Objective – good is an evaluation of the facts of reality by man’s consciousness according to a rational standard of value. Good is an aspect of reality in relation to man. The moralist and subjective/relative theories make it possible for man to believe that the good is independent of man’s mind and can only be achieved by physical force. The moralist and subjective/relative theories have created Stalin, Hitler, and Lenin. When Good is arbitrary/subjective. Force becomes the only way of dealing with one another. Reason: the only means of communication. Objective reality; the only common reference. Objective theory of values incompatible with rule by force. Capitalism is only system based implicitly on objective theory of values. The Good is objective; attempt to achieve the good by force is a contradiction. The good is in objective reality and to be discovered by man’s mind. Man’s capacity to value. To recognize the good. Values cannot exist (be valued) outside of the full context of a man’s life, needs, goals, and knowledge. The recognition of individual rights implies the good is not an abstraction or a supernatural dimension. The good is a value pertaining to reality, to the earth, to the lives of individual human beings. Men are not interchangeable. Values are not determined by fiat or majority rule. You have no social duty. Your own life is your own responsibility. The only thing that a capitalist system requires is that which nature requires; rationality.



Chapter 21: Epistemology, Reason & Philosophy Objectivism is the philosophy consistent with metaphysics. What then is man’s nature and means of human knowledge (epistemology)? Man’s epistemology is rooted in his ability to reason. Reason is his sole means of forming concepts and interpreting the material from his senses. Reason applies to all and everything. Nothing supersedes reason including God, the state, or victims. No-one/nothing is exempt from reason.



Chapter 22: Biased Philosophies Philosophies not consistent with reason and metaphysics are known as biased. The leading biased philosophies in the West are: Progressivism Feminism Moralism It is important for the male to develop philosophy consistent with reason and metaphysics. Biased Philosophies: Progressivism/Feminism: Progressivism advocates behavior (i.e. advocates the girl becoming more alpha and the male becoming more beta). Progressives portray the female being alpha as heroic and the male being beta as heroic. You can look at how media, universities, and politicians portray beta males as heroic. A culture’s heroes convey its ideals. The progressive schema is also hostile to the value schema and sees a system designed around value (i.e. the maximization of pleasure) as “unfair”. Moralism: Moralism is another biased philosophy as it is not consistent with the reason and metaphysics in that the moralist advocates “sin” and a personal God that enforces morality. As we know, there is no “sin” in nature. We also know from science that God is the infrastructure that allows the multiverse to exist (dark matter).



Chapter 23: Reasoned Behavior vs. Biased Behavior There is such a thing as objective behavior and biased behavior. Objective behavior is consistent with reason, the philosophy of objectivism, and the philosophy of alpha & beta. Biased behavior is not. A male should be a heterosexual that is an engineer in some capacity building perpetuities, being reasoned, having sex with a beta female, and working out. Objective behavior for the male is called alpha. A female should be a heterosexual female that is feminine and loving, reasoned, pleasing her man, and working out. Objective behavior for the female is called beta. Biased behavior for the male is called beta. Biased behavior for the female is called alpha.



Chapter 24: The Reason Reward Cycle The reality (i.e. the metaphysics of the universe) rewards reason and reasoned behavior. The philosophy consistent with metaphysics is known as objectivism. Philosophy of objectivism and behavior consistent with this is known as objective behavior. Objective behavior receives objectively positive outcomes. Objectively positive outcomes create objective happiness.

Reasoned Rewards

Reason

Reasoned Communication & Behavior

Reasoned Philosophy

Reason is consistent with metaphysics. Behavior consistent with reason is objective behavior. Objectivism provides us the standard.



Chapter 25: Value & Values Values are objective and are consistent with reason. Using reason, we identify which phenomena has high value and that which has low value. Related to the sexes, that which has value in the first place are individuals aligned with their gender’s archetype. Other phenomena that has value includes the love archetype, perpetuities, and the natural organizing of society/objective culture.



Chapter 26: Intellectually Dominant vs Intellectually Submissive In addition to being dominant in finance, love, and health, an alpha male is dominant philosophically (i.e. objective). That is what we cover in the Alpha Philosophy portion of this text and the How to Be an Alpha Male course. Dominant philosophically has to do with the male or female’s knowledge and application of the philosophy of objectivism and the philosophy of alpha & beta. Girls can be knowledgeable philosophically and still be beta. Alpha males teach their girls to be knowledgeable philosophically in order to protect them from progressivism/feminism and moralism. Being intellectually submissive has to do with the male or female’s advocacy of the philosophy of bias including progressivism/feminism and moralism. Philosophical submissiveness conveys low value for the male and female. These individuals would include the beta male and the alpha female. Another tell regarding those that are non-dominant intellectually/philosophically are those that advocate that there is no objective reality.



Chapter 27: High Value vs Low Value The objective truth is that some people have higher value and some people have lower value. Those with higher value are reasoned and model their gender’s archetype. Those with lower value are biased and do not. Those with the lowest value model the opposite sex's gender archetype. A female does not get more value by being alpha, she gets more value by being beta. A male does not get more value by being beta, he gets more value by being alpha. Society naturally organizes around high value. Progressives/feminists and moralists call this unfair. High value males (alpha) get sex from high value females (beta). High value males build perpetuities (career is a perpetuity) and use them to support high value females. This social system is called Capitalism. There is nothing unfair about this. It is only low value males (beta) and low value females (alpha) that are unwilling to be reasoned and model their gender's archetype that complain about this. Alphas do not associate with low value people.



Chapter 28: Clarity vs Agreement Remember that alphas do not display certainty seeking behavior and are comfortable operating in a context of tension. A wise Jewish man once said, “seek clarity rather than agreement”. Alphas seek clarity rather than agreement with people. So when you disagree with someone, that is ok. You would rather be clear than to try to supplicate to agreement with them. They will respect you more and you will respect yourself more for clarity than simply agreeing with them trying to seek certainty. When someone does not agree with you regarding the Alpha & Beta model, you do not have to convince them. Simply explain that, “A wise man once said seek clarity rather than agreement”. It is better to clearly understand each other’s position. Most times, those that disagree with gender archetypes and the Alpha & Beta model are those that have their identities tied to a purely subjective view of the world. They do not want to live in a world with an objective reality and actually assess their own level of value, let alone do the work to become high value. This purely subjective view of the world can be viewed as a rationalization as a result of cognitive dissonance driven by one’s realization that they are low value.



Chapter 29: Reasoned Culture vs Biased Culture Objective cultures both advocate and espouse reason, the gender archetypes and the love archetype. Objective cultures exist in the East (ex. Eastern Europe, South Asia, East Asia). Biased cultures are hostile to reason, gender archetypes and the love archetype. Biased cultures exist is the West (ex. USA and Western Europe). Biased cultures portray the woman being alpha as heroic (i.e. high value) and the male being beta as heroic (i.e. high value). As you will observe in the Culture Model on the following page, philosophy drives behavior which in turn drives culture. When you put in bias as an input you get biased behavior (process) and ultimately a biased culture (output). Biased culture is characterized by zero sum meaning that life is seen as transactional with winners and losers in every transaction and thus a victimizer and victim in every interaction including male/female relationships. As such, true love is not seen as the goal and is even viewed as not existing. This sort of culture is not conducive to value creation and actually will destroy value. A reasoned/objective culture is characterized as being synergistic where relationships translate into additional value being created which are more than the sum of the parts including male/female relations. True love is seen as the goal and is strived for by all. This culture is conducive to value creation.





Chapter 30: Femininity vs Feminism Girls need to understand that women’s rights and feminism are entirely different things. Women’s rights come from nature and are protected by reason. Feminism comes from the philosophy of Marxism and views the world in terms of victimizer/victims especially in male/female relations. To them, relationships are zero sum meaning that there is a clearly defined winner and a clearly defined loser. Thus, they view true love as something that is not real and ultimately a negative thing for a woman.

Feminine women possess reason and behaviorally model their gender's archetype, beta (in line with the Alpha and Beta behavioral model). Feminists are biased and behaviorally model the opposite sex's gender archetype (the opposite of the Alpha and Beta behavioral model).


How to Be an Alpha Male Girls that behaviorally model the opposite sex are unattractive to males (especially alpha males). Feminists are hostile to reason, gender archetypes and the love archetype. It is important to qualify the female to determine if she is a feminist (i.e. alpha female). You can simply ask her, “Does she consider herself a feminist?” or “Does she consider herself a feminine woman?”. After these questions you can even explain to her the Alpha and Beta model and then see her reaction. If she gets offended, then you are dealing with an alpha female (i.e. low value). If she does not get offended and says that this makes sense, then there is a higher chance that she is a beta female (i.e. high value). With these questions, you are trying to find out whether she is a beta female or an alpha female. Once again, beta females are high value and alpha females are low value. Alpha males look for high value girls rather than just any girl. Alpha males have standards and hold their women to standards.



Chapter 31: Protecting Your Girl from Feminism & Moralism It is important for males to educate their women philosophically to avoid bias. The bias that the male should warn his woman about is known as progressivism, feminism and moralism. Teach your woman reasoning skills and help her identify what bias looks like (help her to make the distinction). There is no "wrong" or "sin" or “victim” in male/female relations and sex is natural and healthy. Women love sex and want sex all the time, just like men.



Chapter 32: Standards Pickup either assumes that all girls are equally valuable and has no standards or claims that their value is entirely determined by their looks. PUAs typically refer to attractive females as HB and a number as if her looks entirely determine her value. This is simply not the truth. Girls that are beta (i.e. feminine) have high value. Girls that are alpha (i.e. masculine) have low value despite how physically attractive they are. If you find yourself settling for sex with low value women (i.e. alpha females), I suggest that you raise your standards. Before you get in field, it is crucial to get your intentions and standards defined. Males should look for high value (i.e. beta) females and stay away from low value (i.e. alpha) females. In the USA and Western Europe (i.e. the West), we have a biased culture that is hostile to reason, gender archetypes and the love archetype. Biased cultures portray women being alpha as heroic (i.e. high value) and men being beta as heroic (i.e. high value). So what do we do as a male in the West? Make the effort to find high value women globally in the East. In the East, reason, gender archetypes and the love archetype are alive and well. We must utilize the internet and social networks to connect with these beta females and build a real relationship. It will be lasting. You do not have to settle for low value women.



Chapter 33: Relationship & Search Costs When you are in a relationship or married to a beta female, you have more time to build perpetuities and to work out which would otherwise be spent trying to find sex (relationship eliminates search costs) if you were simply pursuing pickup. Marriage to a beta female entirely eliminates search costs. The benefits of variety that come with pickup do not outweigh the costs associated with search costs, especially for those living in a country with a biased (feminist) culture. When you live in a country with a feminist culture, search costs almost become infinite within the geography of the country. One must search in different countries in order to find a beta female. For men living in countries with objective cultures, search costs are extremely low and pickup becomes more viable. However, relationship with a beta female is the preferred route as there are benefits that are not available to those just pursuing pickup such as being in love, cuddling, working out together, enjoying meals together, listening to music together.



Chapter 34: What Should a Male Look for in a Girl? Beta (i.e. femininity)! Possesses reason and alpha & beta philosophy: Advocates and espouses gender archetypes (alpha for the male and beta for the female) and the love archetype Avoid those with bias including those with a: Moralist/religious (the concept of “sin” and non-scientific view of God) Progressive schema (hostile to reason, gender archetypes and the love archetype) Prioritizes love (i.e. a relationship with a male) over career. Love with the male is her primary focus. Feminine body type with height 5’0” to 5’9” and weight 95 lbs to 130 lbs. Enjoys wearing feminine clothing such as dresses and skirts.



Chapter 35: What Should a Girl Look for in a Male? Alpha (i.e. masculinity) Possesses reason and alpha & beta philosophy: Advocates and espouses gender archetypes (alpha for the male and beta for the female) and the love archetype Avoid those with bias including those with a: Moralist/religious (the concept of “sin” and non-scientific view of God, hostile to reason) Progressive (hostile to reason, gender archetypes and the love archetype) Corporate finance/investment banking/investment management. Either studying finance or working in finance Game (cocky, teasing, sexual). Guys that know and implement the positive tension model in the pickup phase and in relationship. Male should have a mectomorph or mesomorph body type:



Mectomorph body type: Cannot put on fat and can put on some muscle mass. Muscle is entirely fast twitch.

Mesomorph body type: Can put on muscle mass without fat without limit. Muscle is a combination of fast twitch and slow twitch. Bodybuild Workouts that include the major masculine muscle groups including: bench, arms, shrugs, back/lats



Chapter 36: Bioelectricity & Evolution In order to become an alpha male, it is crucial to understand human behavior and its drivers. Humans, while possessing free will are ultimately driven by pleasure in the form of bioelectricity. Bioelectricity is the cause of pleasure for and governs the behavior of organic life. After the needs of survival are met (i.e. food, shelter, water, clothing), bioelectricity guides humans towards more pleasure. Organic matter moves towards more bioelectricity (i.e. pleasure) automatically without choice. The human brain and body evolved to conduct more pleasure in the form of bioelectricity. Human behavior can be explained by the effort to obtain more and experience bioelectricity. The nature of the mind is bioelectricity in the brain. The brain acts as the infrastructure conducting the bioelectricity (ie mind). The earliest organic life found that bioelectricity was increased when they integrated with other organic life and worked as one. Bioelectricity acted as a coordinating mechanism allowing the new life form to operate as one and continue evolving to maximize bioelectricity. The cells that make up the human are guided by bioelectricity individually. The precursors to human life were guided by bioelectricity and found out that working together created the infrastructure for the maximum conduction of bioelectricity. The human brain evolved to conduct more bioelectricity and bring maximum pleasure to the human. Evolution is towards the maximization of bioelectricity. The male and female evolved to maximize bioelectricity and what evolved was the human ego (alpha for the male, beta for the female). Human progress is towards the maximization of bioelectricity; it can be said that evolution is a selfish phenomena.


How to Be an Alpha Male The magical thing about bioelectricity is that it facilitates reasoning and is pleasureful at the same time!



Chapter 37: Value & Pleasure As mentioned, bioelectricity not only facilitates reasoning (i.e. the mind) but is also pleasureful. The human ego and pleasure are intertwined. The reward for creating value and being valuable is bioelectricity. This speaks to the relationship between value and pleasure. The key to being high value is to be bioelectricity causing (i.e. value creating). The key to this is being the gender archetype in health, love, and finance (discussed in Alpha and Beta in Love presentation). One can do this especially with game as it spikes and maintains high levels of bioelectricity in the female. Implications: Attraction is not a choice. Bioelectricity drives human behavior. High value males maximize their own bioelectricity through relationships, finance, and health. Being high value means maximizing your own bioelectricity and the bioelectricity of others. Alpha is high value (bioelectricity maximizing) for the male and beta is high value (bioelectricity maximizing) for the female. There is a difference between being high value and being rich. High value means that you maximize bioelectricity in yourself and others (alpha for male and beta for female). Rich people are not necessarily high value. There is a distinction between money and value. Those that only pursue money are not high value even if they have more money than those that are high value. The key question that all should ask is, "how do I become high value?" The answer is alpha for the male and beta for the female.


How to Be an Alpha Male Would you rather have the most pleasure in the world or the most money in the world? The reasoned answer is the most pleasure in the world. Money simply allows us to pursue our self-interest and have our essential needs met. The reasoned human maximizes bioelectricity (i.e. pleasure) rather than money.



Chapter 38: Attraction Attraction is the spiking and sustainment of bioelectricity (i.e. pleasure). Attraction is not a choice. Attraction is a result of being in the presence of a gender archetype. One can demonstrate the gender archetype physically or behaviorally. Demonstrating higher value is done by demonstrating alpha for the male. This amounts to behaving in a confident and cocky manner coupled with teasing and playful behavior.



Chapter 39: Positive Tension Model By using the Positive Tension Model we are intentionally trying to create positive tension with the girl that is the source of attraction and which allows for the creation of love. We are not going to break the tension but merely satisfy the tension through sex and repeat as shown in the model.

Positive Tension Model: 1. 2. 3. 4. 5. 6. 7.

Teasing & playful, Sexual & direct Physical escalation Sex Cuddle Commit (tell “I love you”) Repeat


How to Be an Alpha Male Build and maintain positive tension which means spiking bioelectricity (i.e. pleasure) in the girl. Lead this bioelectricity towards love and turn into a lifetime of Alpha and Beta in Love.



Chapter 40: Game Introduction Game has to do with creating and sustaining peak levels of bioelectricity. Game is the ability to generate attraction in female and escalate physically to sex. The best model to learn game is the Positive Tension Model. The Positive Tension Model involves cocky & teasing communication with a girl to spike her bioelectricity and then not breaking the tension but escalating the positive tension by escalating physically, handling logistics where you can pursue sex, and ultimately having oral sex with her and then penetration. Positive Tension Model Using the Positive Tension Model we are intentionally trying to create positive tension with the girl that is the source of attraction and love. We are not trying to build rapport with the girl but rather we are trying to playfully break rapport with her. We are not going to break the tension but merely satisfy the tension through sex and repeat as shown in the model.



Positive Tension Model 1. 2. 3. 4. 5. 6.

Teasing, playful, sexual, and direct Physical escalation Sex Cuddle Commit (tell “I love you”) Repeat

Conclusion Build and maintain positive tension which means spiking bioelectricity (i.e. pleasure) in the girl. Lead this bioelectricity towards love and turn into a lifetime of Alpha and Beta in Love. Game should continue in the relationship with playful, sexual and direct communication daily.



Chapter 41: Game in Relationship Game through the Positive Tension Model is essential to maintaining attraction and passion in a relationship. Simply because you are in a relationship with a girl does not mean that game stops, in fact game gets taken to a new level as you begin to integrate more cuddling and I love you's. Fulfill your dreams of love and sex. Any time you think of sex or want sex, be sexual and speak sexually with your girl. This is what alpha males do. Get her talking about how much she wants your dick and how much she loves your cum. She will get more comfortable discussing sex openly with you the more sexual you are with her. Always be moving your encounters with women towards sex. Become an attractive man. The type of man a woman wants is a sexual man that leads the interaction. Don't make her lead. Move your encounters with women towards sex.



Chapter 42: Marriage: The Sex Perpetuity The purpose of pickup is to build a sex perpetuity with a girl. Men that do not take the time to build relationships with women are not building sex perpetuities. The ultimate sex perpetuity is known as marriage. The male simply has to be sure that she is a beta female. Marriage with an alpha female is not the goal.



Chapter 43: The Horniness Principle The alpha male is constantly horny and so is the girl. It is evolutionarily hardwired into the male and female and bioelectrically automatic. Horniness is not a choice but is automatic and a part of everyday life for both sexes. Bloodflow through the genitals is a part of existence. This constant bloodflow through genitals means continuous horniness as the nature of life. The girl wants sex all time but relies on the male to initiate and lead.



Chapter 44: Assume Horniness Alphas have a high sex drive and want sex all the time. Some men were born with lower sex drives than others. For those that find themselves having sex infrequently, one should assume that they are horny even if they do not currently feel it and then take action to satisfy that horniness. In doing so you condition yourself to be horny more often and in doing so increases your sex drive. Simply by consciously choosing horniness, you can make yourself more horny. As a rule of thumb, you should either be busy doing work (i.e. career, building perpetuities, working out) or you should be escalating physically with your girl towards sex. When the logistics are not right for sex, you should be communicating your horniness to your girl via text, phone call, or directly telling her. Alphas sexualize all interactions with their women and their women love them for it. Assume horniness and become alpha.



Chapter 45: A Day in the Life of an Alpha Male For those that desire to become an alpha male, it is important to have an idea or a mental picture of what the life of an alpha male actually looks like. 7:00 am – I wake up naked next to beta female wife. Cuddle and have sex using morning wood. We tell each other “I love you” while I am inside of her. 8:00 am – Naked wife is making breakfast. Check work email for IOIs from buyers as well as appointments for the day. Running a boutique M&A shop means that time is spent winning engagements as well as working with buyers on existing engagements to move them towards making and offer and ultimately closing. There are three calls for the day; one at 11 am with a potential seller. The business has approximately $10M in revenues as well as $1.5M in EBITDA. Multiples for businesses that are under $25M in total enterprise value (TEV) typically get done at a 5x to 5.5x EBITDA multiple. The two other calls are in the afternoon at 1pm and 2pm and they are both with lower middle market PE firms that are interested in the firm’s engagements. Eat breakfast with the wife. She made eggs, irish oatmeal, fresh fruit, and black coffee. Delicious. 9:00 am – Put workout clothes on and bring wife to the gym inside the building. Workout for an hour doing bodybuilding, working on the major masculine muscle groups. After strength training begin to run on the treadmill. Running generates a natural high. The wife loves to see me bodybuild; it turns her on. 10:00 am – Back to the condo and I strip my wife naked. We take a shower together and wash each other.


How to Be an Alpha Male 11:00 am – I call the seller and discuss our firm and what we do. I ask the seller about price expectations of the business as well as how performance has been last year. We get a general agreement as to multiple range which is 5x to 5.5x EBITDA and fee which turns out to be 6%. After the call I make a note to draft the engagement agreement which I send to the seller later in the day. 12:00 pm – Check Alpha University email account for recent enrollments. Make video article on game in relationship and discuss the Positive Tension Model. Upload to YouTube and link to the site for Alpha TV. 1:00 pm – Call East coast private equity group that is interested in manufacturing engagement. Discuss industry interest and if there is any experience dealing with similar companies. Write down the questions that the PE firm has; these will be relayed to the seller. Finally, ask what multiples that they are seeing in the marketplace for deals like this as well as where they typically come in at. This is going to help in prioritizing buyers. 2:00 pm – Call with Florida based private equity group that is interested in business services engagement. You find out that they typically come in at 5x but will go higher depending on whether the business has substantial % of recurring revenue as well as low CAPEX. 3:00 pm – I check work emails to see if any buyers have sent an IOI. My analyst has scheduled another meeting for tomorrow meeting with a communications company that does $20M in revenues. 4:00 pm – I go to a closing in Fort Lauderdale, FL. The purchase price is $4M with a 6% fee. This means a $240,000 fee. I drive to the bank after receiving the check and deposit it into my savings account. I am going to hit my $1M cash target in another few years. 5:30 pm - My wife gets dressed is a sexy skirt and top and we are going out on South Beach for dinner, drinks and dancing. I am in a dress shirt and jeans. 6:30 pm – We are dining at a high end seafood restaurant. She orders fish and a mojito. I order the lobster and a vodka tonic with a lime. 8:00 pm – We go to a lounge/dance club playing house music. She orders another mojito and I have another vodka tonic. We drink and dance together. It is so much fun having a beautiful, sexy and loving wife.


How to Be an Alpha Male 10:30 pm – We take a cab back to the condo. Once we get back inside, I kiss her and take her clothes off. We have oral sex first and then we fuck on the couch overlooking the city. 11:30 pm – We shower, brush our teeth and go to bed 12:00 am – We say “I love you” and cuddle until we fall asleep together. Life is amazing. You can see what this looks like visually by watching our show, How to Be an Alpha Male, on Alpha TV at our website, www.UniversityAlpha.com.



Chapter 46: The Alpha Code The alpha male does not cheat on a beta female but is free to be with other women if the female is not beta. The key is to determine if the female is beta or not. If she is not beta, then the male should simply enjoy sex with her and then spend his time looking for a beta female. When he finds a beta female he should be exclusive with her and enjoy alpha and beta in love.



Chapter 47: The Alpha & Beta Lifestyle The alpha & beta lifestyle is what we should all be working towards. The alpha & beta lifestyle is characterized by an alpha male and beta female being married, working out together daily, having sex together daily, the male having a perpetuity, and both being reasoned/objective philosophically.



Chapter 48: Winning the Game Winning the game means achieving the Alpha & Beta way of life by becoming alpha, finding and building love with a beta female, and building one perpetuity with passive income larger than your expenses. Investing is not an end itself but is towards maximizing quality of life as represented by owning a perpetuity that generates passive income greater than one’s expenses. The most efficient way to win the game is through syndicating the perpetuity yourself. The highest quality of life is the alpha and beta lifestyle. When you have achieved this, you have won the game.



ALPHA IN FINANCE Alpha in Philosophy

Alpha in Health

Alpha Male

Alpha in Love

Alpha in Finance



Perpetuity Science

The standard undergraduate business and MBA curriculum at most business schools is broken down along siloed subjects such as accounting, finance, management, operations, and marketing and attempts to teach students how to be a mid-level manager at a large corporation for the rest of their lives. Unfortunately, these jobs are mostly gone, having been shipped overseas or automated. This undergraduate business and MBA curriculum is thus outdated and not appropriate for the 21st century when most individuals will have multiple jobs and roles throughout their careers and lives. The more appropriate field of study which has yet to make it to undergraduate and graduate business schools is known as Perpetuity Science. Perpetuity Science is the body of knowledge, methodologies, and optimization models related to the building, selling, and buying of perpetuities. It explains how perpetuities can be built, managed and exited from to create wealth. Perpetuity science is a paradigm shift in business and finance education in that it replaces the siloed subjects traditionally taught in undergraduate and graduate business Copyright: Alpha University www.UniversityAlpha.com

How to Be an Alpha Male schools with a holistic methodology that integrates industry and the capital markets into one framework. Instead of a disparate business taxonomy along the lines of economics, finance, accounting, marketing, etc., we have an initial taxonomy broken down in relation to the perpetuity, namely: Build-side – the building of perpetuities (entrepreneurs, corporations) Sell-side – the selling of perpetuities (investment bankers, wall street) Buy-side – the buying of perpetuities (private equity, corporate M&A) Within each of the three, we have various methodologies and optimization models that may touch on various subjects such as accounting, finance, economics. By starting with perpetuity science, the student can better synthesize the various moving parts of industry and the capital markets. When first learning about industry and the capital markets, one should first understand the nature of the perpetuity, which is the basis for industry & the capital markets. The perpetuity can be modeled with the following formula: Perpetuity value = CF / r Where CF represents the benefit stream associated with the perpetuity and r represents the discount rate associated with the perpetuity’s risk of receiving the benefit stream. After understanding the nature of the perpetuity in general, we can then analyze the perpetuity within each industry. The nature of the CF, r, value chain, and value being offered will be different. We investigate each industry according to these variables by building an index for each industry and then sub-sectors within the industry.


How to Be an Alpha Male After building the index and sub-sector indices we can then begin analyzing the value chain and leaders in each part of the value chain. We then build financial statement models for the leaders in each section of the value chain and understand the drivers of performance in each section. We analyze each leader or target in relation to the phases of perpetuity in terms of where they are now and the next steps that they can take to move to the next phase. In doing so, one begins to think in terms of being a CEO. The CEO’s role is to bring the company/opportunity through the stages of the perpetuity by building recurring benefit streams (i.e. cash flows) and at the same time derisking those benefit streams. In doing so, the valuation of the perpetuity moves from backward looking towards forward looking and the valuation is thus maximized (based upon a multiple of future earnings). The CEO should thus be familiar with perpetuity science and the phases of the perpetuity. As the perpetuity changes, the formula for valuing the perpetuity changes as well. There are five phases of perpetuity building. As we move through the phases, the role of the owner of the perpetuity becomes more passive and the valuation becomes larger due to size of EBITDA increasing, EBITDA multiple increasing, and the discount rate decreasing. The perpetuity becomes less dependent on the owner to exist and run as an organizational structure is formed coinciding with the division of labor, processes are automated, and revenue becomes recurring. Phases of the Perpetuity: I. Syndication (Getting to PMT)


How to Be an Alpha Male II. Job Shop (From PMT1 to PMT2, PMT3, etc) III. Perpetuity (From PMTi to CF/r) IV. Growing Perpetuity (From CF/r to CF/r– g) V. Diversified (Perpetuity 1 + Perpetuity 2) The goal of Perpetuity Science is the building, growing, management, exit and buying of perpetuities, so ultimately, while learning about Perpetuity Science itself, we are also actively looking for: 1.

Perpetuities to create

2.

How to advance a perpetuity to the next phase

3.

Perpetuities that should be exited from

4.

Perpetuities that should be purchased

Capabilities that each business student should have are associated with the 3 key questions of Perpetuity Science: Perpetuity Science: I.

Build side: How to build a perpetuity?

II.

Sell side: How to sell a perpetuity?

III.

Buy side: How to buy a perpetuity?

The key questions are associated with capabilities to be built learning perpetuity science.



Part I: Perpetuity Methodology

This text and Investment Banking University are concerned primarily with how to become an actual investment banker. Investment Banking University has created a methodology for doing so. This is the Perpetuity Methodology:

Foundations of Finance

Buy-Side

Perptuity

Build-Side

Sell-Side



Chapter 49: Perpetuity Methodology This text and Investment Banking University are concerned primarily with how to become an actual investment banker. Investment Banking University has created a methodology for doing so. This is the Perpetuity Methodology:

Foundations of Finance

Buy-Side

Perptuity

Build-Side

Sell-Side

From this methodology, Investment Banking University has built a body of knowledge which turned into the course, How to Become an Investment Banker. The book, Investment Banking, is meant to


How to Be an Alpha Male accompany the course which can be taken online, in the weekend workshop, or in the month-long training.

When asking the question, “How to Become an Investment Banker?”, we are really asking four questions simultaneously: How to use finance to model the concept in a perpetuity format? How to physically build the perpetuity? How to exit the perpetuity? How to buy a perpetuity? For each question, Investment Banking University has developed proprietary methodologies which are the basis for building a capability which is the ultimate answer to the question. When the individual implements these models and builds the capabilities in finance, the build side, the sell side and the buy side,


How to Be an Alpha Male and then sells a perpetuity, one may claim to have become an investment banker.



Part II: Standard of Living

The reason why finance exists is to improve our standard of living. Finance is a set of concepts, methodologies, and optimization models applied to value creation.



Chapter 50: Standard of Living: Perpetuities & Investment

The Goal To increase standard of living without sacrificing quality of life.

How to Get the Goal In order to increase standard of living without sacrificing quality of life, one is to build or buy perpetuities.

Perpetuity


How to Be an Alpha Male Perpetuities increase standard of living without sacrificing quality of life by possessing recurring revenue and automated work processes to achieve the revenue.

Building Perpetuities The building of perpetuities is known as being on the build-side; commonly referred to as entrepreneurship.

Buying Perpetuities The buying of perpetuities is known as investment or being on the buy-side.

Selling Perpetuities The selling of perpetuities is known as the sell-side.

The Science of Perpetuities The science of perpetuities is known as business while the valuation and market for perpetuities is known as finance.

The Lab of Finance The experimentation and optimization tool of finance is known as Excel.


How to Be an Alpha Male Excel Is the scientific computational tool of finance to aid us in the modeling and valuation of perpetuities.



Part III: Perpetuities

The main avenue to improve one’s standard of living is to build or buy a perpetuity. Perpetuities generate value on a continual basis for both the owner and the consumer of the product/service.



Chapter 51: Perpetuities: Build or Buy

The Goal The goal is to build/buy at least one perpetuity in order to maximize standard of living while not sacrificing quality of life.

Demand for Perpetuities There is always demand for perpetuities and especially by institutional investors which means that the market for corporate control more closely mirrors the DCF (intrinsic value) of the perpetuity (corporation). Institutional investors can pay higher multiples in order to realize returns over longer periods of time.

Types of Perpetuities Perpetuities can be created from companies that possess some aspect of recurring revenue and automated work processes associated with product creation.



At a high level, types of perpetuities include: I.

Commodity i. Durables ii. Non-durables

II.

Platform i. Digital ii. Physical

III.

Content i. Educational ii. Entertainment

IV.

Service i. Analysis ii. Allocation iii. Engineering iv. Logistics v. Management vi. Advocacy vii. Relationship

V.

Infrastructure i. Private 1.

Real estate

ii. Public

There are corporate perpetuities as well as financial perpetuities. Financial perpetuities include the market portfolio.

From the types of perpetuities, when applied to the main value themes of human existence we arrive at industries associated with the perpetuities (according to Aswath Damodaran at NYU): Copyright: Alpha University www.UniversityAlpha.com



How to Be an Alpha Male When looking at the different industries in which perpetuities are located, it becomes helpful to understand the nature of the perpetuities including risk (as represented by the discount rate in the perpetuity formula), return, growth, margins, multiples, and cash flow:

Risk (discount rate) on the following page:




How to Be an Alpha Male Return:


How to Be an Alpha Male Growth:


How to Be an Alpha Male Margins (Cash flow):


How to Be an Alpha Male Multiples:



Part IV: The Science of the Perpetuity

In order to build perpetuities, one should follow a methodology and understand the process associated with it’s creation. We start out with the basic formula for a perpetuity and then build up to sources and uses for a specific perpetuity.



Chapter 52: Business: The Science of the Perpetuity

Introduction to Business Business is the science of the perpetuity (buy vs. build)

Perpetuity value = PMT / Discount rate

As you can see we can increase value by increasing PMT (increasing revenues, decreasing COGS, SG&A) or decreasing the discount rate.

Business as Science To maximize returns, one either invests in building perpetuities in the form of positive NPV (net present value) projects or one invests in the market portfolio when there are no positive NPV projects. If an


How to Be an Alpha Male opportunity is not positive NPV, one does not invest time, energy or resources into the opportunity.

Business Methodology When referring to business, we are referring to the science of the perpetuity and we can break this down further into a methodology: I.

Build side – Participants, roles, methodologies and models associated with the creation of a perpetuity

II.

Sell side – Participants, roles, methodologies and models associated with the sale of a perpetuity

III.

Buy side – Participants, roles, methodologies and models associated with the purchase of a perpetuity

The Corporation’s Two Goals 1.

Become a perpetuity - as characterized by recurring revenue as automated work processes.

2.

Become a growing perpetuity Value of growing perpetuity = D1 / r – g

g decreases the discount rate



FOUNDATIONS OF FINANCE

In order to understand the role and work of the investment banker, we need to first have a strong understanding of the foundations of finance. This helps us to understand why it is that the investment banking industry exists and where investment bankers fit into the bigger picture.

Finance is the science of the perpetuity is broken down into the following methodology:

IV.

Build side – Participants, roles, methodologies and models associated with the creation of a perpetuity

V.

Sell side – Participants, roles, methodologies and models associated with the sale of a perpetuity

VI.

Buy side – Participants, roles, methodologies and models associated with the purchase of a perpetuity



Part V: Tracking Value (Accounting)

As a perpetuity is built, it becomes necessary to track the financial existence of the perpetuity through time. Accounting is the set of concepts, methodologies, and models that allows us to do exactly that.



Chapter 53: Tracking Value with Accounts Value The formula for value is:


Accounts and Accounting In order to track valuation performance of the perpetuity (i..e business), companies create accounts for each item of it’s financial existence. These accounts are the basis of valuation. Valuation is the basis of actions taken in a capitalist economy.

Accounts, Accounting & Excel Excel is the software used to model the accounts of the enterprise and determine the valuation of the perpetuity (i.e. business).


How to Be an Alpha Male Account Filings & Public Data 10-K annual 10-Q quarterly

Account Statements: P&L Income statement (P&L): Revenues COGS Gross Profit Operating Expenses EBIT Interest Cost EBT Taxes Earnings

Account Statements: Balance Sheet Assets = Liabilities + Shareholder’s Equity Total Assets = Total Liabilities + Shareholder’s Equity


How to Be an Alpha Male Current Assets + Long Term Assets = Current Liabilities + Long Term Liabilities + Value of Shares Previously Issued + Retained Earnings – Treasury Stock

Account Statements: Statement of Cash Flows CF from Operating CF from Investing CF from Financing

Statement of Cash Flows is the linkage between the income statement and the balance sheet.

Get D&A from SCF (CF from Operations) and CAPEX from SCF (CF from Investing)



Part VI: Analyzing Value with Models (Finance)

As the economic existence of the perpetuity continues to grow, one becomes interested in the value of the perpetuity. Enter finance, whose concepts, methodologies, and models allow us to understand the valuation of the perpetuity.



Chapter 54: Analyzing Value with Models

Analyzing Value Strategics, financials, and entrepreneurs undertake investment with the expectation of NPV & IRR. They accept projects that have positive NPV and IRR higher than the cost of capital. They actively find and structure positive NPV projects and then match financial products to them.

The positive NPV project is ideally a perpetuity with the value of the business being the perpetuity value:


Calculating NPV & IRR is the main analytical work of finance.



*Growth statistic CAGR (Compound Annual Growth Rate) is yearly IRR

From Accounts to Models To go from accounts (accounting) to a finance number we use models. We only use Free Cash Flow to determine valuation for major transactions in a capitalist economy including restructuring, growth, M&A, and capital raising.

To go from account filings to models, we need to “clean the numbers”, “scrub the financials”, “normalize the financials”. This amounts to recasting accounts to get to a finance number. We try to get to a finance number to get to a valuation. We get to a valuation to then take actions in a capitalist economy.

*We want more add backs to get to a higher valuation

Modeling After getting valuation, we can then model the different actions we can take in a capitalist economy to increase the valuation of the strategic, financial or entrepreneurial firm.

Modeling in Excel


How to Be an Alpha Male Just like our account statements, our models are built and exist in Excel

Analysis of Account Statements Analysis of account statements (ratio of analysis) has various uses including from a liquidity perspective, commercial bank perspective, activity perspective, profitability perspective, and growth perspective.

Ex. 4x-7x debt multiple for lending purposes



Part VII: Modeling Value

Continuing deeper into the field of finance we now discuss the actual work associated with understanding the value of a perpetuity. The work is done by modeling the perpetuity in Excel.



Chapter 55: Finance with Excel

Finance with Excel Express your decisions using Excel. Excel is the premier business computational tool

Implement financial analysis using the tool for financial analysis, Excel

Valuation process

Heart of finance is time value of money and discounting

Excel Concepts Needed for Finance


How to Be an Alpha Male Write down variables (defining the parameters of the decision) Absolute or relative values copying (=A1) (=$A$1) and formulas Functions (=fx(

))

Data tables (“sensitivity tables”)

Express Decisions with Excel Implement financial analysis with Excel



Using a Financial Model for Decision Making: The Investment Decision Ability to get financing from financial institutions depends on ability to make a financial model for the new or existing business

The financial model projects future earnings from the organization

Predict the future performance of a firm.

Accounting statements report what happened to the firm in the past. A financial model predicts what the firm’s accounting statements will look like in the future. Start by taking the initial accounting statements and inputting them into Excel

Difference between accounting and financial model is in the current assets and current liabilities. In financial model we are concerned only with operating assets and operating liabilities. We exclude financing related

Financial model has three components:

Model parameters (value drivers) Copyright: Alpha University www.UniversityAlpha.com

How to Be an Alpha Male Financing decision assumptions (i.e. Mix between debt and equity, what does firm do with excess cash? Repay debt, payments to shareholders, or as cash balance) Pro forma financial statements

Cash in the financial model is a plug. The plug is so that the balance sheet balances.

Cash = total liabilities and equity – current assets – net fixed assets

The plug is the balance sheet item that guarantees the equality of the future projected total assets and future projected total liabilities and equity. Every financial model has a plug and the plug is almost always cash, debt, or stock.

Financial Model and Valuation Process:

Assumptions (value drivers) Existing accounting statements (IS and BS) Projected financial statements Free cash flow calculation (FCFs) Terminal value calculation


How to Be an Alpha Male Valuation calculation Sensitivity table for major value drivers to see range of valuation

Once the financial model is complete (i.e. accounting statements have been projected), we can use the model to:

Value the firm by projecting free cash flows (FCFs) Determine ability of firm to pay it’s debts (i.e. credit analysis)

Using a Financial Model for Decision Making: The Financing Decision All companies must decide how to finance their activities

Proportion of debt and equity

The discount rate should be appropriate to the riskiness (i.e. variability or beta) of the cash flows being discounted.

Discount rate is also called interest rate, cost of capital, opportunity cost.


How to Be an Alpha Male Compute annualized IRR

The cost of capital of an investment is related to the risk of the cash flows of the investment. The relationship of individual asset returns to the risk is called the security market line (SML). You can use SML to get the discount rate for individual investments. The SML is used for private companies.

The cost of capital of an organization is related to the risk of the combined riskiness of the investments in the portfolio. The relationship of portfolio returns to the risk is called the capital asset pricing model (CAPM). You use CAPM to get the discount rate (i.e. cost of capital). When the investment is a public security, you use CAPM since the buyer of the security will have a portfolio to diversify away risk.

Portfolio risk is associated with statistics.

Wealth Maximizing Decisions Investment decision – What is it worth? NPV of strategic alternative Financing decision – What does it cost? IRR of financing alternative

Cash is King


How to Be an Alpha Male Wealth maximization has to do with maximizing cash. Cash in the context or organizations is known as cash flow.

Return is a word for cash flows

Cash Flow Definition (FCF) Profit after taxes + Depreciation (noncash expense) + Change in net working capital (- increase in current assets and + increase in current liabilities) Capital expenditures (CAPEX) + After-tax interest payments = Free Cash Flow (FCF) Role of the Finance Professional The role of the financial professional is to quantify the cash flows and risk of strategic alternatives available to the individual or organization.

Investment bankers compute the IRR and NPV of strategic alternatives.

Capital Markets Copyright: Alpha University www.UniversityAlpha.com

How to Be an Alpha Male The capital markets is made up of cash flows and discounts

Capital Markets and Information Information is valuable in determining investment and financing decisions in the capital markets. Overall, markets are weak form efficient meaning that their valuations reflect previous stock price performance (i.e. stock price data) and are sometimes semistrong meaning that valuations incorporate all public information. Capital markets are not strong form efficient meaning that valuations do not reflect private information.

Multiple Investment and Financing Decisions: Portfolio When there is multiple investment and financing decisions, we have something called a portfolio. The discount rate can be decreased by diversifying with a portfolio. When the discount rate is decreased, the valuation of the portfolio increases as cash flows have maintained more value.

A corporation/organization is simply a portfolio of sources and uses

Modeling a Strategic Alternative Put all variables (“value drivers”) at the top of the spreadsheet Never use a number where a formula will also work


How to Be an Alpha Male Blue for hard codes Black for links and outputs

Finance: Exchanging Value Through Time Assets have a time dimension

Future value function =FV( ) Value in the future of a sum of money compounded into the future

Present value =PV( ) Value today of future payments discounted to present

Net present value (NPV) =-First payment + NPV( ) Incremental wealth increase earned by a strategic alternative. NPV tells you economic value of an investment today. Always use NPV in the investment decision.

Internal rate of return (IRR) =IRR( ) Compound rate of return earned by a strategic alternative VIII. Rate of Return vs. Cost of Capital Copyright: Alpha University www.UniversityAlpha.com

How to Be an Alpha Male What is the asset’s IRR?

Compare to the cost of capital (Effective annual interest rate – which is the annualized IRR used to compare financing alternatives aka Compound Annual Growth Rate (CAGR))

Cost of Capital Calculate IRR of financing alternatives to determine cost of capital

Need to get IRR in annual terms to facilitate comparison. May have to start with monthly IRR then annualize

Annualized IRR = (1 + Monthly IRR)^n-1

Finding a Value in a Financial Model When we want to find a value by setting a particular value to another cell, we use:

Goal seek – Alt, A, G



Financing Alternatives: Loan Amortization =PMT( ) To calculate the debt payment per period

=IPMT( ) To calculate the interest portion of the payment of debt

=PPMT( ) To calculate the principal portion of the payment VIII. Financing Alternatives: Direct Comparison IRR of differential cash flows tells you the cost of the option

IRR tells you the cost of the financing alternative

CAGR is Effective Annual Interest Rate (EAIR) to allow for comparison

Analyzing the Strategic Alternative: Sensitivity Table Data Table is Alt, A, W, T


How to Be an Alpha Male Tells you how output changes with incremental changes in the inputs (i.e. variables)


How to Be an Alpha Male The Financing Alternative: Nominal vs. Real Cost In determining the true cost of a financing alternative, it is important to use the real rate of interest which incorporates inflation. The real rate of interest is determined by using the real cash flows.

Inflation acts as a discount rate

Strategic Alternatives Analysis For each strategic alternative, compute the NPV and IRR, then have decision rules for investing including:

Minimum NPV Hurdle rate (IRR)

You are using NPV and IRR to make investment decisions but you need the discount rate. The discount rate is associated with the financing decision

Cash Flows and Risk Are cash flows riskless (i.e. treasury bills) or are they risky (i.e. market portfolio)


How to Be an Alpha Male Cost of Capital and Opportunity Cost The returns of similar investments should be used as the cost of capital

The Discount Rate An organization’s discount rate is the cost of equity and cost of debt. The cost of the total capital structure is known as the Weighted Average Cost of Capital (WACC):

WACC = rE* (E/(E+D)) + rD (1-Tc)*(D/(E+D))

Value of Equity The value of equity is the present value of all future dividends Sources & Uses Uses

Sources

Free Cash Flows WACC CAPM to get cost of equity

Accounting Statements: Statement of Cash Flows The purpose of the statement of cash flow is to explain the increase in the cash accounts on the balance sheet as a function of the firm’s operating, investing, and financing activities. Copyright: Alpha University www.UniversityAlpha.com


Valuation Methods: Total Enterprise Value (TEV) vs. DCF Market valuation:

Total Enterprise Value (TEV) = MVE + MVD + Preferred – Cash

2. DCF Method (intrinsic value) = PV(FCFs) @ WACC + liquid assets

Accounting Value vs. Finance Value Accounting value of firm is backward looking and thus incorrect to use in valuation. Finance value is forward looking and consistent with the fact that the owner of an organization or security has claims on the future cash flows of the business.

FCF and DCF Free cash flow (FCF) calculations is DCF

Portfolio Analysis and the Capital Asset Pricing Model (CAPM) Discount rate is a measure of risk associated with: Horizon Safety


How to Be an Alpha Male Liquidity

We get the discount rate by analyzing the distribution of an investment’s returns. We get the standard deviation which is a measure of variance in returns. Standard deviation is a component to finding the discount rate:

=STDEVP( )

What does the frequency distribution look like?

Determine risk measure known as beta and plug this into CAPM to get the discount rate of equity. Derive the cost of debt and then calculate WACC to get the discount rate of the firm.

Ex Ante vs. Ex Post Returns Ex Ante is the expected return

Ex Post is the actual return VIII. Statistics for Portfolios =Average( ) To get mean return Copyright: Alpha University www.UniversityAlpha.com


=Varp( ) To get variance of returns

=Stdevp( ) To get standard deviation of returns

=Covar( ) To get covariance between two sets of returns

=Correl( ) To get correlation between two sets of returns

Trendline (regression) – click on points of XY graph and right click to Add Trendline with linear regression and display equation and Rsquared on chart

Portfolio Returns and The Efficient Frontier Statistics are used to determine acceptable and unacceptable portfolios


How to Be an Alpha Male Diversification lowers standard deviation of the portfolio

Are the returns correlated? If no, then add security to the portfolio (i.e. diversify)

The efficient frontier is the set of all portfolios that are on the upward-sloping part of the graph starting with the minimum variance portfolio (i.e. the market portfolio). Choose the portfolio that is on the efficient frontier.

The Efficient Frontier and the Optimal Portfolio The best investment portfolio is made up of the risk free asset and a risky asset representing the market (i.e. the market portfolio)

Determine the market portfolio (the portfolio with the highest attainable sharpe ratio)

Market portfolio is the best combination of risky assets available to the investor

Security Market Line & CAPM The security market line says that the expected return of an asset is a function of the asset’s beta (i.e. sensitivity to the market). Copyright: Alpha University www.UniversityAlpha.com


Only relevant risk is systematic risk since the investors will all be diversified

Security Market Line & Investment Performance The security market line says that the expected return of an asset is a function of the asset’s beta (i.e. sensitivity to the market).

Only relevant risk is systematic risk since the investors will all be diversified

Security Market Line & Investment Performance The security market line says that the expected return of an asset is a function of the asset’s beta (i.e. sensitivity to the market).

Only relevant risk is systematic risk since the investors will all be diversified VIII. Security Market Line & Investment Performance Continued Investment performance:

Risk adjusted performance; excess returns?



Risk Adjusted Performance Market portfolio proxy is S&P 500

Beta is measure of riskiness of security

Alpha measures excess return

Market portfolio proxy is S&P 500

Beta is measure of riskiness of security

Alpha measures excess return

It is about investment performance versus the risk involved in the investment

CAPM & Investment Performance Use CAPM to get the discount rate of equity and compare to cost of financing alternatives


How to Be an Alpha Male Is there risk adjusted overperformance or underperformance?

Is performance commensurate with risk?

Excess Return Excess return is the investment’s spread over the one year treasury (i.e. risk free rate)

Use regression equation to determine if underperformance (negative alpha) or overperformance (positive alpha)

When regressing asset’s returns against the market portfolio, alpha measures excess returns over the market portfolio

Beta & R^2 High beta is an aggressive stock

Low beta is a defensive stock

R^2 is percentage of variability that is market related risk when returns are regressed on the market portfolio



Diversification increases R^2 of the portfolio and decreases nonsystematic risk

Alpha and Efficient Markets In efficient markets, there is no alpha and investments earn their riskadjusted return

CAPM and the Cost of Capital CAPM = rf + Beta [ E(rm) – rf]

In CAPM, use Beta of asset to calculate cost of equity

WACC is the discount rate based upon the capital structure of the investment

Valuing Securities in Efficient Markets Market efficiency and the role of information in determining asset prices

Publicly available information should be reflected in market price



Chapter 56: Financial Statement Modeling

Financial statement modeling refers to the creation of a standalone operating model for a company. The operating model is built using historical performance (i.e. historical financial statements). We use the operating model to see pro forma performance of a company given certain assumptions. These pro formas are the basis for decision making within the corporation.

Financial statement modeling best practices: Blue is hard codes, black is formulas Be consistent with millions and billions (keep conventions the same) Footnote everything in presentation Keep your model simple (1,000 cells is better than 10,000 cells)

Financial Modeling Steps: 1.

Spread historical financial statements


How to Be an Alpha Male a.

3 to 5 years history for IS, BS, and SCF

b.

Public information for company 10K, 10Q

c.

If private company, get audited financial statements provided by company

2.

Adjust for non-recurrings

3.

Build cases into the operating model

a.

Best case

b.

Base case

c.

Worst case

d.

Disruption case

4.

Build assumptions based upon historical trends in assumptions tab (margins and growth rates)

5.

Project LIBOR and interest rates

a.

Spread over LIBOR

b.

LIBOR is the base that banks use to price spread their loans to make money (called “L”)

c.

3 month LIBOR is the standard reference

6.

Project IS and BS & two items on SCF (D&A and CAPEX (before gross PPE on BS))

a.

Maintenance CAPEX vs. Discretionary (growth) CAPEX

7.

Separate debt and interest schedule (calculate debt and interest schedule before calculating BS items for revolver, term loan, and unsecured debt)

8.

Project Working Capital

a.

Days payable & Days receivable (360 day method)

9.

Project rest of SCF (all items pulled from IS or BS)

a.

AR goes up, need negative sign on SCF

b.

AP goes up, need positive sign on SCF

c.

BS cash is ending cash position on SCF

10. Calculate paydown/drawdown for revolver as minimum (Min function) of CF before revolver and beginning revolver balance


How to Be an Alpha Male 11. Operating model is done when you finish SCF. Operating model check (zero for Assets – (Liabilities + Owners Equity)

NEXT STEP IS TO USE THE OPERATING MODEL FOR VARIOUS ANALYSES INCLUDING ORGANIC GROWTH & INORGANIC GROWTH (STRATEGIC ALTERNATIVES). THE KEY QUESTION TO ASK IS: WHAT IS THE BEST STRATEGIC ALTERNATIVE FOR THE CORPORATION (I.E. HOW TO BE A GROWING PERPETUITY OR PARENT COMPANY OF MULTIPLE GROWING PERPETUITIES)?



BUILD-SIDE

Related to the intentional creation of perpetuities following a methodology, we have what is known as the build-side. The buildside is associated with the creation and management of perpetuities. Participants on the buy-side include startups, growing businesses, and established corporations.



Part VIII: Perpetuity Analysis

On the build-side, we are ultimately concerned with the creation and management of perpetuities. We first explore the perpetuity analysis, perpetuity building process/timeline (including sources and uses) and then move towards a methodology for perpetuity management.



Chapter 57: Perpetuity Science

The AltQuest Group (www.AltQuest.com) proprietary methodology is known as Perpetuity Science, Science of the Perpetuity, or the Build Side. Perpetuity science explains how perpetuities can be built, managed and exited from to create wealth. As such, it inherently has an owner focus rather than simply a capital markets focus which is manifested by the dual goals of decreasing the owner’s active involvement in the day to day of the business and the maximizing of valuation. Perpetuity science is where entrepreneurship, strategy & finance come together. It a field of study complete with a body of knowledge, methodologies, and optimization models towards improving the individual's quality of life by the building of a perpetuity that accomplishes two dual goals: 1. ever decreasing involvement of the perpetuity owner in the perpetuity 2. ever increasing valuation of the perpetuity Perpetuity science is ultimately about maximizing quality of life rather than wealth by building perpetuities with recurring revenue streams Copyright: Alpha University www.UniversityAlpha.com

How to Be an Alpha Male that are not reliant on the daily participation of the owner of the perpetuity. We can take a look in a visual format of what we are trying to accomplish:

As you will notice, the owner’s direct involvement in the perpetuity decreases as the perpetuity moves through the phases of development. Also, valuation increases as the perpetuity moves through the phases of development for three reasons; EBITDA increase, EBITDA multiple expansion, decrease in discount rate. The key question is: How to build a perpetuity that minimizes the daily involvement of the owner and at the same time maximizes it’s valuation. Though applicable to all industries, the focus industries of perpetuity science are thus those that do not require significant capital outlays which could otherwise be used to invest in a diversified portfolio. These industries include:


How to Be an Alpha Male 1.

Technology

2.

Media

3.

Education

4.

Business Services

As you will notice, these industries have to do with knowledge working and benefit from information arbitrage and/or network arbitrage. While it is possible to structure arbitrage in other industries by preselling various products and services, knowledge working industries offer genuine information/network arbitrage as well as allowing for recurring revenue business models rather than being one time commodity or project-based. You will also notice that margins are much larger in knowledge working industries which translates into larger EBITDA multiples. Thus, the owner of the perpetuity is rewarded multiple times more for the value that their perpetuity creates than they would for commodity or project-based syndications. Given that the human has a limited amount of time on earth and limited resources within which to invest (energy, capital), one should invest their time in knowledge working industries and build perpetuities there first. Only after a perpetuity has been built in a knowledge working industry should the owner explore other nonknowledge related industries. One should thoroughly understand these industries overall and their sub-sectors when syndicating a new perpetuity. We will go into these industries in detail after explaining the perpetuity building process, the perpetuity management process, and perpetuity exit process.


How to Be an Alpha Male The science of the perpetuity can be broken down into three sequential categories including: I.

Perpetuity Analysis

II.

Perpetuity Building

III.

Perpetuity Management

IV.

Perpetuity Exit



Chapter 58: Market Analysis

GDP

Industry Spend


How to Be an Alpha Male Sub sector spending

Sub sector spending by product



Chapter 59: Value Chain Analysis

General Industry Sub-sector Sub-sector by product



Chapter 60: Gap Analysis

General Industry Sub-sector Sub-sector by product



Chapter 61: Product/Platform Analysis

Base Mods



Part IX: Perpetuity Building & Management

On the build-side, we are ultimately concerned with the creation and management of perpetuities. We first explore the perpetuity analysis, perpetuity building process/timeline (including sources and uses) and then move towards a methodology for perpetuity management.



Chapter 62: Perpetuity Building

To begin our study of the perpetuity, we can observe the formula for the perpetuity:

Perpetuity Value = CF / r

To understand the drivers of value for the perpetuity which include: Multiple EBITDA (size, % recurring, growth rate) which is represented by CF in the formula EBITDA multiple (peer group, level of disruption) Discount rate (% recurring, diversification) which is represented by r in the formula

As the perpetuity changes, the formula for valuing the perpetuity changes as well. There are five phases of perpetuity building. As we move through the phases, the role of the owner of the perpetuity


How to Be an Alpha Male becomes more passive and the valuation becomes larger due to size of EBITDA increasing, EBITDA multiple increasing, and the discount rate decreasing. The perpetuity becomes less dependent on the owner to exist and run as an organizational structure is formed coinciding with the division of labor, processes are automated, and revenue becomes recurring.

Perpetuity Building Process I. Syndication A. Perpetuity Concept B. Perpetuity architecture C. Perpetuity engineering 1. In house 2. Outsource 3. White label customization D. Perpetuity marketing E. Perpetuity Monetization F. Value Tracking G. Value Analysis II. Job shop A. Diversification of labor B. Diversification of clients/users


How to Be an Alpha Male C. Operations automation D. Marketing automation III. Perpetuity IV. Growing perpetuity V. Diversified

Phases of Building the Perpetuity: I.

Syndication

II.

Job Shop

III.

Perpetuity

IV.

Growing Perpetuity

V.

Diversified

PHASE I: SYNDICATION - From concept to platform

The key here is taking a concept that has a large enough total addressable market and turning it into a single sale as represented by PMT. This demonstrates product market fit between the minimum viable product/platform and allows the owner to invest additional time/energy/resources into turning the syndication into a perpetuity. The syndication’s value to the owner will be related to the NPV/DCF value, however, since there is an inefficient market for syndications, the value is going to be discounted at a high rate, in the 80% to 100%


How to Be an Alpha Male range. This means an implied beta of 12.2. There is no multiple here since the syndication does not have a long enough history of operations. The syndication is entirely reliant on the owner’s active involvement. If the owner no longer works in the syndication, the syndication will cease to operate.

Syndication value = PMT

EBITDA (size, % recurring, growth rate) Drivers: Minimum total addressable market Minimum viable product Minimum viable content Minimum viable service Minimum viable platform Minimum viable marketing

EBITDA multiple (peer group, level of disruption) Drivers: Capabilities Markets

Discount rate (% recurring, diversification) Drivers: Minimum viable capital


How to Be an Alpha Male Minimum viable return

Sales: EBITDA: Discount rate: 80% Implied beta: 12.2 Multiple: NA Perpetuity reliance on owner: 10/10

PHASE II: JOB SHOP (SMB) - Monetizing jobs off of platform

The key here is taking a syndication that has demonstrated product/market fit and turning it into a job shop with multiple projects as represented by PMT1, PMT2, PMT3. This demonstrates product market fit between the minimum viable product/platform and allows the owner to invest additional time/energy/resources into turning the syndication into a perpetuity. The syndication’s value to the owner will be related to the NPV/DCF value, however, since there is an inefficient market for syndications, the value is going to be discounted at a high rate, in the 80% to 100% range. This means an implied beta of 12.2. There is no multiple here since the syndication does not have a long enough history of operations. The syndication is entirely reliant on the owner’s active involvement. If the owner no longer works in the syndication, the syndication will cease to operate.


How to Be an Alpha Male The owner’s primary responsibility is to first turn the company into a project or job shop (PMT representing a given job). The company is looked at solely as the sum of the value of its projects/jobs meaning that the valuation of the company is backward looking. The formula looks like the following:

Project/job shop = PMT1 + PMT2 + PMTi….

EBITDA (size, % recurring, growth rate) Drivers: Addressable market monetization product completion content completion service completion platform completion marketing completion

EBITDA multiple (peer group, level of disruption) Drivers: Capabilities Markets

Discount rate (% recurring, diversification) Drivers: Minimum viable capital


How to Be an Alpha Male Minimum viable return

Sales: <$5M EBITDA: <$500k Discount rate: 50% Implied beta: 7.6 Multiple: 3x-4x EBITDA Perpetuity reliance on owner: 7/10

PHASE III: PERPETUITY (Lower Middle Market) - from separate jobs to capabilities

The key here is taking a syndication that has demonstrated product/market fit and turning it into a job shop with multiple projects as represented by PMT1, PMT2, PMT3. This demonstrates product market fit between the minimum viable product/platform and allows the owner to invest additional time/energy/resources into turning the syndication into a perpetuity. The syndication’s value to the owner will be related to the NPV/DCF value, however, since there is an inefficient market for syndications, the value is going to be discounted at a high rate, in the 80% to 100% range. This means an implied beta of 12.2. There is no multiple here since the syndication does not have a long enough history of operations. The syndication is entirely reliant on the owner’s active involvement. If the owner no longer works in the syndication, the syndication will cease to operate.



From here, the owner is to turn the company into a perpetuity as characterized by predictable, preferably recurring revenue. This can be done by building an organizational structure with division of labor, automated processes with technology, and a business model that is recurring by nature. When this is accomplished, the valuation becomes forward looking and the company is modeled following the perpetuity value formula:


EBITDA (size, % recurring, growth rate) Drivers: Addressable market penetration Product differentiation Content differentiation Service differentiation Platform differentiation Marketing differentiation

EBITDA multiple (peer group, level of disruption) Drivers: Capability differentiation Market share


How to Be an Alpha Male Discount rate (% recurring, diversification) Drivers: Capital reinvestment

Sales: $5M to $150M EBITDA: Discount rate: 15% to 25% Implied beta: 4.5 Multiple: 4x – 7x EBITDA Owner activity: 5/10

PHASE IV: GROWING PERPETUITY (Middle Market to Upper Middle Market) - from capabilities to scaling capabilities

The key here is taking a syndication that has demonstrated product/market fit and turning it into a job shop with multiple projects as represented by PMT1, PMT2, PMT3. This demonstrates product market fit between the minimum viable product/platform and allows the owner to invest additional time/energy/resources into turning the syndication into a perpetuity. The syndication’s value to the owner will be related to the NPV/DCF value, however, since there is an inefficient market for syndications, the value is going to be discounted at a high rate, in the 80% to 100% range. This means an implied beta of 12.2. There is no multiple here since the syndication does not have a long enough history of operations. The syndication is


How to Be an Alpha Male entirely reliant on the owner’s active involvement. If the owner no longer works in the syndication, the syndication will cease to operate.

Next the owner is to turn the perpetuity into a growing perpetuity. This can be accomplished by increased levels of paid/unpaid marketing and scalable technology platform as part of the core business. The valuation of the company now has to incorporate a growth factor as seem in the formula below:

Value of growing perpetuity = D1 / Discount rate – g





Discount rate (% recurring, diversification) Drivers: Capital reinvestment

Sales: $150M to $500M & $500M to $1bn EBITDA: Discount rate: 15% Implied beta: 2 Multiple: 7x-10x Owner activity: 2/10

PHASE V: DIVERSIFIED (SMALL CAP, MID CAP, LARGE CAP) - from scaling capabilities to new perpetuity building/acquisition

The key here is taking a syndication that has demonstrated product/market fit and turning it into a job shop with multiple projects as represented by PMT1, PMT2, PMT3. This demonstrates product market fit between the minimum viable product/platform and allows the owner to invest additional time/energy/resources into turning the syndication into a perpetuity. The syndication’s value to the owner will be related to the NPV/DCF value, however, since there is an inefficient market for syndications, the value is going to be discounted at a high rate, in the 80% to 100% range. This means an implied beta of 12.2. There is no multiple here since the syndication


How to Be an Alpha Male does not have a long enough history of operations. The syndication is entirely reliant on the owner’s active involvement. If the owner no longer works in the syndication, the syndication will cease to operate.

Finally, the owner is to diversify either organically (new product, new business) or inorganically. If the diversification is organic, the new product/business will naturally move through the phases of:

1.

Project/job shop

2.

Perpetuity

3.

Growing perpetuity

Since the valuation is forward looking, it has to incorporate the new product/business’ financial performance. Since the parent company is now becoming diversified, the discount rate will now decrease which adds value to the parent company. The formula for the parent company now becomes:

Diversified parent company = (D1 / Lower discount rate – g) + (PMT1 + PMT2 + PMTi…)

As the new product/business moves through the phases of development, the parent company’s discount rate will continue to get lower. The formula for the company becomes:


How to Be an Alpha Male Diversified parent company = (D1 / Lower discount rate – g) + (PMT / Lower discount rate)

Ideally, the goal is to build a diversified parent company with a portfolio of growing perpetuities so that the parent company itself remains a growing perpetuity. The formula for the parent company looks like this:

Diversified parent company = (D1 / Lower discount rate – g) + (D1 / Lower discount rate – g)





Discount rate (% recurring, diversification) Drivers: Capital reinvestment

Sales: EBITDA: Discount rate: 6% Implied beta: 1 Multiple: 11x-13x EBITDA Perpetuity reliance on owner: 0/10



Chapter 63: Perpetuity Management

The Purpose of the Company Companies exist to create value

How Companies Create Value Companies create value by investing capital at rates of return that exceed their cost of capital. This is the principle of value creation.

The only thing that differs across companies is the implementation (i.e. different asset and capitalization mix)


How to Be an Alpha Male Strategy & Finance

Valuation Drivers



The Role of the CEO


How to Be an Alpha Male Perpetuity Management

Valuation



Perpetuity Management with Discounted Cash Flows

Growth or Restructuring

Perpetuity Management Process




How to Be an Alpha Male Measuring Value Added: ROIC vs. Market Return

Measure return on invested capital (after-tax operating profits divided by capital invested in working capital, PP&E) and compare it with stock market returns

Measuring Value Added: Economic Profit & NPV

Economic profit = ROIC spread % over cost of capital x invested capital

The objective is to maximize economic profit. When the company is larger, one should use Net Present Value (NPV) which calculates economic profit in a more robust and flexible fashion.

Valuation in the Public Markets

Valuation in the public markets has investors paying for the performance they expect the company to achieve in the future; investors ultimately end up paying more since their valuations are not based upon the past or cost of the assets.

The CEO should endeavor to have his company in the public markets since the largest multiples are applied in valuation Copyright: Alpha University www.UniversityAlpha.com


Real Markets & Financial Markets

When a public company, the CEO has to both maximize the intrinsic (DCF) value of the company and manage the expectations of the financial market

Differences between actual performance and market expectations and changes in these expectations drive share prices. The delivery of surprises produces higher or lower total shareholder returns

Perpetuity Planning & Control (i.e. Management)

Planning & control system should be put in place to monitor the NPV of every business unit and summed to get the NPV of the corporation. Economic profit (i.e. NPV) targets set annually for next three years, progress monitored monthly and managers’ compensation tied to economic profit against these targets

Value Metrics

Metrics are to drive decisions and guide all employees toward value creation.


How to Be an Alpha Male Perpetuity Planning & Control (i.e. Management) in Practice

Corporate management sets long-term value creation targets in terms of market value of a company or total returns to shareholders (TRS) Strategic alternatives valued in DCF (i.e. NPV) Intrinsic value of chosen strategic alternative translated into short and medium term financial targets and then targets for operating and strategic value drivers

Performance assessed by comparing results with targets on both financial indicators and key value drivers. Managerial rewards linked to performance on financial measures and key value drivers

Value Metrics: Market Value Added & Total Return to Shareholders

Market Value Added is the difference between the market value of a company’s debt and equity and the amount of capital invested. Measures financial market’s view of future performance relative to capital invested in business.

Total Return to Shareholders measure performance against the expectations of financial markets and changes in these expectations.


How to Be an Alpha Male TRS measures how well a company betas the target set by market expectations

Value Metrics: DCF vs. Earnings Multiple

DCF is intrinsic value. Earnings multiples are market values.

Earnings alone is inadequate without understanding the investment required to generate the earnings. Should know ROIC

Cash Flow

Cash flow equals the operating profits of the company less the net investment in working capital and fixed assets to support the company’s growth.

Perpetuity Management Capability

1.

Set aspirations and targets

a.

An inspirational statement of intent

i.

State that the goal is to maximize shareholder value

ii.

Vision is “To create shareholder value by being the world’s premier _____ company from a strategic and financial standpoint”

iii.

States what businesses we are in and what we aspire to be known for


b.

How to Be an Alpha Male Value-linked quantitative target

i.

Mark the milestones toward their aspiration with value linked targets

ii.

Target share price (i.e. double every three, four or five years)

iii.

Target key value drivers (ex. Financial (EBIT) or operational (ex. Number of customers)

iv.

Calibrate proposed targets against historical performance to observe how large a gap needs to be closed

2.

Manage the corporate portfolio - Determine to what extent its current portfolio of businesses will help meet its aspirations. Determine the strategic advantages of the parent corporation. Improvement opportunities continuously. Manage growth pipeline

a. i. b. i.

Strategic theme analysis Which capabilities does the corporation possess? Value management process Do DCF to quantify impact of value creation levers: investor communication, internal improvements, disposals, growth opportunities (organic or inorganic), and financial engineering

c. i.

Three horizon analysis Ensure that portfolios always include businesses in all three stages of development

1.

Horizon 1: core businesses

2.

Horizon 2: emerging opportunities (have revenues but no CF)

3.

Horizon 3: future options (initial activity has begun)

3.

Orient the organization toward value

a.

Having the right organization in place ensures company’s value creation aspirations and strategy are translated into disciplined execution

b. i.

Hard areas: Structure (who reports to whom), Decision rights, people (key jobs), and coordination mechanisms (how do things get communicated or done)

c.

Soft areas:


i.

How to Be an Alpha Male Beliefs (how much potential people believe exists in market), values (what people think is important, and leadership style

d.

Should be clearly designed performance units and individual accountabilities

e.

Organization to then set targets, measure performance, and reward success

4.

Understand value drivers

a.

What elements in day to day operations have the most impact on value. These are value drivers

b.

Prioritizing these drivers and thus determining where resources should be placed or removed is key

c.

Value driver is a performance variable that has impact on the results of a business (ex. Production effectiveness or customer satisfaction)

d.

The metrics associated with value drivers are called key performance indicators (KPIs) (ex. Capacity utilization or customer retention rate)

e.

KPIs used for target setting and performance measurement

f.

Value drivers should be directly linked to shareholder value creation and cascade down through the organization

g.

Each business unit should have its own key value drivers and KPIs

h.

Managers should monitor these numbers regularly to obtain an overview of business performance

i.

5 to 10 KPIs

j.

Value driver definition starts with creating value trees linking operating elements of business with value creation, then prioritizing which drivers have greatest impact on value (use DCF to determine sensitivity of business unit’s value to changes in value drivers), then institutionalizing the value drivers by incorporating them into the targets and scorecards of business performance management

5.

Manage business performance - Manage each business to attain results consistent with top-down aspirations by process of setting targets for a performance unit and regularly reviewing progress against them

a.

Create business unit strategy to maximize value


How to Be an Alpha Male b.

Set value-linked targets

i.

Translating strategy into specific quantitative goals

ii.

Agree on a target, corporate center and business unit formalize commitment in a performance contract. Contract contains milestones and quantitative and qualitative goals that business unit needs to achieve through performance period.

iii.

Targets should cascade through organization (CEO gets financial indicators, business unit head gets key performance indicators, managers get operational levers)

c.

Review performance

i.

Structured calendar of performance reviews

ii.

Scorecard incorporating value metrics and KPIs from value driver analysis

iii.

Custom scorecards in each business unit

6.

Manage individual performance

a.

Link managerial rewards to behavior that creates overall shareholder value

b.

People performance management includes target setting and performance reviews. These targets should link to KPIs.

c.

CEOs get TRS, MVA; Business unit manager gets Economic profit; Functional manager gets operating profit and ROIC; Mid level/frontline gets operating value drivers

Perpetuity Lifecycle

Product development – includes market analysis, product design, invention and testing Market introduction – initial release of the product and usually followed by high levels of advertisement


How to Be an Alpha Male Rapid Growth – sales growth accelerates with increasing sales year over year Maturity phase – the sales growth rate approach the average growth rate of the economy Decline – demand will slowly decline as newer inventions make it obsolete

Valuation Process: Discounted Cash Flows

1.

Forecast Free Cash Flow

a.

Recasting financials from accounting statements to financial. This process is also called “normalizing” the financials. Normalizing strips out non-recurring events and non-cash charges which are not part of normal operations of the company. These changes help you get to Free Cash Flow (FCF)

i.

Nonrecurring and non-cash charges usually found in MD&A or financial footnotes (above or below operating income line? abnormal expense (reverse expense) or income (reverse income) and what time period does it impact?)

ii.

Must tax effect when normalizing earnings (expenses reduced tax expense and gains increased tax expense) = Non-recurring item x (1tax rate)

iii.

Want to get to EBITDA = earnings before taxes, depreciation & amortization (operating income + D&A)

iv.

D&A is from the Income Statement

b.

Note historicals

c.

Project financials using assumptions

2.

Estimate Cost of Capital

a.

Perform WACC analysis


b.

How to Be an Alpha Male Develop target capital structure

c.

Estimate cost of equity

3.

Estimate Terminal Value

a.

Use either cash flow multiple (i.e. EBITDA multiple) or growth rate method (i.e. Gordon Growth method)

b.

Discount it back to present value

4.

Calculate results

a.

Bring all cash flows to present

b.

Perform sensitivity analysis

c.

Interpret results

Forecast Free Cash Flow

FCF = EBIT – Taxes – Increase in working capital – capital expenditures + Depreciation and Amortization

DCF projects 5 years of FCF plus a terminal value Terminal value is a perpetuity Gordon growth multiple vs. terminal multiple. Use terminal multiple

Terminal multiple = (LTM multiple from comps) x EBITDA

Estimate Cost of Capital Cost of capital (aka discount rate) is an investor’s required rate of return


How to Be an Alpha Male The cost of capital should match the cash flows to be discounted

Discount rate in two forms; cost of equity and cost of debt. Combined on balance sheet so discount rate is weighted average cost of capital

WACC is the required rate of return for the overall enterprise. This is simply a weighted average of the required rates of return for each of the different sources of capital (equity and debt)

Perform WACC analysis

WACC = [Re x (E/(E+D)] + [(Rd x (D/(E+D)) x (1-T)]

Cost of equity calculated using the capital asset pricing model (CAPM)

Re = Rf + Beta (Rm – Rf)

Beta is measure of volatility or systematic risk of a security compared to the market as a whole (ex. S&P 500). Firms use 2 year to 5 year betas Un-levering and relevering beta. First unlever beta and re-lever with the subject company’s capital structure (i.e. debt to equity ratio)



Bu = BL / [1 + D/E x (1-T)]

BL = Bu x [1 + D/E x (1-T)]

Cost of debt calculated by averaging (weighted) the coupon rates of its various pieces of debt and multiplying it by the tax shield (1 – tax rate)

Valuation Process: Comparable Companies

Based on how similar companies trade in the public markets Select comp universe “Spread” comps Same time frame (Last twelve months) Normalize numbers Back out non-recurring items Treasury stock method to calculate share price Select multiples for implied valuation Apply multiples to target to get valuation


How to Be an Alpha Male Valuation Process: Comparable Transactions

Based on how similar transactions occurred. Control premiums of 2025% Select comp universe “Spread” comps Same time frame (Last twelve months) Implied valuation multiples Market premiums Select multiples for implied valuation Apply multiples to target to get valuation

Modeling Value: Financial Statement Modeling

Spread historical financial statements and adjust historical income statement for onetime, extraordinary and non-recurring items Derive historical ratios, trends and variables Project financial statements Integrate financial statement projects with revolver



Chapter 64: Valuation Methodologies

1.

Public Company Valuation

2.

Comp Companies – Also known as trading comps. Management team gives you 1 to 2 years projections or equity research comp reports to get forward multiples (x Revenue or x EBITDA ) which may be used as the basis for this valuation. You can get comps from the general overview as it will discuss the target’s comps in the 10K. Find comps with good multiples to then tell your story to the marketplace to then get a certain valuation.


a.

How to Be an Alpha Male Select the universe of comparable companies – Choose 7, 8, 10 comps, need their 10K, 10Q, analyst reports to get TEV for each comp then divide by line item to get multiple.

b.

Locate financial information on comp companies – Information must come from latest filing (10K or 10Q). Print out 10K, 10Q, analyst reports.

c.

Spread key financial information, ratios and multiples – Calculate TEV (in comp spread tab). To get MVE, use TSM method. TSM = Exercisable options outstanding x (share price – strike) / share price.

d.

Benchmark comp companies – Get the multiple that the company is trading at for each metric for each comp and get mean and median of comps for the metrics (ex. TEV/EBITDA)

e.

Determine implied valuation – Multiply mean and median multiple x the revenue or EBITDA to get the valuation range for your target company.

Notes: The better the company, the higher the multiple and the better valuation you get.

In IB/PE/CorpFin, you need to know comp companies and transaction comps. “Here are the comps in your sector…”

Higher multiple because… Operating in better markets, better operations


How to Be an Alpha Male The multiple tells you which company is better, margin analysis tells you why they are better.

Sell side key question: “Which comp would you use to guide potential buyers?”

3.

Precedent Transactions – comp transactions

a.

Select universe of comp transactions

b.

Locate deal-related and financial information – Need press release of the deal, 8K, 10K, and 10Q. Type of payment: cash, stock, cash & stock.

c.

Spread financial information, ratios and multiples – Get transaction TEV (implied) & transaction MVE (implied)

d.

Benchmark precedent transactions

e.

Determine implied valuation

Notes: 20% to 25% control premium paid with the transaction multiple being an implied one based upon the valuation.

Determine whether the market is good or bad based upon whether people are paying good premiums (control premiums).

When a transaction occurs, update client on the latest transaction to show them impact on the control premiums being paid and implied multiple as well. Copyright: Alpha University www.UniversityAlpha.com


Point to the transaction comps that have the highest control premium.

4.

Discounted Cash Flow (DCF)

a.

Spread historical financial statements (input historicals) and derive historical ratios, trends and variables (drivers of future performance; margins and growth rates). Project financial statements (proforma). Revolver modeling to link IS, BS, and SCF

b.

Project free cash flow (FCF)

c.

Determine Weighted Average Cost of Capital (WACC) – Discount rate

Cost of equity:

Rf = 10 year treasury Market risk premium = Rm – Rf. Refer to Ibbotson. Ultimately this is S&P returns over 70, 80, or 90 years Beta = Levered beta of comps to unlevered median and mean of comps (unlevered beta); should be .5 to 2.5; 2 year to 5 year betas (taking out capital structure and relever to actual capital structure. With beta, we are putting capital structure on unlevered beta mean and median of comps to calculate WACC of own company.

Cost of debt: weighted average of tranches of debt tax effected; found in 10K. Rates from the notes. If private company, get from


How to Be an Alpha Male clients the tranches and to get rates, go to DCM to get approximation.

Cost of equity 20% to 25% in private markets. No use of debt is an inefficient use of capital. Trying to optimize the D/E ratio to minimize cost of financing.

d.

Determine terminal value – EBITDA multiple which is going to be almost 80% of the company value. Terminal value = LTM multiple from comps x EBITDA. Perpetuity growth rate should be 2.5% to 3% and should not be larger than the size of the GDP of the country

e.

Calculate net present value (NPV) and determine implied valuation

Notes: Need the valuation date; this determines stub year fraction (i.e. period left in the year). Stub year fraction – investor does not have claim on


How to Be an Alpha Male revenues before that. DCF value always moving through time consistent with valuation date.

IB interviews test you on DCF. Everything else that you know is a bonus.

Do DCF to find yield to decide whether or not to invest principal.

Creating value: $ dollars of value increased by… Changing multiple on valuation Decreasing the discount rate



Chapter 65: Framing Valuation

We are not looking at each valuation methodology in isolation but are ultimately using the methodologies together to frame the valuation in a valuation summary format. We use a “football field” (valuation summary) to frame the valuation which looks like the following:

Regarding the football field, we add control premiums to comp companies and DCF (% addition that is equal to the control premium average for the transaction comps) if doing valuation for selling the company.


How to Be an Alpha Male Footnote everything (assumptions) in the football field. The football field takes one day to a few days depending on how easy it is to obtain the precedent transactions data. Banker should know what valuation the client expects to be at; 10% to 15% spread of range of valuation (“tighten” the range if needed by eliminating comps that skew the range) For each valuation methodology we are going to do a sensitivity analysis to determine a valuation range:



Chapter 66: The Market for Perpetuities

As finance emerges, so too does the market for the perpetuity. The market for the perpetuity at its initial stages is inefficient, but as it moves through the stages of a perpetuity, the market becomes more efficient. You can observe the coinciding cost of capital move from almost 100% going all the way down to 3.5%.

You can observe the decreasing discount rate for the perpetuity as the perpetuity moves through the phases of the perpetuity.





SELL-SIDE

As perpetuities continue to grow, the builder of the perpetuity seeks to grow the perpetuity inorganically or exit the perpetuity. This is the primary role of the sell-side, which is to aid in the buying and selling of perpetuities. Investment bankers now enter the picture as this is their core work.



Part X: Perpetuity Exit

On the sell side, the primary responsibility of the investment banker is to aid those owning perpetuities in analyzing their strategic alternatives related to inorganic growth or exit.

Which phase is the perpetuity in? (SMB, LMM, MM, UMM, L)

Which buyers are likely interested in the perpetuity? (Individual, Financial, Strategic, Special Situation)

Each of these buyers have a different valuation range Individual – Desire 30% to 40% IRR, 3x EBITDA Financial – 4x to 7x EBITDA Strategic – 5x to 10x EBITDA



Valuation is a range

Determine valuation method (DCF, comp companies, precedent transactions) Calculate benefit stream (synergistic vs. owner benefit)

Determine required rate of return given the phase of the perpetuity and the buyer (discount rate)

Convert benefit stream into present value at the discount rate Sensitize the variables for a range of values to see effect on valuation (sensitivity table)

Strategics and financials establish their filter criteria (hurdle IRRs for financial and minimum EPS increase for strategics) and test targets against this filter

Strategics have a range of values with standalone value as the lower end and valuation with all synergies on the higher end. A deal happens usually in the middle



Chapter 67: Investment Banking

The investment banking core product is M&A. As such, the investment banker’s role is to aid in the growth of perpetuities via an inorganic strategy (merger, acquisition).

As investment bankers, we are matching strategic and financial buyers' investment mandates to targets that meet their criterion including hurdle rates.

The real work of M&A is origination, matching and deal-structuring. Financial modeling and valuation is merely for decision support and deals often get done simply based upon precedent transactions analysis.


How to Be an Alpha Male Thus, the priority of the investment bankers is to obtain a base level understanding of financial modeling & valuation but then to immediately start originating sell side and buy side mandates.

An investment banker = investment (perpetuity) broker. Investment bankers are investment brokers for the largest investment in the capital markets, controlling interest of a company.

Controlling interest of a company is an M&A transaction and the method of purchase is an LBO for a financial acquirer (use of debt to fund majority of purchase price) or merger for a strategic acquirer.

Investment bankers explore strategic alternatives (value creation opportunities) with corporation’s CEO’s/owners.

1. Calculate valuation and create valuation football field to get to valuation midpoint (compare intrinsic value to market value; intrinsic should be more). Valuation informs the investment decision 2. Calculate NPV and IRR to the sponsor (entry and exit) in LBO (LBO is the proper method of purchase) OR calculate EPS change and balance sheet effects for strategic

Valuation Football Field and the Midpoint is the final valuation of the company.


How to Be an Alpha Male Calculate NPV and IRR to the sponsor in LBO or EPS Change and Balance Sheet Effects in Merger

Compare NPV and IRR OR compare EPS change and BS effects to other strategic alternatives and choose the highest return/EPS alternative

Ultimately, as an investment banker, you are to:

Use valuation methodologies to determine valuation ranges of each strategic alternative and see if capital sources match uses. IBankers should provide the client with tight ranges on valuation.

Use an operating model of the target (and acquirer if strategic) and then tailor it to the specific client: Financial (LBO) Strategic (Merger)

Determine: NPV and IRR for financial in LBO EPS change and balance sheet effects for strategic in merger M&A

Run the M&A process Copyright: Alpha University www.UniversityAlpha.com


Junior Banker: Industry coverage Comps and comp transactions (where are multiples) Valuation Mid Banker: Operating model creation + tailored to transaction client (LBO or Merger) Manage M&A process Senior Banker: Revenue center Personal contacts at firms to win engagements



Part XI: The Middle Market

The majority of perpetuities are in what is known as the middle market, a classification for mid-sized perpetuities. This is where the majority of the transactions occur and where the average investment banker will make his living.



Chapter 68: The Middle Market

Because of the wide range of company sizes within the definition, the middle market can be further broken down into the following:

Lower Middle Market: $5 - $50 million of revenue; Middle Market: $50 - $500 million of revenue; and Upper Middle Market: $500 million - $1 billion of revenue.

Overview of Middle Market We view the middle market as having three distinct segments, defined by a company's ownership type, prospects, and access to capital. Companies with EBITDA below about $10 million (lower middle market) are typically family or entrepreneur owned and individual customer wins and losses greatly impact performance. Many of those sales relationships are concentrated in the family, and senior management ranks are often populated with family members. Such companies are generally well served by local banking Copyright: Alpha University www.UniversityAlpha.com

How to Be an Alpha Male relationships, government-sponsored entities such as Small Business Investment Companies (SBICs) in the U.S., or public entities such as Business Development Corporations (BDCs).

At the other extreme, upper middle market companies typically have $75 million of EBITDA or more, and are often publicly held or sponsor backed. These companies, given their size, typically ebb and flow with their respective industries. They have myriad options for accessing capital, notably including the public high yield market. Some institutional investors who are looking to write large checks ($100 million or more) also participate in this space, though volume is limited. Given the relatively lower yields in this segment, as well as structural disadvantages such as the lack of maintenance covenants and limited information rights.

We define the core middle market as companies with $10 to $75 million of EBITDA and this is the segment where we are most active. Companies are typically sponsor owned with several opportunities for growth, from taking share to expanding into related products or new geographies.

Pitchbook defines the middle market as companies with total enterprise value between $25 million and $1 billion and the “core middle market” as between $100 million and $500 million.



Part XII: M&A Multiples

It is crucial for investment bankers to understand the M&A marketplace in the middle market and particularly for the industries that they cover.



Chapter 69: M&A Multiples

Since the investment banker will most likely be starting in the lower middle market or middle market, it is important to have a strong understanding of the multiples in the M&A marketplace in general and then in your sector and sub-sector. The following are 2016 M&A multiples from the data provider, Pitchbook (Morningstar), that you can use initially. Here are the EBITDA multiples for transactions in the lower middle market:




How to Be an Alpha Male These are EBITDA multiples for transactions in the middle market:

Finally, we have EBITDA multiples for transactions in the upper middle market:



Notice how the multiples increase as the size of the perpetuity increases due to the scarcity value of larger perpetuities (increased demand for large perpetuities and less of them).

The following is a chart depicting the average debt to equity breakdown for LBOs. You will notice that equity levels are steadily increasing, indicating a tighter credit market:



In this chart, you will see the average time that is it taking for deals to close. You will notice that the majority of transactions get done in the 5-9 weeks and 10-14 weeks timeframe:



Next, the following is a chart that depicts the % of deals getting done with some aspect of an earnout, meaning portion of the purchase price contingent on future performance of the business:



Finally, we see a chart depicting activity for the buyers of perpetuities:



Part XIII: Origination

The following methodology describes the primary work of the investment banker, origination. The methodology arose through the work of Michael Herlache in his M&A career and the lack of content about the actual work of senior M&A professionals. There is plenty of knowledge around the technical support work of investment bankers including financial modeling and valuation, but there are no current texts on origination, let alone a methodology.



Chapter 70: Origination Methodology

The M&A origination methodology is the following:

1.

Determine coverage industries and sub-sectors

2.

Build industry and sub-sector index

3.

Pull national screens for the coverage area from Salesgenie

4.

Collect emails for CEOs/owners from Salesgenie and RocketReach.co

5.

Origination email to identify target considering selling and get price expectations

6.

Obtain sell side mandate

7.

If cannot, develop buyer list and pitch M&A idea to them in a buy side capacity clarifying that the target is not running a process and that you do not have the mandate but that you have been in talks with their CEO/owner. The target is willing to listen to reasonable offers



Step 1: Database Utilization & Emails Collected The following email is used after pulling a county list from infousa.com or screening in Salesgenie and screening for revenue size ($2.5M +) and contact person (owner, CEO, President). Starting from the end of the database (Z), go through each account in the database and determine the business owner’s primary email address either from the database itself or by going to the website and acquiring the email address. Once 30 to 50 emails are obtained in one day, the process of emailing begins with the best practice below. The response rate to the emails should be approximately 3%.

Step 2: Email Inquiry John,


How to Be an Alpha Male It's a pleasure. I work with AltQuest Group right here in Fort Lauderdale. Would you be willing to take an offer on your business from a private equity group?

Please let me know.

Best, Michael

Step 3: Offer & Price Inquiry After receiving initial response, you will then message them that you will email them when you have the offers and ask for the price of the business. The following is the email that should be sent:

John,

Alright. I'll notify you when I receive the offers. What is your expectation regarding the price of your business?

Best, Michael


How to Be an Alpha Male Step 4: Phone Call Request (by Sellers) or Meeting Request After requesting price, some sellers will request a phone call and provide their contact information. If the seller provides price information, they reply with the following email:

John,

Alright. Let’s sit down and discuss next steps. Does Monday afternoon at 1pm work for you?

Best, Michael

If the seller accepts a meeting then the engagement is going to be sell side. If the seller does not accept the meeting and instead states that he would like you to represent the buyer then it will be buy side.

Sell side engagements get an RBCA. For buy side engagements, make a buyer list of the largest likely buyers including public companies then contact the head of M&A at these companies and ask:

Brian,


How to Be an Alpha Male It's a pleasure. Would you care to take a look at a premier business group with a presence in multiple states? $40M revenues and $6M EBITDA.

Please let me know.

Best, Michael

After hearing back from the heads of M&A, let them know that the seller has requested that we represent the buyer and that the buy side fee will be 1.5%. You then ask them to accept in writing to the fee and once they do you can tell them the target name and then proceed to contact the seller and let them know that there is interest and ask what multiple range they are targeting for a sale. From there you send an advisor NDA and request financials. After giving financials to buyer, the company is assessed and a valuation range is determined and an IOI with this valuation range is submitted to the seller.

Step 5: Phone Call or Meeting Phone call:

During the phone call you will introduce yourself and state that you work on behalf of private equity firms in locating quality cash flowing Copyright: Alpha University www.UniversityAlpha.com

How to Be an Alpha Male companies and that is how you found their company. From there you will state that you want to get an initial understanding as to the price of the business. After the price of the business is found, ask how the business performed last year (revenue and net income). Finally, request a meeting at the end of the call (in person). The following is your outline for the phone call:

Price: Revenue: Net Income: Meeting:

Meeting:

During the meeting you will introduce yourself and state that you work on behalf of private equity firms in locating quality cash flowing companies and that is how you found their company. From there you will state that you want to get an initial understanding as to the price of the business. After the price of the business is found, ask how the business performed last year (revenue and net income). If this information is already known, you can move straight to giving the seller the signed NDA and explaining that any information that we receive is confidential and will not be shared without the approval of the business owner. Next you discuss the structure of the engagement that you are requesting a non-exclusive relationship whereby you only get paid when your buyers purchase the company.


How to Be an Alpha Male You can hand them the Registered Buyer Commission Agreement and have them sign right there or to have them review it. Finally, you ask if they have their financials on hand to view and you view them. You can ask to keep a copy to aid in recasting.

Step 6: Add Backs Calculated and Teaser Created After the meeting, you now have the financials or financial data needed to do add backs to get to an owner’s benefit or EBITDA number. From here you can input the recasted financials into the teaser and then complete the teaser based upon the general information (usually from the website and meeting conversation) of the business

Step 7: Deal Put on M&A Marketplaces Once the teaser is finished and financials recasted, you can put the deal on the M&A marketplaces including BizBuySell for smaller deals and DealNexus and Axial for larger deals.

Step 8: NDAs Signed with Buyers Once inquiries are received from buyers from the M&A marketplaces, you will send NDAs to the buyers which they will then sign and send back to you.

Step 9: Teaser with Name Given to Buyer


How to Be an Alpha Male Once the NDA is received, you can give the buyer the name of the business on the teaser and request an IOI from the buyer after reviewing the teaser and summary financials. The following is the email to accompany the teaser:

Buyer,

After reviewing the teaser and summary financials, please submit your initial indication of interest (IOI) and we will set up a buyer/seller meeting.

Best, Michael

Step 9: Teaser with Name Given to Buyer Often times a call will be requested by the buyer. On the phone the M&A professional finds out the following, taking notes on the call:

Industry interest: Questions (that the buyer has): Multiples that buyer is seeing or that they typically do:

Step 10: IOI from Buyer Copyright: Alpha University www.UniversityAlpha.com

How to Be an Alpha Male After reviewing the teaser and summary financials, the buyer will notify you that they are interested in purchasing the company (IOI).

Step 11: Buyer Seller Meeting After submitting the IOI, you will arrange an in person meeting with the seller which is called the buyer seller meeting. If the buyer is unavailable due to distance or timing, a phone call can be set up.

Step 12: Purchase Agreement Given to Seller After the buyer seller meeting, you prompt the buyer to submit a purchase agreement and then give this purchase agreement to the seller.

Step 13: Signed Purchase Agreement with Different Terms After the seller reviews the purchase agreement they will either sign the contract or counter with different terms. They are to sign the contract with the contingencies written into the contract. Step 14: Enter Due Diligence After receiving the counter, the buyer can sign the agreement with makes for a legally binding purchase agreement contingent to the items that will now be explored during the due diligence period. As items are explored, the buyer signs off that the items are no longer in question one by one.


How to Be an Alpha Male Step 15: Complete Due Diligence After all the items in the due diligence list are completed, due diligence is now completed and the closing can be scheduled. The documents are sent to the closing agent with instructions as to the M&A fee as well.

Step 16: Closing & Checks Cut After the both the buyer and seller sign at the closing, the checks are cut and you receive your M&A fee and bring it to your bank.



Chapter 71: Mandate/Target Matching Methodology

1.

Build relationships with strategic and financial buyers in a given industry sector or subsector

2.

Indicate your interest in sourcing deals on their behalf and obtain their investment mandate. This will usually be detailed in a one-page teaser or presentation that they will send to you

3.

Screen for companies that match the mandate(s) in Salesgenie and obtain CEO/owner emails and phone numbers

4.

Begin emailing and calling CEO/owners and soliciting interest in taking an offer on their business from a financial or strategic buyer

5.

Structure as a sell-side engagement or a buy-side engagement depending on CEO/owner’s level of interest in selling

6.

Collect historical financial data for the last three years

7.

Introduce the financial and/or strategic buyer to the opportunity with the summary financial information and have them sign an NDA

8.

Have a call with the financial and/or strategic buyer and then make the formal introduction to the CEO/owner and have a buyer/seller meeting



Chapter 72: Deal Structuring

After matching a financial or strategic buyer’s mandate with a target, it is up to the investment banker to work with the buyer and seller to structure a deal. Deal structures can be along the following lines: I.

Majority vs. Minority

II.

Cash vs. Stock vs. Cash & Stock

III.

Seller financing

IV.

Earn out

V.

Seller stays on as management vs. consulting agreement for shorter term



Part XIV: M&A Process

When the owner of a perpetuity has decided to grow inorganically or exit the perpetuity, the M&A process must be executed/run.



Chapter 73: M&A Process

From Origination to M&A Execution Once the investment banker has originated 8 to 10 multimillion dollar listings, one should transition from origination to M&A execution process creating a shortlist for each deal (10 in the shortlist). The investment banker should concurrently prepare the marketing package which includes the teaser and the executive summary. Once the teaser is finished, the investment banker should begin emailing the shortlist with the teaser. From this shortlist, a percentage will reply seeking additional information on the target. NDAs should be sent out and after being signed, the executive summary should be sent to the shortlist member. After the executive summary is sent, a percentage will decide to request a buyer/seller meeting. After the buyer/seller meeting, a percentage will decide to make an offer.

Building the Buyer Shortlist The shortlist should include strategic and financial buyers and the investment banker should screen each that make it onto the shortlist


How to Be an Alpha Male for financial capacity to pay. The investment banker should use Salesgenie to pull the geographic competitors (geography screen with SIC code screen) and have 10 strategics. The investment banker should use the massinvestor database to determine which 10 financials to include in shortlist:

Strategic Competitors - synergies Indirect Competitor

Financial Hybrid strategic – financial buyer with asset in the sector Pure financial

For deals that are $500k earnings and above, BizBuySell.com and DealNexus.com should be used to find buyers. For deals below $500k in earnings, only BizBuySell.com should be used.

The Teaser The teaser will contain an overall financial profile: three years of historical revenue and EBIT/EBITDA and at least two years of projected revenue and EBIT/EBITDA Indicate type of transaction


How to Be an Alpha Male Professional font (Times New Roman or Arial) Send as PDF Do not capitalize words or use flowery language No grammar or spelling errors Indicate sustainable growth potential based upon competitive advantage: Customer entrenchment and high switching costs (ex. Software) Long term contracts (ex. Equipment service companies) Brand recognition (ex. Consumer products) Intellectual property Stable management teams Culture

The NDA The NDA in a sell side engagement is a unilateral NDA meaning that only one side has to not disclose confidential information

Teaser With Name of Business & Financials After the NDA is signed, a teaser with the business name is then sent to the buyer along with the financials in PDF form.

The CIM Copyright: Alpha University www.UniversityAlpha.com

How to Be an Alpha Male Executive summary Company history Sales process and/or manufacturing capabilities Management team structure Growth opportunities Competitive landscape or industry outlook Intellectual property overview and/or company assets High-level financials (preferably five years of historical data and projections, if available)

The IOI (Indication of Interest) Approximate price range. This can be expressed in a dollar value range (e.g., $10-15 million) or stated as a multiple of EBITDA (e.g., 35x EBITDA). Buyer's general availability of funds, including sources of financing Necessary due diligence items and a rough estimate of the due diligence timeline Potential proposed elements of the transaction structure, e.g., asset vs. equity, leveraged transaction, cash vs. equity, etc. Management retention plan and role of the equity owner(s) posttransaction Time frame to close the transaction


How to Be an Alpha Male The Buyer/Selling Meeting First conference call In person meeting & tour the facilities In person handshake meeting

The LOI (Letter of Intent) Official deal structure and terms. Acceptance of engagement means that company cannot receive other offers Deal Structure. Defines the transaction as a stock or asset purchase. Generally, the seller prefers a stock transaction from a tax and legal perspective. Asset transactions are preferred by the buyer to protect against prior liabilities and provides a stepped-up tax basis. Consideration. Outlines the form(s) of payment — including cash, stock, seller notes, earn-outs, rollover equity, and contingent pricing. Closing Date. The projected date for completing the transaction. This date is an estimation and often changes based on due diligence or the purchase agreement. Closing Conditions. Lists the tasks, approvals, and consents that must be obtained prior to or on the Closing Date. Exclusivity Period (Binding). It is common practice for a buyer to request an exclusive negotiating period to ensure the seller is not shopping their deal to a higher bidder while appearing to negotiate in good faith. Expect to see requested periods of 30 to 120 days. The duration may be negotiable, but the presence of the exclusivity term rarely is.


How to Be an Alpha Male Break-up Fee (Binding). A fee to be paid to the buyer if the business owner decides to cancel the deal. Break-up fees are relatively common in larger deals (above $500 million). The fee can either be a percentage (typically 3%) or a fixed amount. Management Compensation. Outlines plan for senior-management post-sale. This term describes who in the management will be provided employment, equity plans, and employment agreement. This term is often vaguely worded to provide the buyer with latitude since they may not be prepared to make commitments to senior management. Due Diligence. Describes the buyer’s due diligence requirements, including time frame and access. Confidentiality (Binding). Although both parties have probably signed a confidentiality agreement at this point, this additional term ensures all discussions regarding the transaction are confidential. Approvals. Lists any approvals needed by the buyer (e.g., board of directors) or seller (e.g., regulatory agencies, customers) to complete the transaction. Escrow. Provides the summary terms of the buyer's expected escrow terms for holding back some percentage of the purchase price to cover future payments for past liabilities. The escrow is typically highly negotiable and often excluded from the LOI and presented for the first time in the purchase agreement. Representations and Warranties. This clause will include indemnifications in the purchase agreement. It is best practice to include any terms that may be contentious or non-standard.


How to Be an Alpha Male Due Diligence Financial books and records Incorporation documents Employee benefits, policies and compliance issues Internal systems and procedures Customer contracts Intellectual property Condition of assets Any key area of concern identified while negotiating the letter of intent

Digital deal rooms are now used (ex. Firmex and V-rooms). Due Diligence is usually 60 to 90 days

The Purchase Agreement Incorporates all terms of the LOI and is written to address issues discovered in due diligence. The agreement will lay out a structure to handle this (a hold back account, deductions from future payments, price adjustment, etc.)


How to Be an Alpha Male Pitchbook Table of Contents (exploring strategic alternatives to win a mandate): I.

Executive summary

II.

Industry specific market update (discuss control premiums and multiples)

III.

Review of company’s strategic priorities

IV.

Potential strategic targets a.

Vertical I

b.

Vertical II

c.

Vertical III

Sell side after winning the mandate: I.

Discuss and demonstrate knowledge of buyer universe (strategic vs. financial)

II.

Discuss valuation range (“I believe that you can get $_____, providing that these things hold true”)

III.

Process and timing

IV.

Tax consequences

V.

What is going to happen to key management and employees

Confidential Information Memorandum (CIM) Table of Contents: I.

Executive summary

II.

Key investment considerations

III.

Growth opportunities

IV.

Industry overview

V.

Company overview a.

Overview

b.

Products and services

c.

Sales and marketing

d.

Operations Copyright: Alpha University www.UniversityAlpha.com

How to Be an Alpha Male e. VI.

Organization Financial overview

Confidentiality – Discuss in terms of project name, never mention name of company. “No comment” and refer press to PR department.

M&A Banker’s Role: M&A banker is hired to run a process: 1.

Defining exit options and strategies (4 types: auction process, controlled sale, targeted high level solicitation, closed negotiation)

2.

Valuation

3.

Recast financials

4.

Presentation and packaging

5.

Buyer qualifications

6.

Marketing

7.

Management coaching

8.

Due diligence facilitation (data room)

9.

Price and contract negotiation

From 100 buyer universe, narrow it down to 20 to 30 target buyers

Auction Process: 100-150 companies initial call 4 months; 6-12 months actual Initial call interest, then send teaser If interested after teaser, sign NDA, send CIM



Controlled Sale: 10-12 companies 4 months, 6-8 months actual

Targeted High Level Solicitation: 4-5 companies 2-4 months

Closed Negotiation: 1-2 parties 1-3 months

Regarding valuation, the investment banker will form the story which is either: I.

Growth story

II.

Well operating story

Presentation and Packaging CIM (1st round): Week 1: interviews with CEO, CFO 2-3 weeks to create Copyright: Alpha University www.UniversityAlpha.com

How to Be an Alpha Male 70, 80, 90 pages

Teaser (1st round) Management presentation (2nd round) – all info in CIM

Buyer Qualification: Finalize to list of 50, bankers begin making phone calls

Marketing: Sign NDAs, send CIM Weekly calls with client to update (buyer list updates)

Pitching: To win new business. Pitching can take years. This is ultimately deal sourcing with MDs calling on clients for 10-15 years.

Bake Off to Win Mandate: To win sell side mandate there are 9 to 10 banks with 2 to 3 banks in the next round. They present to management and the board.

The Pitchbook to Win Business:


How to Be an Alpha Male I.

Intros and quals

II.

Industry overview

III.

Capital market overview (capital markets and products perspective (ex. M&A and IPO))

IV.

Company and situation overview

V.

Valuation (football field)

VI.

Process

VII.

Buyers/investors



Part XV: Firm Management

Since the M&A market is so fragmented in the middle market, it may become necessary for the investment banker to run his own M&A practice.



Chapter 74: Running the Boutique Investment Bank

In building AltQuest’s initial book of business, we sent over 2,000 emails to our initial coverage group, industrials/manufacturers. The response rate was approximately 2%. Of those that responded approximately 50% were interested in seller and 50% were interested in taking an offer on their business. Of those that were interested in selling their business, approximately 50% accepted our fee agreement.

When first starting the M&A firm, majority of time should be spent originating sell side mandates. Once the investment banker gets to 20 sell side mandates, one can ease up on origination and transfer those responsibilities to analysts and associates hired as interns which then turn into full time analysts/associates.


How to Be an Alpha Male This means that all of the investment banker’s time will now be spent in M&A execution with sell-side pitches from time to time when the analyst/associate originates an opportunity.

Good analysts and associates will originate 2 to 3 sell-side pitch opportunities per week so the investment banker will stay busy on the phone with these CEOs/Founders/Partners.

Realistically it will take a year to a year and a half to close your first deal if you are just starting out in M&A. If you have been in M&A and have a book of business, the timeframe shortens to the typical time it takes to close a deal which is shown below.

It is important for the M&A professional to plan for this extended time frame and not to get discouraged when deals blow up, get delayed, or change. All deals associated with an actual perpetuity close, it is just a matter of time.



Part XVI: Deliverables & Coverage

Investment banking requires a certain set of deliverables from coverage, to origination through sell side representation.



Chapter 75: Investment Banking Deliverables

Investment banking deliverables include the following in order from left to right:

I.

Industry financial report and newsletter (coverage)

II.

Pitchbook (origination)

III.

Teaser & CIM (sell side mandate)



Chapter 76: Coverage

The investment banker will often focus on a product group (i.e. M&A) and/or an industry (industrials, healthcare, technology). Proper coverage comes in the form of maintaining a coverage index for a sector and its sub-sectors which is broken down in the following manner:

I.

Industry macroeconomics a.

Industry spending

b.

Sub-sector spending

c.

Stock market performance of industry

II.

Public sub-sector financial and valuation performance a.

Sub-sector index

b.

Sub-sector index: financial performance

c.

Sub-sector index: public market multiples

d.

Sub-sector index by product category

e.

Sub-sector index by product category: financial performance

f.

Sub-sector index by product category: public market multiples

III.

Industry M&A Market Update a.

Industry M&A deal volume and spending

b.

Industry M&A exit multiples


c.

How to Be an Alpha Male Sub-sector M&A deal volume and spending

d.

Sub-sector M&A exit multiples

e.

Sub-sector M&A deal volume by product category

f.

Sub-sector M&A exit multiples by product category

IV.

Appendix a.

Sub-sector index key metrics

b.

Sub-sector index key metrics by product category

c.

Industry most active buyers

d.

Sub-sector most active buyers

e.

Sub-sector most active buyers by product category



Chapter 77: Index Building & Analysis

General (Dow)











Industry

Sub-sector







Sub sector by product





Chapter 78: Financial Data Sources

If you are at a larger investment bank, you will have various paid data sources at your disposal. These include: 1.

Bloomberg

2.

CapitalIQ

3.

FactSet For those that are not at a larger bank, one can use the free sources of financial data including:



Yahoo Finance



Google Finance Yahoo Finance and Google Finance get their EBITDA numbers from CapitalIQ and their analyst EPS consensus estimates from there as well. Investment banks typically do not want you to use the EBITDA from CapitalIQ, Bloomberg, FactSet and would prefer that you spread the comps individually to get to EBITDA. We are ultimately using the financial data sources to build and maintain our various indices associated with our coverage group. Copyright: Alpha University www.UniversityAlpha.com


Chapter 79: Industry or Sector Newsletter

When maintaining coverage of an industry or sector, one prepares a newsletter to be send to prospective sell side clients in the industry or sector. Investment bankers use the index information to create this newsletter. The newsletter is about 2 to 6 pages.



Chapter 80: Industry or Sector Report

When maintaining coverage of an industry or sector, one prepares a report to be send to prospective sell side clients in the industry or sector. Investment bankers use the index information to create this report. The report goes more in depth than the newsletter. The report can be about 50 pages.



Chapter 81: Rolodex Building

As an investment banker it is important to establish relationships with the strategics in your coverage group as well as relationships with targets and their potential buyers. After building the index containing relevant strategics, one should go to RocketReach.co and find the email addresses for each of the CEOs, CFOs, and/or corporate M&A department head for the potential acquirer.



BUY-SIDE

For those that have already built perpetuities and their representation, there is another category known as the buy-side. The buy-side is made up of financial (private equity) and strategic buyers (corporate).



Part XVII: Buying a Perpetuity

On the buy-side, we are concerned with the purchasing of perpetuities.



Chapter 82: The Operating Model

We are going to start with the operating model previously built (integrated financial statement model). From here we are going to build on a transaction (ex. LBO, Merger, ECM, DCM).



Chapter 83: Financial Buyer aka Private Equity (LBO)

There are over 4,000 financial buyers in the world. They command over $2 trillion in capital and are broken down into the following categories:

Leveraged buyout Growth Mezzanine

While each of these private equity firms have different hurdle rates, each perform an LBO analysis to determine whether or not to purchase a perpetuity.


How to Be an Alpha Male Private equity firms have 7 to 8 years to invest and get returns and be done with the fund. They have a 2% management fee generally. They are targeting 20% to 25% and think in terms of spread over treasuries. IRR is the name of the game which the main drivers of returns being; acquisition price, amount of debt raised, and future operating performance (model projections). There is an aspect of buy low, sell high regarding multiples (ex. 11x entry and 13x exit). You can use the following as a general rule of thumb for a private equity group:

15% IRR don’t do the deal 25% IRR do the deal 30% IRR, you must do the deal

Regarding ideal private equity targets, the private equity firm will specialize in a few sectors and does not want a lot of discretionary CAPEX. They will however do maintenance CAPEX. They will look to rework AR and AP contracts.

Furthermore, after an acquisition, the PE group will look to pay debt down as fast as possible. They ideally want dividend recaps (add additional cash and then pay self a dividend after paying back additional debt).

The PE firm when considering an investment will run multiple cases to determine what case to bid on. They will do sensitivity tables as well. Copyright: Alpha University www.UniversityAlpha.com


The PE group will work with LevFin, SLF & DCM within a given investment bank with SLF syndicating the loans and then selling the paper. The IB charges a financing fee, advisory fee, and syndication fee.

Leveraged Buyout (LBO) Analysis:

1.

Locate financial information

2.

Build the operating model

3.

Input transaction structure

4.

Complete LBO model with new structure

5.

Run the LBO analysis

Notes: Banks want 20% to 30% for financial sponsor. This depends on the industry; 50% necessary for technology company. Bank looks at leverage ratios and interest coverage to determine which covenants to put in place.

Construction of LBO Model Purchase price and considerations Sources and uses Cap structure alternatives (sources)


How to Be an Alpha Male Integrate proforma BS into operating model (change in debt level and intangibles) IS, BS, and SCF projections integration IRR analysis for FS and hybrid debt lender (to find what is EBITDA, how much is cash and how much is debt Sensitivity tables Credit ratios

PIK allows you to get more leverage

LBO model is an M&A & DCM transaction in one

EBITDA multiple determined from midpoint of the football field

Transaction fees: Financing fees – SLF & DCM IB fees – M&A Legal – Lawyer Other fees

Leverage is spoken in terms of x leverage which means x EBITDA



SLF & DCM go through cases of operating model to find optimal tranche of debt to provide highest leverage to the FS but can still be sold in the marketplace

Proforma is AS IF after the transaction. Adjustments (changes) -> Proforma (after changes)

Retained earnings: Old RE gets wiped out and new RE starts negative due to financing fees.

Assumptions for projects: Operating model start with base case without transaction Sponsor upside case Sponsor downside case Each case underneath line item in Assumptions tab Use choose function to choose case

Key question: Is capital structure correct to allow you to pay down amortized debt and other tranches of debt?

Look at net cash flow being generated and then determine if unsecured needs to be PIK (if not enough net CF, then need PIK) Copyright: Alpha University www.UniversityAlpha.com


Talk to credit officer to get to capital structure that is optimal

Need to do accounting quality of earnings analysis to get to true EBITDA?

Financial sponsors want to see sensitivity table with highlighted options that make sense. Sensitize entry multiple and exit multiple for IRR.

Reverse LBO: If I have a hurdle rate of x%, what is the max price I can pay for the asset? Also get an implied entry multiple.

PE transaction rationale: Offense (growth) vs. defense (protecting territory aka maintain margins)

Credit officer meeting: 25-30 page deck Industry Sponsor thesis 1 sheet summary of relevant financial statistics (one for each capital structure)


How to Be an Alpha Male How quickly do you draw on revolver? Do not want to draw on revolver too quickly Credit officer looks at BS/CF statistics, leverage ratios, and interest coverage statistics Want to see debt ratios steadily going down; want a few turns of the company being delivered How quickly does this company get delivered?

PE work: 10, 20, 30 CIMs (confidential information memorandums) per month.

PE interview: Interview 1 – Experience Interview 2 – You have 2 hrs to build an LBO model and tell me whether or not to invest



Chapter 84: Strategic Buyer aka Corporation (Merger)

There are over 3,000 strategic buyers in the world.

While each of these strategic buyers have different hurdle rates, each perform a merger analysis to determine whether or not to purchase a perpetuity.

Merger Analysis:

1.

Locate financial information

2.

Build the standalone operating model for target & acquirer

3.

Input transaction structure

4.

Complete merger model with new structure

5.

Run the merger consequences analysis (accretion/dilution, balance sheet effects, contribution analysis)



Notes:

Merger Modeling 2 operating models put together with synergies

Don’t want to give away more than 50% of your synergies in your bid

Accretion (EPS goes up with combined company)/dilution merger model to see impact of acquisition on acquirer’s EPS Offensive play vs. defensive play (protecting your market or size)

Dilution is proforma decrease in EPS. What causes dilution? Buyer with higher PE multiple than target, then accretive as the target is less expensive. If target has PE that is higher than the acquirer, always dilutive. If premium paid causes PE of target to be higher, then dilutive.

Accretion/dilution always forward looking as it takes years to get synergies

Proforma ownership structure want to control 50.1% of company



Pretax synergies required to break even: How much synergies does acquirer need to have for the transaction to be accretive:

((Proforma EPS – Acquirer EPS) x proforma shares outstanding) / (1 – tax rate))

We then take this number as a % of revenue or EBITDA of combined company

Know where your stock’s value is going: If undervalued, then don’t use stock If overvalued, then use stock to fund the transaction

Collars: When announce transaction, establish exchange ratio as the stock price will move so have either: A. Fixed value collar – favors target B. Fixed share collar – favors acquirer

Sensitivity tables are used to help structure deals and in negotiations


How to Be an Alpha Male Surviving entity (acquirer)



PART VI: HOW TO BECOME A BILLIONAIRE



Chapter 85: How to Build a Unicorn Buy-side. Sell-side. Build-Side?

Buy-side (buying perpetuities) Sell-side (selling perpetuities) Build-side (building perpetuities) - combining Wall Street valuation with Silicon Valley platform building

We have all heard about the buy side and the sell side of finance, but who is actually building the perpetuities. What if there was a third side of finance? What if there was a build-side, with individuals possessing IB/PE and platform development talents to use in building perpetuities? Shouldn't that be the logical course of events with individuals taking their knowledge of valuation and industries and putting them to use in building the next unicorns?

So what would this look like? IB/PE professionals joining startup labs such as the one I run called Founders Ventures (www.VCFounders.com) to work on concepts that have a legitimate chance of being a unicorn. Rather than leaving one's job to join a questionable startup, join a startup lab and be directly involved in the build-side, even if it part-time. The work of the build-side is syndication.

Shouldn't we all be working towards getting on the build-side? Introduction to the Unicorn Methodology



Unicorn Methodology

Concept: Market size: Total addressable market: UNIT ECONOMICS (PROFITABILITY) OF THE COMPANY: a.

IDENTIFY COST OF ACQUISITION PER CUSTOMER (CAC):

b.

IDENTIFY COST PER USER PER MONTH:

c.

IDENTIFY REVENUE PER USER PER MONTH:

d.

IDENTIFY LIFETIME VALUE PER USER (LTV):

MODEL PLATFORM ARCHITECTURE IN TERMS OF BASE PHP PLATFORM AND MODS ONTO IT. DOMAIN WITH MVP DONE: www.domainnamehere.com DATABASE OF 25 HIGHEST PRIORITY USERS OF PLATFORM AND COLLECT EMAIL, NAME, NUMBER. .XLS NAME WITH TOP 25 DATABASE: databasenamehere.xls SELF-ADVOCATE TO THE 25 HIGHEST PRIORITY USERS OF PLATFORM AND NOTIFY THEM THAT YOU WILL BE SENDING THEM VALUE AND THAT THIS IS THEIR ACCOUNT TO CLAIM IT GIVING THEM LOGIN CREDENTIALS. .DOC NAME WITH MESSAGE TO BE SENT: companyname.doc SCREEN SHARE WALK THROUGH WITH THE HIGH PRIORITY USER AND SHOW THEM HOW IT WORKS AND GET THEM TO LOGIN BY THEMSELVES USER UTILIZES PLATFORM BY THEMSELVES FOR A TRIAL PERIOD OF TIME (3 TO 6 MONTHS) SEND USER THE INVOICE FOR USING THE PLATFORM. FEE SHOULD BE MEMBERSHIP FEE BASED UPON STANDARD MARKET FEE. AMOUNT OF FEE & INVOICING METHOD: $XXX.00 per month & PayPal BUILD DATABASE OF 26-50th HIGHEST PRIORITY USERS OF PLATFORM AND COLLECT EMAIL, NAME, NUMBER. .XLS NAME WITH TOP 26-50 DATABASE: databasenamehere2.xls


How to Be an Alpha Male IDENTIFY 3 TO 5 MOST LIKELY STRATEGIC BUYERS OF YOUR PLATFORM. REACH OUT TO THE PERSONALLY WHEN YOU HAVE $100M IN RECURRING REVENUE AND EXIT AT THE MARKET REVENUE MULTIPLE BASED UPON PRECEDENT TRANSACTIONS: Facebook, Google, LinkedIn, Alibaba

DISCOUNT RATE STATUS: Seed: pre-database MVP: 80% discount rate Angel: self-advocacy & activation: 50%-70% discount rate Series A: utilization & monetization: 40%-60% discount rate Series B: monetization & scale: 30%-50% discount rate Growth: Scale & new markets: 20%-40% discount rate Mezzanine: Scale in old & new markets: 15%-30% discount rate IPO: Scale globally: 7-15% discount rate Post-IPO Minority Ownership: Mature & New Product Development: 3.5%10% discount rate

FINANCIAL MODEL & VALUATION (DCF):


How to Be an Alpha Male Concept

1.

IDENTIFY MARKET SIZE (REVENUES PER YEAR):

2. IDENTIFY TOTAL ADDRESSABLE MARKET SIZE (REVENUES PER YEAR):

To build a unicorn, both of these should be in the billions. You need to be able to show that the company can capture $100M in recurring revenues in years 5 to 10. This means that you have built a unicorn.

1.

IDENTIFY UNIT ECONOMICS (PROFITABILITY) OF THE COMPANY:

a.

IDENTIFY COST OF ACQUISITION PER CUSTOMER (CAC):

b.

IDENTIFY COST PER USER PER MONTH:

c.

IDENTIFY REVENUE PER USER PER MONTH:

d.

IDENTIFY LIFETIME VALUE PER USER (LTV):

To build a unicorn, the REVENUE PER USER PER MONTH SHOULD BE 30% to 50% higher than COST PER USER PER MONTH. This means that when you scale, you do so extremely profitably. These sort of margins are what billion-dollar consumer/internet companies get including Facebook and Linkedin.

Size of market means how many revenues per year is generated by that industry. You want to achieve $100M recurring revenue per year of that market in 7 years. What % is that? This means a billion dollar company.


How to Be an Alpha Male Billion Dollar Markets that are (y) Ripe for Disruption checks the box. If you're at a $2.9B TAM, and that's truly an addressable market ... that works. Check.

The tactical question though is can you get to $100m in ARR in 6-7 years if everything goes really well? Even if your nominal TAM is high, my #1 recommendation if you are preMSP (Minimum Sellable Product) is to do your own model to get to $100m in 7 years.

Any product that can really sell at a $100m ARR in 7 years has a billion+ TAM, by definition.

that TAM needs to be very large. At least a Billion.


How to Be an Alpha Male Platform

1. MODEL PLATFORM ARCHITECTURE IN TERMS OF BASE PHP PLATFORM AND MODS ONTO IT

Database(s)

1. BUILD DATABASE OF 25 HIGHEST PRIORITY USERS OF PLATFORM AND COLLECT EMAIL, NAME, NUMBER

Self-Advocacy

SELF-ADVOCATE TO THE 25 HIGHEST PRIORITY USERS OF PLATFORM AND NOTIFY THEM THAT YOU WILL BE SENDING THEM VALUE AND THAT THIS IS THEIR ACCOUNT TO CLAIM IT GIVING THEM LOGIN CREDENTIALS

Activation

SCREEN SHARE WALK THROUGH WITH THE HIGH PRIORITY USER AND SHOW THEM HOW IT WORKS AND GET THEM TO LOGIN BY THEMSELVES

Utilization

USER UTILIZES PLATFORM BY THEMSELVES FOR A TRIAL PERIOD OF TIME (3 TO 6 MONTHS)


How to Be an Alpha Male Monetization

SEND USER THE INVOICE FOR USING THE PLATFORM. FEE SHOULD BE MEMBERSHIP FEE BASED UPON STANDARD MARKET FEE.

Scale

BUILD DATABASE OF 26-50th HIGHEST PRIORITY USERS OF PLATFORM AND COLLECT EMAIL, NAME, NUMBER

Exit

IDENTIFY 3 TO 5 MOST LIKELY STRATEGIC BUYERS OF YOUR PLATFORM. REACH OUT TO THE PERSONALLY WHEN YOU HAVE $100M IN RECURRING REVENUE AND EXIT AT THE MARKET REVENUE MULTIPLE BASED UPON PRECEDENT TRANSACTIONS.

Exiting at a 10x+ revenue multiple means that you have exited at a valuation of $1 billion dollars and have thus created a unicorn.



Cases:

M&A Nexus: Concept: M&A network and marketplace connecting strategic and financial buyers to advisors representing middle market companies for sale. Market size: $1.4 Trillion (capital marketplace) Total addressable market: $900 Billion (M&A transactions in non-tech companies) UNIT ECONOMICS (PROFITABILITY) OF THE COMPANY: a. IDENTIFY COST OF ACQUISITION PER CUSTOMER (CAC): database cost/# of companies in database = $3000/12,000 = $.25 b. IDENTIFY COST PER USER PER MONTH: server cost/total users = $150/12,000 = $.02 c. IDENTIFY REVENUE PER USER PER MONTH: revenue per year/12 = $2,000/12 = $166.66 d. IDENTIFY LIFETIME VALUE PER USER (LTV): revenue per year x life expectancy = $2,000 x 60 = $120,000 MODEL PLATFORM ARCHITECTURE IN TERMS OF BASE PHP PLATFORM AND MODS ONTO IT DATABASE OF 25 HIGHEST PRIORITY USERS OF PLATFORM AND COLLECT EMAIL, NAME, NUMBER. .XLS DATABASE NAME: SELF-ADVOCATE TO THE 25 HIGHEST PRIORITY USERS OF PLATFORM AND NOTIFY THEM THAT YOU WILL BE SENDING THEM VALUE AND THAT THIS IS THEIR ACCOUNT TO CLAIM IT GIVING THEM LOGIN CREDENTIALS. .DOC MESSAGE FILE NAME: SCREEN SHARE WALK THROUGH WITH THE HIGH PRIORITY USER AND SHOW THEM HOW IT WORKS AND GET THEM TO LOGIN BY THEMSELVES USER UTILIZES PLATFORM BY THEMSELVES FOR A TRIAL PERIOD OF TIME (3 TO 6 MONTHS)


How to Be an Alpha Male SEND USER THE INVOICE FOR USING THE PLATFORM. FEE SHOULD BE MEMBERSHIP FEE BASED UPON STANDARD MARKET FEE. BUILD DATABASE OF 26-50th HIGHEST PRIORITY USERS OF PLATFORM AND COLLECT EMAIL, NAME, NUMBER IDENTIFY 3 TO 5 MOST LIKELY STRATEGIC BUYERS OF YOUR PLATFORM. REACH OUT TO THE PERSONALLY WHEN YOU HAVE $100M IN RECURRING REVENUE AND EXIT AT THE MARKET REVENUE MULTIPLE BASED UPON PRECEDENT TRANSACTIONS. Axial, LinkedIn, Alibaba

DISCOUNT RATE STATUS: Seed: pre-database MVP: 80% discount rate Angel: self-advocacy & activation: 50%-70% discount rate Series A: utilization & monetization: 40%-60% discount rate Series B: monetization & scale: 30%-50% discount rate Growth: Scale & new markets: 20%-40% discount rate Mezzanine: Scale in old & new markets: 15%-30% discount rate IPO: Scale globally: 7-15% discount rate Post-IPO Minority Ownership: Mature & New Product Development: 3.5%-10% discount rate





How to Be an Alpha Male DegreeLinked: Concept: DegreeLinked simplifies the college application process by allowing would be students to complete one digital college application that gets used for all college applications. Market size: $250 billion (amount spent by universities on acquiring and matriculating students) Total addressable market: $25 billion (digital advertising to students) UNIT ECONOMICS (PROFITABILITY) OF THE COMPANY: a. IDENTIFY COST OF ACQUISITION PER CUSTOMER (CAC): cost to custom build database/# of universities in database = $2,000/14,000 = $.14 b. IDENTIFY COST PER USER PER MONTH: server cost per month/users = $150/14,000 = $.01 c. IDENTIFY REVENUE PER USER PER MONTH: total revenue per year/12 months = $50,000/12 = $4,100 d. IDENTIFY LIFETIME VALUE PER USER (LTV): revenue per user per year x life expectancy = $50,000 x 60 = $3,000,000 MODEL PLATFORM ARCHITECTURE IN TERMS OF BASE PHP PLATFORM AND MODS ONTO IT DATABASE OF 25 HIGHEST PRIORITY USERS OF PLATFORM AND COLLECT EMAIL, NAME, NUMBER. .XLS DATABASE NAME: SELF-ADVOCATE TO THE 25 HIGHEST PRIORITY USERS OF PLATFORM AND NOTIFY THEM THAT YOU WILL BE SENDING THEM VALUE AND THAT THIS IS THEIR ACCOUNT TO CLAIM IT GIVING THEM LOGIN CREDENTIALS. .DOC MESSAGE FILE NAME: SCREEN SHARE WALK THROUGH WITH THE HIGH PRIORITY USER AND SHOW THEM HOW IT WORKS AND GET THEM TO LOGIN BY THEMSELVES USER UTILIZES PLATFORM BY THEMSELVES FOR A TRIAL PERIOD OF TIME (3 TO 6 MONTHS) SEND USER THE INVOICE FOR USING THE PLATFORM. FEE SHOULD BE MEMBERSHIP FEE BASED UPON STANDARD MARKET FEE.


How to Be an Alpha Male BUILD DATABASE OF 26-50th HIGHEST PRIORITY USERS OF PLATFORM AND COLLECT EMAIL, NAME, NUMBER IDENTIFY 3 TO 5 MOST LIKELY STRATEGIC BUYERS OF YOUR PLATFORM. REACH OUT TO THE PERSONALLY WHEN YOU HAVE $100M IN RECURRING REVENUE AND EXIT AT THE MARKET REVENUE MULTIPLE BASED UPON PRECEDENT TRANSACTIONS: Facebook, LinkedIn, Google, Alibaba





FundLinked:


How to Be an Alpha Male Concept: Private equity network and marketplace connecting limited partners (LPs) with general partners (GPs) representing funds being raised. Market size: $454 billion (total LP commitments) Total addressable market: $15 bn (fund placement) UNIT ECONOMICS (PROFITABILITY) OF THE COMPANY: a. IDENTIFY COST OF ACQUISITION PER CUSTOMER (CAC): database cost/# of companies in database = $3000/12,000 = $.25 b. IDENTIFY COST PER USER PER MONTH: server cost/total users = $150/12,000 = $.02 c. IDENTIFY REVENUE PER USER PER MONTH: revenue per year/12 = $2,000/12 = $166.66 d. IDENTIFY LIFETIME VALUE PER USER (LTV): revenue per year x life expectancy = $2,000 x 60 = $120,000 MODEL PLATFORM ARCHITECTURE IN TERMS OF BASE PHP PLATFORM AND MODS ONTO IT DATABASE OF 25 HIGHEST PRIORITY USERS OF PLATFORM AND COLLECT EMAIL, NAME, NUMBER. .XLS DATABASE NAME: SELF-ADVOCATE TO THE 25 HIGHEST PRIORITY USERS OF PLATFORM AND NOTIFY THEM THAT YOU WILL BE SENDING THEM VALUE AND THAT THIS IS THEIR ACCOUNT TO CLAIM IT GIVING THEM LOGIN CREDENTIALS. .DOC MESSAGE FILE NAME: SCREEN SHARE WALK THROUGH WITH THE HIGH PRIORITY USER AND SHOW THEM HOW IT WORKS AND GET THEM TO LOGIN BY THEMSELVES USER UTILIZES PLATFORM BY THEMSELVES FOR A TRIAL PERIOD OF TIME (3 TO 6 MONTHS) SEND USER THE INVOICE FOR USING THE PLATFORM. FEE SHOULD BE MEMBERSHIP FEE BASED UPON STANDARD MARKET FEE. BUILD DATABASE OF 26-50th HIGHEST PRIORITY USERS OF PLATFORM AND COLLECT EMAIL, NAME, NUMBER IDENTIFY 3 TO 5 MOST LIKELY STRATEGIC BUYERS OF YOUR PLATFORM. REACH OUT TO THE PERSONALLY WHEN YOU HAVE $100M IN RECURRING REVENUE AND


How to Be an Alpha Male EXIT AT THE MARKET REVENUE MULTIPLE BASED UPON PRECEDENT TRANSACTIONS. DISCOUNT RATE STATUS: Palico, LinkedIn, Google, Alibaba

Seed: pre-database MVP: 80% discount rate Angel: self-advocacy & activation: 50%-70% discount rate Series A: utilization & monetization: 40%-60% discount rate Series B: monetization & scale: 30%-50% discount rate Growth: Scale & new markets: 20%-40% discount rate Mezzanine: Scale in old & new markets: 15%-30% discount rate IPO: Scale globally: 7-15% discount rate Post-IPO Minority Ownership: Mature & New Product Development: 3.5%-10% discount rate





How to Be an Alpha Male Asiansbook: Concept: “Facebook for Asia” Market size: $121 billion (Digital advertising) Total addressable market: $25 bn (digital advertising spend in Asia) UNIT ECONOMICS (PROFITABILITY) OF THE COMPANY: a. IDENTIFY COST OF ACQUISITION PER CUSTOMER (CAC): cost of country database/# of consumers in database = $200/1,000,000 = $.02 b. 80%)

IDENTIFY COST PER USER PER MONTH: $2.40 (Facebook data discounted

c. IDENTIFY REVENUE PER USER PER MONTH: $3.80 (Facebook data discounted 80%) d. IDENTIFY LIFETIME VALUE PER USER (LTV): Revenue per user per month x 12 x life expectancy = $3.80 x 12 x 60 = $2,736 MODEL PLATFORM ARCHITECTURE IN TERMS OF BASE PHP PLATFORM AND MODS ONTO IT DATABASE OF 25 HIGHEST PRIORITY USERS OF PLATFORM AND COLLECT EMAIL, NAME, NUMBER. .XLS DATABASE NAME: SELF-ADVOCATE TO THE 25 HIGHEST PRIORITY USERS OF PLATFORM AND NOTIFY THEM THAT YOU WILL BE SENDING THEM VALUE AND THAT THIS IS THEIR ACCOUNT TO CLAIM IT GIVING THEM LOGIN CREDENTIALS. .DOC MESSAGE FILE NAME: SCREEN SHARE WALK THROUGH WITH THE HIGH PRIORITY USER AND SHOW THEM HOW IT WORKS AND GET THEM TO LOGIN BY THEMSELVES USER UTILIZES PLATFORM BY THEMSELVES FOR A TRIAL PERIOD OF TIME (3 TO 6 MONTHS) SEND USER THE INVOICE FOR USING THE PLATFORM. FEE SHOULD BE MEMBERSHIP FEE BASED UPON STANDARD MARKET FEE. BUILD DATABASE OF 26-50th HIGHEST PRIORITY USERS OF PLATFORM AND COLLECT EMAIL, NAME, NUMBER IDENTIFY 3 TO 5 MOST LIKELY STRATEGIC BUYERS OF YOUR PLATFORM. REACH OUT TO THE PERSONALLY WHEN YOU HAVE $100M IN RECURRING REVENUE AND Copyright: Alpha University www.UniversityAlpha.com

How to Be an Alpha Male EXIT AT THE MARKET REVENUE MULTIPLE BASED UPON PRECEDENT TRANSACTIONS: Facebook, Google, Alibaba, LinkedIn






How to Be an Alpha Male FameLinked: Concept: “Monetizing Social with Microsponsorships” via a ranked social network Market size: $121 billion (Digital advertising and digital subscriptions for USA businesses) Total addressable market: $75 billion (digital advertising on social networks) UNIT ECONOMICS (PROFITABILITY) OF THE COMPANY: a. IDENTIFY COST OF ACQUISITION PER CUSTOMER (CAC): cost of database/# of consumers in database = $2000/1,000,000 = $.20 b. 80%)


c. IDENTIFY REVENUE PER USER PER MONTH: $3.80 (Facebook data discounted 80%) d. IDENTIFY LIFETIME VALUE PER USER (LTV): Revenue per user per month x 12 x life expectancy = $3.80 x 12 x 60 = $2,736 MODEL PLATFORM ARCHITECTURE IN TERMS OF BASE PHP PLATFORM AND MODS ONTO IT DATABASE OF 25 HIGHEST PRIORITY USERS OF PLATFORM AND COLLECT EMAIL, NAME, NUMBER. .XLS DATABASE NAME: SELF-ADVOCATE TO THE 25 HIGHEST PRIORITY USERS OF PLATFORM AND NOTIFY THEM THAT YOU WILL BE SENDING THEM VALUE AND THAT THIS IS THEIR ACCOUNT TO CLAIM IT GIVING THEM LOGIN CREDENTIALS. .DOC MESSAGE FILE NAME: SCREEN SHARE WALK THROUGH WITH THE HIGH PRIORITY USER AND SHOW THEM HOW IT WORKS AND GET THEM TO LOGIN BY THEMSELVES USER UTILIZES PLATFORM BY THEMSELVES FOR A TRIAL PERIOD OF TIME (3 TO 6 MONTHS) SEND USER THE INVOICE FOR USING THE PLATFORM. FEE SHOULD BE MEMBERSHIP FEE BASED UPON STANDARD MARKET FEE. BUILD DATABASE OF 26-50th HIGHEST PRIORITY USERS OF PLATFORM AND COLLECT EMAIL, NAME, NUMBER


How to Be an Alpha Male IDENTIFY 3 TO 5 MOST LIKELY STRATEGIC BUYERS OF YOUR PLATFORM. REACH OUT TO THE PERSONALLY WHEN YOU HAVE $100M IN RECURRING REVENUE AND EXIT AT THE MARKET REVENUE MULTIPLE BASED UPON PRECEDENT TRANSACTIONS: Facebook, Google, LinkedIn, Alibaba





NationLinked:


How to Be an Alpha Male Concept: It is a government representative’s civic duty to represent their constituents and NationLinked is the platform in which constituents directly voice their issues to their representatives. NationLinked is the social governance platform.

Market size: $500 billion (total spend on influencing constituencies) Total addressable market: $25 billion (total spend) UNIT ECONOMICS (PROFITABILITY) OF THE COMPANY: a. IDENTIFY COST OF ACQUISITION PER CUSTOMER (CAC): cost to build federal/state/local governance database/# of entries in database = $2,500/2000 = $.25 b. 80%)


c. IDENTIFY REVENUE PER USER PER MONTH: $3.80 (Facebook data discounted 80%) d. IDENTIFY LIFETIME VALUE PER USER (LTV): Revenue per user per month x 12 x life expectancy = $3.80 x 12 x 60 = $2,736 MODEL PLATFORM ARCHITECTURE IN TERMS OF BASE PHP PLATFORM AND MODS ONTO IT DATABASE OF 25 HIGHEST PRIORITY USERS OF PLATFORM AND COLLECT EMAIL, NAME, NUMBER. .XLS DATABASE NAME: SELF-ADVOCATE TO THE 25 HIGHEST PRIORITY USERS OF PLATFORM AND NOTIFY THEM THAT YOU WILL BE SENDING THEM VALUE AND THAT THIS IS THEIR ACCOUNT TO CLAIM IT GIVING THEM LOGIN CREDENTIALS. .DOC MESSAGE FILE NAME: SCREEN SHARE WALK THROUGH WITH THE HIGH PRIORITY USER AND SHOW THEM HOW IT WORKS AND GET THEM TO LOGIN BY THEMSELVES USER UTILIZES PLATFORM BY THEMSELVES FOR A TRIAL PERIOD OF TIME (3 TO 6 MONTHS) SEND USER THE INVOICE FOR USING THE PLATFORM. FEE SHOULD BE MEMBERSHIP FEE BASED UPON STANDARD MARKET FEE. BUILD DATABASE OF 26-50th HIGHEST PRIORITY USERS OF PLATFORM AND COLLECT EMAIL, NAME, NUMBER


How to Be an Alpha Male IDENTIFY 3 TO 5 MOST LIKELY STRATEGIC BUYERS OF YOUR PLATFORM. REACH OUT TO THE PERSONALLY WHEN YOU HAVE $100M IN RECURRING REVENUE AND EXIT AT THE MARKET REVENUE MULTIPLE BASED UPON PRECEDENT TRANSACTIONS: Facebook, LinkedIn, Google, Alibaba DISCOUNT RATE STATUS: Seed: pre-database MVP: 80% discount rate Angel: self-advocacy & activation: 50%-70% discount rate Series A: utilization & monetization: 40%-60% discount rate Series B: monetization & scale: 30%-50% discount rate Growth: Scale & new markets: 20%-40% discount rate Mezzanine: Scale in old & new markets: 15%-30% discount rate IPO: Scale globally: 7-15% discount rate Post-IPO Minority Ownership: Mature & New Product Development: 3.5%-10% discount rate






Chapter 86: The Four Habits of Billionaires 1. Research/Read – Understand many industries that are ripe for disruption. Which have TAMs (total addressable market) of at least $1 billion? 2. Valuation - Building a DCF/EBO (Equity Build Out) to understand NPV & IRR of the concepts with billion-dollar addressable markets. Which concepts get you to $100M ARR (annual recurring revenue in 7 years)? 3. Syndication - Building a Minimum Viable Product (MVP) for each of the concepts 4. Self-advocacy - PPC, SEO, Quora, custom database, industry events, social media, PR to get initial traction and scale from there



Chapter 87: Total Theme Monetization Total theme monetization is an approach to building a portfolio of synergistic companies around one value theme. For example, for the value theme, Investment Banking, I have utilized the total theme monetization strategy as displayed here: University: Investment Banking University (www.InvestmentBankingU.com) Book: Investment Banking, Middle Market M&A, Execution, Financial Modeling & Valuation Platform: M&A Nexus (www.MnANexus.com) Designation: Chartered Investor (CI) (www.CharteredInvestor.org) Transaction: AltQuest Group (www.AltQuest.com)



Chapter 88: Venture Capital Valuation Startup Valuation The startup valuation method is a standard DCF with an individual adjustment of the beta coefficient that is applicable to the startup. So we ultimately want to build a financial statement model (with 10 to 15 years projection period) and then a DCF on top of it. The adjusted beta is put into the CAPM (Capital Asset Pricing Model) to get to cost of equity (rE). The cost of equity (rE) is the IRR of the startup required by the investor. Since startups are completely financed with equity, the cost of equity is the cost of capital. Risk free rate is government bonds and treasuries (ex. 4.1%) Market risk premium (ex. 5.5%) Company tax rate (ex. 35%) Required IRR by startup investors (Angel, Micro VC, VC) is 39.5% (Achleitner 2004). Backing into the beta coefficient implied by this cost of equity yields a beta of 6.4. For startups with a lower business risk, this 6.4 number can be adjusted lower. A premium or discount to the beta coefficient is determined by the risk profile as determined by the financial statement model and management team. VC Perspective on Valuation The NPV is calculated at a 39.5% IRR (implied beta of 6.4) and is the incremental wealth increase at t=0 by taking on an opportunity. The goal is to buy as much of this NPV (% of the company) for as little capital as possible


How to Be an Alpha Male Ex. 50M NPV at 25% for $2M investment gets you $12.5M worth of NPV (i.e. increase in wealth at t=0 by taking on the investment). We can then calculate the ROI or multiple on cash with an entry of $2M and an exit for $12.5M which is a 6.25x multiple on cash. This is the VCs perspective VC Work Build financial statement model Determine adjusted beta (starting from 6.4 rule) Determine investment value with exit Compare against strategic alternatives Entrepreneur Perspective on Valuation Founders can ask what beta the VC is using to calculate the cost of equity (rE) and how they calculated this. You can use the 6.4 beta rule as a starting point for negotiations and adjust upward or downward from there. This allows for an objective negotiation.



PERSONAL FINANCE

While finding and building love with a beta female as well as building a perpetuity and maintaining an alpha body type, the male is to manage his personal finances. Namely, he is to budget his cash flow to be able to support his girlfriend/wife as well as fund his perpetuity’s cash flow needs.



PART V: COST OF LIVING



Chapter 89: Passive Income vs. Expenses One should build a perpetuity whose monthly income exceeds one's level of monthly expenses. This phenomena is a part of the Alpha & Beta lifestyle or way of life. Regarding expenses, one should be aware of their monthly expenses in their current country as well as developing countries in order to plan for an early retirement (i.e. Living off of the perpetuity) in a target developing country (ex. Ukraine, China, Thailand). Once one's perpetuity exceeds the expense level of the developing country, one can enjoy the Alpha & Beta lifestyle overseas with the chosen beta female.



Chapter 90: Target Countries Our target countries are those where the cost of living is 3x to 4x less expansive to live in the downtown of a major metropolitan city than it is to live in the downtown of a major metropolitan city in the United States of America. For example, if the cost of living in downtown Miami for one year is $45,000 per year, the cost of living in Kiev, Ukraine is $15,000 per year.

Podil, Kiev, Ukraine Flight: $600 one way from USA Apartment: $500 per month Residency: 1 year after using legal service

Larnaca, Cyprus Flight: $232 one way from Kiev Apartment: $310 per month Residency:

Bangkok, Thailand Flight: $500 one way from Kiev Apartment: $500 per month


Residency:




PART VI: EDUCATION



Chapter 91: Undergraduate One should take university very seriously and strive for the highest grades possible. This will have a material effect on your career and thus earning potential. For example, in my undergraduate at the University of Massachusetts, Amherst, I received a 3.8/4.0 and was cum laude.







Chapter 92: Graduate After undergraduate, one should pursue graduate school as quickly as possible and prepare for a knowledge working career. Graduate school has become the standard for those that wish to be knowledge workers be it finance, law, medicine, or engineering. For example, I received a scholarship to Texas A&M directly after my undergraduate due to my high grades and received an MBA in Finance.





Chapter 93: Post-Graduate After you have established your career in a knowledge working field and have begun syndicating on the side, I suggest that you formalize your research efforts as you come up with various theses regarding cases for disruption in various industries. You will ultimately end up publishing these cases in various texts. It is not necessary, but continuing your formal education is always a good idea. I suggest getting a Doctorate in your career field part time from a University that is low cost. In doing so you will earn the credential without having to sacrifice your career/cash. For example, I have just gotten accepted/started at California Southern University in their Doctorate of Business Administration program.





PART VII: CAREER The first perpetuity that is usually built by the alpha male is his career which should be in a knowledge working field. In order to building a career, it is important to have a solid education along with strong performance from a GPA perspective.



Chapter 94: The Value of a Career How much is your career worth?

Let’s do some calculations to show your career worth now and in the future: From the ages of:

20-30 = $750,000(based on an average salary of $75k per annum) 30-40 = $1,750,000(based on an average salary of $175k per annum) 40-65 = $7,500,000(based on an average salary of $300k per annum)



Chapter 95: Choosing a Career Your choice of graduate school has ultimately decided your career path. As mentioned, this should be some form of knowledge working that will allow you to build a career perpetuity. For example, my choice of career was finance so I pursued an MBA in finance. While in graduate school, I founded the boutique investment bank, AltQuest Group, which has allowed me to get origination, mandate/target matching, and deal structuring experience usually only reserved for Directors and Managing Directors at investment banks. AltQuest Group has become a perpetuity for myself. We average 10 sellside mandates at any given time and close 2 to 3 deals per year. When possible, I would suggest that those desiring a career in investment banking get origination experience at an early age and build a book of business.



Chapter 96: Wall Street Career Paths Letter to a Future Worker on Wall Street Though the nature of financial system continues to change in order to reflect the demands/needs/priorities of the society at large, there will continue to be a wide breadth of opportunities available for those looking to pursue a financial career on Wall Street. From investment banking to private equity to research, there are numerous careers available for those willing to venture to the East Coast. There are however, certain skill sets and knowledge bases that remain critical to your successful performance in each of the prospective careers. This guide seeks to match the relevant skill sets and knowledge bases to the given Wall Street career in addition to providing you with a general overview of the respective career path. Furthermore, in addition to the pertinent technical skills and knowledge, Wall Street employers look for ‘fit’ in their potential employees. This means that they are looking to understand why it is that you are uniquely qualified to work in their environment. Now more than ever, each future worker on Wall Street must differentiate themselves in order to gain an edge in the hypercompetitive recruitment process that defines Wall Street. This means not only possessing the humility, integrity, and tireless work ethic which characterizes the American Spirit, but ultimately mastering the skill sets and knowledge bases required by the given career. It is our sincere hope that this document may guide your efforts in determining your career path on Wall Street and the acquisition of its respective compulsory knowledge and competencies.


Michael Herlache


Alpha University

Wall Street Preparation As you meet with potential employers, you need to be well-informed as possible about the finance industry in general and the employers’ sector within the overall industry in addition to the specific firm that you will be visiting. When preparing to engage professionals at a Wall Street firm, one must know the following: CURRENT CLIMATE •

Know the sector within the industry

• Know how the sector is segmented and where the company you are meeting with ‘fits’ within the industry • Be able to explain the competitive landscape, including the top players/organizations • Be able to identify the market size (i.e. revenue base, number of clients, number of employees) for the top players/organizations • What changes in the external environment have had the most dramatic impact on the sector and how has this changed the “business model”? FORECASTING • Consider what is likely to happen in the sector over the next three to five years •

How will this sector grow/change?

• Which organizations are likely to benefit or be harmed by these changes? FIRM • Know the primary products and/or services offered by the firm and how they are unique • Know the culture of the organization, how it is different from the competitors’, and how it affects the way work gets accomplished


How to Be an Alpha Male • Be knowledgeable about significant as well as recent transactions and what the firm’s role was in the transaction • Be knowledgeable about the background of the leaders of the firm as well as the people that you will be interacting with Wall Street Career Progression While each financial services firm on Wall Street will ultimately have its own unique organizational structure, most follow a common promotional path for their employees characterized by similar job titles. Thus, what follows is a break-down of the most common career path starting from an entry-level position. ANALYST Those first entering the financial services industry typically begin their careers with the title of analyst. While an analyst’s actual job responsibility will differ across industries, time is mostly spent performing company or sector research, manipulating and updating financial models, and drafting marketing material in effort to help the firm win business. Analysts can expect to spend approximately three years in this position before being considered for a promotion. It is at this time, the top performers will have the option to renew their contract with the firm, switch firms or careers, or attend business school. ASSOCIATE The position of associate is held by either a former analyst that has been promoted, or a recent MBA grad. An associate’s work involves managing of a team of analysts to ensure that the work being performed is accurate and timely. Additionally, an associate begins to interact with the client in order to address their lower-level needs. An associate will usually spend three years in this position before being considered for a promotion. VICE PRESIDENT Those holding the title of vice president (“VP”) are typically former associates who have made it to the next level. The role of a vice president involves managing a group of analysts and associates in order to deliver on business that the firm has won. This ultimately means a higher level of client interaction and responsibility for the given output of the work process. A VP may spend a number of years in this role as until they are either promoted or change companies. DIRECTOR Copyright: Alpha University www.UniversityAlpha.com

How to Be an Alpha Male For those steadfast and unique individuals whom can make it this far, the end game is in sight. At this level, the nature of the work changes, as the primary focus of the director is helping the managing directors manage client relationship. While delivering on business remains crucial, the bulk of the day-to-day minutia is delegated to the VPs whom report to the directors. The time period until promotion is highly variable at this level. MANAGING DIRECTOR The highest level employees in financial services firms typically hold the title of managing director (“MD”). Managing directors are responsible for bringing in new business and maintaining relationships with existing clients. Thus, they are the ones using the marketing material and research created by the analysts and associates. Investment Banking Investment banking is the business of raising capital for companies and providing advice on financing and mergers and acquisition restructuring alternatives. The field of investment banking does not refer to one function but a wide breadth of activities. Careers in this field may involve the valuation of potential acquisitions, assessing the credit-worthiness of bonds, company valuation, management of initial public offerings, equity and bond financing, in addition to a variety of consulting services. Investment banks are usually classified into two categories; Corporate Finance (“Investment Banking”) and Sales & Trading. Corporate finance divisions are tasked with raising capital and providing M&A advisory while the sales & trading divisions perform research and broker financial transactions on behalf of clients and the firm. It is important to note that although they may exist inside an investment bank; those working in sales & trading are not to be referred to as investment bankers. Rather, these professionals are known as either sales brokers or traders that work in sales & trading. Furthermore, within the corporate finance division of the investment bank, there exist groups that are divided along industry- or product-lines. Industry groups include: Financials, Institutions, and Governments (“FIG”); Health Care; energy; Technology, Media, and Telecommunications (“TMT”); and Consumer Goods among others. Product groups include M&A, debt and equity capital markets, and merchant banking in addition to others.


How to Be an Alpha Male While many of the largest investment banks have converted to bank holding companies in the wake of the financial crises, a typical fullservice investment bank will offer the following services which further segment careers within the field of investment banking: MERGERS AND ACQUISITIONS Mergers and acquisitions (“M&A”), otherwise known as financial advisory, is the product group within the bank that advises clients on the strategic alternatives and analyzes the corresponding affects on the firm’s valuecreation efforts. This product group includes M&A and restructurings & reorganizations in addition to other client-specific transaction expertise. M&A bankers guide their clients in determining which companies and/or divisions to acquire and which to divest (i.e. sell) in order to execute their respective corporate-level strategies. Ultimately, these processionals run what is known as the M&A process on either a seller’s behalf (“sell-side”) or a buyer’s behalf (“buy-side”). The M&A process involves evaluating the performance of a prospective client, formulating a buyer or target list, facilitating interactions between parties, performing valuation analysis and due diligence, making or assessing bids, structure the terms of the transaction, ultimately implement chosen alternative. DEBT AND EQUITY CAPITAL MARKETS The debt and equity capital markets groups within an investment bank facilitate the raising and placement of capital on behalf of organizations that need capital and those which excess capital to invest. The type of financial instrument (i.e. debt, equity, hybrid) used in the placement of capital depends on the nature of the investment, the desired level of risk of the investor, and the general climate in the financial markets and sector. When approaching the public markets for an initial offering, investment banks are said to underwrite the issue when they take possession of the securities before they are subsequently sold to investors. Once the issue has been purchased by investors, the client firm is said to have “gone public” if the organization had not previously raised capital in the public markets. On the other hand, when raising capital in the private markets, investment banks are said to sell the securities to investors in a “private placement”. Private placements are subject to less regulatory requirements than public offerings, but may ultimately be more expensive to the client’s firm since the secondary market (i.e. buying and selling of existing securities) is much less liquid (i.e. able to buy and sell securities Copyright: Alpha University www.UniversityAlpha.com

How to Be an Alpha Male without moving prices) when compared to the secondary markets for publicly issued securities. SALES AND TRADING Sales and trading refers to the department within the bank that is responsible for distributing/selling all of the financial products developed by the investment bank. Once, the capital needs of a client have been determined and the type, amount, and structure of the financial instrument identified, the sales & trading arm acts to place the financial asset in public or private markets. While an investment bank may treat this as one group, sales and trading do in fact possess distinct roles and responsibilities. Additionally, those in sales seek to provide their institutional clients with guidance on new issues of financial products, portfolio optimization, and transaction support. Sales and trading can be further segmented into investment research, proprietary trading, and private equity/merchant banking. Investment Banking Skill Set & Knowledge Investment Management Investment management involves the management of a variety of securities such as shares and bonds, and assets such as real estate, to meet an investor’s goals. Investors may be institutions such as insurance companies, pension funds, corporations or private investors. Investment management firms provide investment numerous investment options in the equity, fixed income, real estate, and private equity industries. One pursuing a career in investment management may perform research or portfolio management at an investment bank, mutual fund, hedge fund, insurance company, or with a pension or retirement plan sponsor. BUY-SIDE RESEARCH Investment Research on what is termed the buy-side is the primary focus of Investment Management. Investment Management is the stewardship of financial assets (equity securities, bonds, real estate, etc.) in many organizational forms such as mutual funds, pension funds, and insurance companies. The reason behind the buy-side moniker is that these firms actually purchase the assets that they research to earn returns for their clients. They make money by earning fees from the assets under management.


How to Be an Alpha Male The typical career path for individuals interested in a career in Investment Research is Analyst > Associate > Portfolio Manager > Chief Investment Officer (CIO). In the Investment Research arena, individuals typically specialize in one industry and may make one or two shifts in industry specialization to broaden their talents and overall investment experience as they try to progress to Portfolio Manager and eventually strive to become the Chief Investment Officer. Pursuing the Chartered Financial Analyst (CFA) designation will also go a long way in advancing your career. Key skills needed to succeed in Investment Research are finance, accounting, excel modeling, and statistics. Accounting cannot be overemphasized because “scrubbing” of the financials to find a firm’s true value is paramount and mastery of financial statement analysis is extremely valuable. Too often finance majors overlook the value of sound accounting fundamentals. Additionally, a deft touch in excel will go a long way in modeling your discounted cash flow analysis quickly and giving you a leg up on your peers. The primary purpose of buy-side Investment Research is to analyze and purchase financial assets with attractive return potential on behalf of clients. It can be a very rewarding career, both personally and financially. SELL-SIDE RESEARCH Investment Research on the sell-side in terms of skills required of the employee is extremely similar to the buy-side. Additionally, sell-side research is also trying to find attractive investment opportunities. These are the only dimensions where these careers maintain similarities. Sell-side research will not purchase financial assets. They earn money by selling their research, thus the title of sell-side research. Often a financial firm will have both an Investment Banking division and Research (sell-side) division. There is supposed to be a clear separation here or “Chinese wall” to ensure no conflicts of interest within the firm. Wall Street has come under much scrutiny recently for accusations of not strictly following this separation. The career path here is much different as there is not an opportunity to move into a Portfolio Manager role as there is no portfolio to manage. Again, a career in sell-side Investment Research can be very personally and financially rewarding. HEDGE FUNDS


How to Be an Alpha Male Hedge Funds have similarities to traditional investment management mentioned in the section on Investment Research, Buy-Side in that a Hedge Fund will analyze and purchase financial assets on behalf of clients. However, Hedge Funds deal with very little regulation due to the small amount of investors they open themselves up to. They are often located anywhere throughout the world as opposed to mutual funds that are primarily located in major financial hubs. Hedge Funds may employ as little as 1 individual. Hedge Funds fall into the class of “alternative strategies.” They have far less restrictions as to what types of assets they can invest in than mutual funds, pension funds, or insurance companies. The term Hedge Fund originated from the strategy of hedging to attempt to neutralize downside risks. Today, the term Hedge Fund will tell you nothing about the strategy employed. The primary skills necessary to succeed in a Hedge Fund are the same as in the Investment Research field. However, due to its unique characteristics regarding asset class choice availability, unique knowledge of specific asset classes would be very useful. Gaining a position in the Hedge Fund industry is very competitive, much more so than in traditional Investment Management positions. Additionally, the compensation is very lucrative.

PRIVATE EQUITY Like investment banks, private equity funds seek to raise capital for entities in need of funding. However, the method by which they raise and place funds is entirely different. Instead of accessing the pubic markets to broker the transaction, private equity firms first raise a pool of money (i.e. fund) by tapping wealthy individuals and institutions looking for above-average returns. After raising a fund, PE firms will then take controlling stakes in target companies utilizing moderate to high levels of debt to finance the remaining purchase price. This allows PE firms and their investors to “lever up” their returns by taking advantage of the favorable tax treatment of interest on debt financing. When the purchase price of a “target” is primarily funded through debt, the transaction is said to be a “leveraged buy-out” (LBO). Often, one may hear venture capital and private equity mentioned in the same breath. Venture capital refers to firms solely focused on the funding and development of new ventures, while private equity firms choose mostly to allocate their capital to established companies.


How to Be an Alpha Male While it is possible to land a private equity position without prior relevant work experience, the odds are against you. PE firms prefer individuals to have worked for a few years in banking, management consulting, or accounting (This goes for undergraduates as well as MBAs). This makes sense, as the skills developed in these career fields are highly transferrable to private equity. So if private equity is your end game, you may have to first gain some “deal experience” before being considered for a position. Investment Management Skill Set & Knowledge Investment Management Skill Set & Knowledge Continued Private Wealth Management Private Wealth Management is the management of financial assets for high-net worth individuals. Key skills necessary here would be finance, communication, and relationship building. Even though a Private Banker must be financial savvy, just as importantly they must be customer focused and be able to communicate clearly with their clientele, especially during economically turbulent times when portfolios are losing values.

Certified Public Accountants (CPAs) have found success in career switches to Private Banking as the knowledge of individual income tax laws are valuable in high-net worth estate planning. Pursuing the Certified Financial Planner (CFP) designation is also highly recommended to be noticed in the Private Wealth Management industry.

Daily duties of a Private Banker would be the monitoring of client positions, reviewing client performance, and prospecting new clients. Knowledge of Modern Portfolio Theory is crucial for a Private Banker, as they make investment decisions in mutual funds and bonds on their clients’ behalf. They must constantly monitor these positions, move money as necessary, review performance to keep the clients disciplined in the investment philosophy, and always be looking to grow their book of business. The pay here can be good but the two best aspects versus all other careers described are a better work life balance, more client focus and interaction, and more autonomy. Private Wealth Management Skill Set & Knowledge


Corporate Finance


Professionals in the field of corporate finance are employed multinational firms, and focus on the strategic financial objectives associated with increasing the value of their given firm to its shareholders. Increasing a firm’s value includes the decisions that determine how an organization; raises and manages capital, identifies suitable investments, apportions dividends returns to shareholders, and identifies opportunities to merge with or acquire another firm. Careers in this field require the ability to evaluate investment projects or engage in capital budgetary management, mergers and acquisitions, public equity offerings, public and private debt placement, management of existing debt, cash flow and foreign exchange management for one’s respective corporation. Corporate Finance Skill Set & Knowledge



ALPHA IN HEALTH

Alpha in Philosophy

Alpha in Health

Alpha Male

Alpha in Love

Alpha in Finance



Chapter 97: Archetypal Body Types Fitness increases levels of bioelectricity in a sustained manner. Working out itself increases bioelectricity and then there is a sustained higher level of bioelectricity permanently. Alpha in health means obtaining and maintaining a body type that is between mectomorph and mesomorph with the ideal being no fat and all fast twitch muscle. Girls are also the most interested in mectomorph and mesomorph body types in males evolutionarily speaking. It is important for the male to obtain a mectomorph or mesomorph body type in order to maximize his own bioelectricity as well as maximize attraction with females.



Chapter 98: Developing an Archetypal Body Type Mectomorph is all fast twitch muscle and no fat while mesomorph has both fast and slow twitch muscle and no fat. If you are an ectomorph and cannot put on muscle or fat, your goal is mectomorph. The training is high levels of weight lifting focusing on the major masculine muscle groups. If you are an endomorph and cannot lose fat, your goal is mesomorph. The training should be high levels of cardio particularly running. Fast twitch muscle is the ideal as it maximizes bioelectricity. Slow twitch still has bioelectricity, just not as much as fast twitch muscle.



Chapter 99: The Alpha Diet The alpha diet involves no sugar, low carbs, and no fat. This also includes high protein and large amounts of liquids (water, fresh juice).



ALPHA IN LOVE

Alpha in Philosophy

Alpha in Health

Alpha Male

Alpha in Love

Alpha in Finance



Chapter 100: Alpha and Beta Methodology The Alpha and Beta methodology is a behavioral model as well as a value analysis model. In short the Alpha and Beta model tells us what behavior has value. It makes the distinction between male behavior and female behavior as value is different for the male and female just as attraction is different for the male and female. The female is evolutionarily programmed to be attracted to the male gender archetype called alpha. The male is evolutionarily programmed to be attracted to the female gender archetype called beta. These distinctions are at the core of the Alpha and Beta model. The model also explains what behavior is unattractive in males and females. The behavior that is unattractive is that which models the opposite sex’s gender archetype. In other words, beta (i.e. feminine) behavior is unattractive for the male and alpha (i.e. masculine) behavior is unattractive for the female. The Alpha and Beta model aids males and females in finding high value sexual & love partners. It states that the male should select a beta female and avoid alpha females. It also states that the female should select an alpha male and avoid beta males.







Chapter 101: Positive Tension Methodology Spiking and Sustaining Bioelectricity Using the Positive Tension Model we are intentionally trying to create positive tension with the girl that is the source of attraction and love. We are not going to break the tension but merely satisfy the tension through sex and repeat as shown in the model.

Positive Tension Model: 1. 2. 3.

Teasing & playful, Verbal sexual and direct Physical escalation


4. 5. 6. 7.

How to Be an Alpha Male Sex Cuddle Commit (tell “I love you”) Repeat

Conclusion Build and maintain positive tension which means spiking bioelectricity (i.e. pleasure) in the girl. Lead this bioelectricity towards love and turn into a lifetime of Alpha and Beta in Love.



Chapter 102: Network to Love Methodology Selection is the single most important thing in the search for love. Selecting the right girl (i.e. beta female) is the difference between Alpha and Beta in Love for life and ending up with a feminist woman that does not love men. The number one determinant as to whether or not she is a beta female is culture. Does she come from an objective culture or a biased culture? The key is to target countries with objective cultures to find love. The USA and Western Europe has a biased culture. East Asia and Eastern Europe have objective cultures.



Network to Love Methodology 1. 2.

Selection – Objective culture countries and the corresponding social network for the country (ex. VK.com for USSR states) Messaging - direct FB, VK messaging and coinciding friend request:

Hey, I noticed you in the cooking group and found you interesting and pretty. I'd like to get to know you better. How was your day? 3. Interaction – Playful, sexual, love 4. Logistics – Coordination of physical meetings 5. Escalate - Sexually 6. Commit – Promise rings, marriage

Improve at each step in the process.

Notes


How to Be an Alpha Male Beauty is common and that beta (femininity) is the real value driver. For people that do not know what beta is you can simply say it is femininity that is the most attractive in a female; beauty is common. She will then know she is only valuable to you inasmuch as she is feminine to you. Would you rather be with a girl that truly loves you or with a girl that does not believe in or value love?

The girl that does not believe or value love has less value. Despite their physical attractiveness. There are pretty girls with high love drives. High love drives come from the culture. Eastern Europe and East Asia have objective cultures. Ideal wife is a beta female that is 5' 0" to 5' 9", 100 to 130 lbs with a pretty face.



Chapter 103: Relationship Methodology 1. 2. 3. 4. 5. 6.

Pickup Sex Cuddle & Commit (Exclusive discussion) Promise ring Engagement Marriage



PART X: NEXT STEPS



Chapter 103: How to Be an Alpha Male Course Now that you have read through the How to Be an Alpha Male book, you are ready to formally go through the course and obtain: i.

Beta girlfriend/wife Whether you are looking for same night lays, a girlfriend or a wife, you are going to need to start the process beginning with selection. During the course we go through the selection process with our students one by one and build a list of beta females. We aid our students in shaping their initial message and ultimately transition this into a relationship including face to face meetings and sex.

ii.

An investment banking internship Breaking into finance is difficult. It requires strong grades from target schools. Not everyone went to Harvard or Berkeley and even some of those that did are not successful in doing so. All of our students that go through Alpha University receive an investment banking internship working with a boutique investment bank. This gets your foot in the door and finance experience on your resume.

iii.

An alpha physique If you have an ectomorph or endomorph body type, this portion of the course is crucial. We form a diet with each one of our students in order to get them to the target range of body types which is between mectomorph and mesomorph.


How to Be an Alpha Male Our course is not cheap. We priced it at the market for a combination of a pickup course which runs $2,000 and a live investment banking training course which costs $2,000. So in total our course is $4,000 since you are getting value on the love front and finance front. Our initial city is Miami, Florida since that is where I am located so you will need to make travel arrangements. The course runs Friday, Saturday and Sunday every week of the month. To register for the course, you can go to www.UniversityAlpha.com and make a payment via PayPal on the Prices & Plans page. Once you make a payment you will receive an email in the next day coordinating the schedule with you. If you have any questions or to comment how awesome the book is, please send me an email at: [email protected]


How to Be an Alpha Male

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