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Deal Making in a Nutshell - Part 1

 I can’t find the definition of a dealmaker online.  Here is my definition of dealmaker.

Deal making is an art. In an ideal world, dealmakers would be clear about their objectives. They would understand what they want and know how to get it. They would have expertise in structuring deals, minimizing risks, negotiating, and cutting losses.

Dealmakers usually own public companies or private development projects. They do not have to worry about the trading volume of their companies because they have a well-established investor’s relations team to bring in new buyers for their stocks or deals. Deal making requires access to updated information and human resources. Hence, dealmakers have investment bankers, attorneys, accountants, appraisers, consultants, detectives, agents, and stockbrokers among their inner circle. A deal maker might act as a director or major shareholder of a public company. As shareholders, they will aim to keep their stakes below 9.99% to allow more flexibility to sell their shares without restrictions from the securities regulators.

During bull market, dealmakers concentrate their efforts on promoting their public companies to investors from retail and institutions. Once the market has peaked, or when their companies are trading above market value, they sell their shares and buy bonds. They then raise capital through the public market to increase the cash position of their companies and sell all their overvalued assets during the bull market. After this, they pay back all of their outstanding loans to avoid high interest rates.

During periods of financial crisis, dealmakers sell their bonds and buy back shares in their company at a lower price. They then use the excess cash in their company to acquire more projects in order to gain market share. During bear market, the economy has a lack of cash in circulation. This allows dealmakers to bargain aggressively and acquire undervalued deals. They borrow money from every source to hedge inflation and take advantage of low interest rate. This cycle continues until the market takes them out of the game.