Question about selling shares

mlagoo · #1 08-30-2007, 07:03 PM

I was having a discussion with a friend about how to go about selling shares for an event. I want to make sure I have this right because I don't want to screw anyone over, but I also don't want to be screwed over.

So, rather than doing a hypothetical, I'm just gonna do the actual situation, because I'm familiar with all the numbers.

The backee is looking for backers to buy %s of his action in three events -- a $2650, a $5200, and a $10,000, for a total buyin for $17850. The backee is looking for a 35% markup, which I understood to mean he retained 35% of his own action. But to others 35% markup just means that you are multiplying the buyin by 1.35 and paying 1% of that figure to buy a share.

So like, we can see the difference in this example. If it means we are taking 35% of our own action, we would divide 17850 by .65, and reach a figure of ~$27462, making one share $274.62, and 65 shares would add up to the total buyin of the tournaments entered, leaving the backee with 35% of his own action.

If it means we are doing a pure 35% markup, then we multiply 17580 by 1.35, reaching a figure of 24100. This would mean 1% is 241, and 17850/241 is about 74, which means the backee only has 26% of his own action.

What I don't understand is why anyone would phrase it in the latter way. Like wouldn't you always be phrasing your backing deal in terms of the amount you kept, rather than the arbitrary number reached when you multiply the buyin by 1.35 (or whatever the markup percentage agreed on is).

I'm honestly asking the question, I have very little experience with this, and I want to make sure it's being done correctly. It's just, intuitively, it doesn't make any sense that you would go "I want a 35% markup, which of course means I want to keep 26% of my own action."

Thoughts? Would love to hear from people that have a lot of experience with selling shares/buying shares. Thanks dudes.

Exitonly · #2 08-30-2007, 07:16 PM

35% markup, means the player sells 1% at 1.35% of buyin, or 10% of a 10k event would cost an investor 1350.

edit: when its one person doing a backing deal, you're not really selling shares, you're backing him. selling shares would be if you were going to find multiple separate investors.

kleath · #3 08-30-2007, 07:18 PM

[ QUOTE ]
35% markup, means you sell 1% at 1.35% of buyin.

[/ QUOTE ]

This is the most intuitive way to interpret it too so its kinda weird OP arrived at a completely different conclusion.

mlagoo · #4 08-30-2007, 07:23 PM

[ QUOTE ]
[ QUOTE ]
35% markup, means you sell 1% at 1.35% of buyin.

[/ QUOTE ]

This is the most intuitive way to interpret it too so its kinda weird OP arrived at a completely different conclusion.

[/ QUOTE ]

Well initially I arrived at the same conclusion as you guys, but then I did the math and realized that when I sold 65 shares at $241 or whatever, it only added up to like 15.4k or something. And I was all, wtf son. Because intuitively, I assumed that a 35% markup would mean that I retained 35% of myself. But I guess this word does not mean what I think it means.

the alex · #5 08-30-2007, 07:31 PM

I don't understand what you're asking.

Are you talking about an example where a player sells $6500 worth of shares to play $10k in events where the player is investing $3500?

Or an example where the collective stakers receive a total of 65%+stakeback?

mlagoo · #6 08-30-2007, 07:32 PM

It would be like, if a staker backed me fully for a 10k event (paid $10,000), they would receive 65% of my action. That's what I'm saying.

the alex · #7 08-30-2007, 07:38 PM

Ah, OK.

Let's say you sold (100) $100 shares.

Each share would possess (.65/100) of profit. In this case, if I had 5 shares, I'd receive [(.65/100)*5] of profit- (.0065*5).

If you cashed for $50k, I receive [(.0065*5)(40k)+500].

Is that what you're asking?

ASPoker8 · #8 08-30-2007, 07:45 PM

$17850 * 1.35 = $24097.50

Therefore a 1% share of your action = $240.975

mlagoo · #9 08-30-2007, 07:47 PM

[ QUOTE ]
Ah, OK.

Let's say you sold (100) $100 shares.

Each share would possess (.65/100) of profit. In this case, if I had 5 shares, I'd receive [(.65/100)*5] of profit- (.0065*5).

If you cashed for $50k, I receive [(.0065*5)(40k)+500].

Is that what you're asking?

[/ QUOTE ]

nah dude. its no biggie. youre thinking about something totally different. i just didnt phrase my question well... but i think ive got my answer.

mlagoo · #10 08-30-2007, 07:48 PM

[ QUOTE ]
$17850 * 1.35 = $24097.50

Therefore a 1% share of your action = $240.975

[/ QUOTE ]

yeah dude, thats been established. i was just trying to decide if that was the proper way to calculate markup, because to me, intuitively, 35% markup meant i retained 35% of myself. that is not what it in fact means, but i just didnt know that.