My Library and Courses
Last Update: Sunday February 16, 2020

Key Idea: Go To Wall Street

Andy Murstein of Medallion Financial had a great story and results that convinced Wall Street to invest and reinvest in his business.

Key Question:

A: 

To win on Wall Street you must tell your story well. Sounds too simple but great ideas are simple and simple to explain.

Q: You have to have a great story to tell and you have to tell it with passion. But there is more. What else did Andy say you need in order to take your company public and actually convince investors to give you money?

A: Timing. If you think back about what was happening in 1996, the dot com flurry was just beginning. Andy admits that it was a good time to go public since his business was so different from the high tech, cyberspace-driven upstarts mainly from Silicon Valley. Andy's story was about a company that would turn around and put money into people who would otherwise never be able to start a business. Can't you hear the violin playing? Yes. The Medallion Financial story is tugs at the heart strings of successful people.

We know that we are successful because other people believed in us. It may have been our parents or a grandmother who loaned us a $1,000 to get started in business. Immigrants don't have connections to people with means with they arrive in the US. Medallion Financial is an oasis in the desert.

Also, by the time Andy took the business to Wall Street, it had a perfect lending track record. Andy raised $50 million with his first offer then went back a year later and raised an additional $50 million. Even though they did not need the money, because the stock price had gone up 50% and more investors wanted to be part of the success, advisors told Andy to make a second stock offer.

Two years later, Medallion had people clamoring for the stock so they made a third offer and raised another $50 million dollars. Andy said, "We didn't really need the capital but again the economy was good and our stock was doing well." So, the lesson is, you raise money when you don't need it.

Think about it

Should you sell stock in your company? Did you know that you can do what Andy did and go to Wall Street or you can do a Direct Public Offering?

Clip from: Money: All about Financing Your Business

Silicon Valley, New York City, Sydney and the World:   When you are just  starting, it is usually about your money, called MOM, an acronym for My Own Money. It is also called "skin in the game."  Very few of us have a track record and can write a business plan that is so compelling that we begin with Other People's Money (OPM).

If you are growing, there is an abundance of stagnant capital that may be looking just for you.  Qualified investors (and people who believe in you) are looking for ways to grow their money either as a loan or as an investment for equity. It will require an excellent business concept, a well-detailed business plan (your story), and real financial projections. They will also require that you understand your financials, even if they are quite modest. Those numbers are the organics of a business, the basic 1-2-3s.

Business is just a series of problem-solving exercises. That's its nature.  If you do not have the stomach for it, get a job. If you think money is going to be given to you just because you have a good idea, keep your job!

Go to all the key ideas and videos of this episode...      
Go to the homepage of this episode...
    

Medallion Financial Corp.

Andy Murstein, CEO

437 Madison Avenue
New York, NY 10022
212-328-2100

Visit our web site: http://medallionfinancial.com/

Office: 212-328-2100

Business Classification:
Financial Services

Year Founded: 1937

Go To Wall Street

HATTIE: We've already done programs about the Small Corporate Offering Registration. Please read on our website about this process for taking your company public without going to Wall Street. But, if you want to go to Wall Street you can. Andy Murstien, small investment corporation, Medallion Financial, raised $50 million in its initial public offering.

ANDY MURSTEIN: Yeah. You need a good story. I mean, as funny as that sounds, you have to have a passion for what you do because people could see if you are serious about it and if you really have the heart to go out and grow your business.

So you need the passion. You need people to believe in you and to also share that passion. So, every cycle there's a different wave of companies that basically Wall Street becomes enamored with.

Again, it's jumping on the bandwagon when the timing is right. You could have the greatest company in the world, and if the timing's not right, you're not going to be able to raise money.

When we went public again, we raised $50 million. The next year we did not need the money but our stock had gone up 50% so everybody said it's a good time to go out and raise money. Sometimes banks and others lenders are willing to lend you money if times are good, if the economy's doing well; and even though you don't need it, take it, and reserve for a rainy day.

We did it again. Our stock had gone up 50%, so we went out and raised another $50 million because investors were clamoring for more of the stock and we gave it to them.

Then two years later we went out and raised a third launch of $50 million. We really didn't need the capital, but again the economy was good, and our stock was doing very well. So that's the time to go out and get a loan.

We bought 15 companies since you last saw us seven years ago. When you saw us last our portfolio was about $200 million. Today we manage over $600 million. So we just took the money and bought companies and lent it to small businesses.

In the Studio -- Concluding Remarks
HATTIE: So, what is money? It's an equation where the past reaches into the future. To start a business or grow the one you have, money can appear to be a huge obstacle. But you've just seen many creative, tenacious people who could see the future so clearly they were able to work with their own assets and make the inherent value of that money grow.

You must, however, have a great idea and as Andy Murstein said, 'A good story to tell.'

And, you have to have MOM, my own money. Then once you have that skin in the game, move on to OPM, other people's money.

There's a lot to go around. We'll see you next time.

Not a member yet? Learn!  Be empowered! Join us!