Dong Qiangqiang's Story of Leaving Germany

"So what if they have a problem with me? Haven't they always been dissatisfied with me?" Lao Bai disagreed. "To be honest, I don't care. I don't have any expectations of them. If they are willing to help, they will help. If they don't want to help or hold me back, that's fine. If you know (I'm raising funds), you will know that (they) can't hold me back anyway."

"Then again, there are still four months and one week until the end of the year. SARS is over, the domestic situation and Lebai's business are both very good. Is there no chance at all (to achieve the performance)?"

"Man, I've worked really hard for half a year, but it's just a drop in the bucket." Lao Bai sighed.

"Then I'm afraid you have to think carefully about how to solve the performance bet problem, otherwise they can still hold you. You mentioned that your parents' old house is used as collateral for the bet. If this matter is not handled well, you will not only lose the house, but also be unable to raise money. The next round of investors will be reluctant to get involved in startups with historical problems."

"I thought of this when I signed the investment agreement. I was cautious and insisted on adding an option in the agreement: if I don't achieve the required performance by the agreed time and the bet fails, I can choose between losing the collateral and buying back their shares at a certain interest rate. In short, I will not easily give them the old house where my parents have lived for most of their lives. If they want to ruin me, there is no way. I can take it. I think they are just talking and dare not take real action. Don't they invest in Lebai to make money? If Lebai really fails, they will not have a good ending."

"Choose one of the two? Buy back shares?" Dong Qiangqiang pondered the meaning behind this word and raised his eyebrows. "Do you have the money to buy back?"

"Of course not, the interest rate is not low." Lao Bai's tone dropped along with his momentum.

"Then don't you have to sell the house to raise money?" The conversation went around in circles and returned to the starting point. Dong Qiangqiang was a little annoyed and didn't understand where Lao Bai got his confidence from.

"There is a way to avoid selling the house. Someone gave me a suggestion: when introducing new investors, make an agreement with them and use the new money..."

"Buy back the shares of Lao Tang and Lao Ji?" Dong Qiangqiang rushed to finish what Lao Bai hadn't finished saying and questioned, "Aren't you just borrowing new money to repay old debts? Will the new investors be happy about this? If you were the investor, would you be willing to take on this hot potato?"

As he said this, Dong Qiangqiang's mind flashed through a series of operations that Anderson performed after Sergey invested in Cicada Catching.

"Then we'll all just have to play together." There was no regret in Lao Bai's voice.

"You will end up losing your house if you throw everything at the wall." Dong Qiangqiang quickly sorted out the logic. "It's fine if you use the new money to pay off the old money as your first option, but it's best not to have any expectations. No one will agree to fill this hole. You might as well prepare a few more plans."

"What other solutions are there?" Old White asked, "I can't think of any."

"If you don't want to sell the house and the new investor doesn't want you to use the investment money to repay the debt, then theoretically there is only one possibility left: you will have to sign a new investment agreement when you raise funds again, and the new investment agreement specifically stipulates that the bet agreement in the previous round of investment agreement will be automatically invalidated after the investment money from the new investor arrives. Lao Tang and Lao Ji are all shareholders, and all shareholders must sign the new investment agreement for it to take effect. If they sign, it means they admit that the bet agreement between them and you is invalid."

"Cancel the old (bet agreement)? The new investors will definitely not object to this method, but why should Lao Tang and the others agree? If they don't agree, I can only sell the house to compensate them, and they are very safe." Hearing that Dong Qiangqiang was sincerely trying to help him solve the problem, Lao Bai finally stopped being stubborn. As Dong Qiangqiang said, if he failed to meet the performance requirements by the end of the year, he could only sell the house. He would not be able to get away with it by simply denying it, and would only lose the lawsuit first and then lose the house.

Dong Qiangqiang knew that he didn't understand, so he further explained: "You are right. If Lao Tang and his wife don't accept it, you will have to sell the house. But if they can accept it, you don't have to sell it. It's like you are asking them to choose between two options: stop the loss immediately or help you get on the right track. In the final analysis, this plan can't stop the investors from selling the house, but it increases the game of human nature, which may alleviate your predicament."

"The game of human nature? How do you put it?" Lao Bai's tone became more humble.

"Human nature is greedy. You just said that they invested in LeBai so early just to make several times, dozens of times, tens of times, or even hundreds of times the money before exiting? Currently (for investors), the most profitable exit method is to list on the New York Stock Exchange or Nasdaq in the United States. If you don't go public, how can they maximize their profits?"

Lao Bai on the other end of the phone remained silent, patiently waiting for Dong Qiangqiang to continue. "Whether they can accept (abolishing the gambling agreement) depends on their expectations for Lebai's future. If they think Lebai can reach the day of listing, they will agree (to sign), otherwise they will not sign, and your loss will not be more than before..."

Dong Qiangqiang didn't say the last sentence, "You are planning to sell the house anyway," but he believed that Lao Bai could hear it.

"That's worth a try," Lao Bai groaned, "Next time I meet with investors, I'll ask them what you said. If they agree to consider (your suggestion), I'll give them a discount on the valuation. Okay, that's right, let's talk about it this way. Boss, you still have as many messed up ideas as before. I thought you were stupid after studying here. No, bah, bah, I said the wrong thing. The one-euro hotel project was also your idea. Look at my pig brain."

"There has been a precedent for this in Cicada, but I don't know if there is one in China. We can only try our best. Let's talk about the Lebai bet like this for now. But don't set your expectations too high, lest you feel disappointed when you can't reach them. In addition, I'm curious about what story you plan to tell new investors in the next round of financing? The four major sectors and three stages you mentioned to me last Christmas have not changed?"

"I made some adjustments to last year's plan in light of this year's situation. I think Lebai must transform and cannot just be content with being a local guide. The only way out is to be a resource provider that distributes tour groups to other travel agencies."

"You mean Lebai is going to be a platform?" Dong Qiangqiang was surprised by Lao Bai's ambition. "Are you transforming? Why does it sound like a scam to me?"

"From what I understand, all of our domestic peers are doing this. Building a platform makes it easier to gain recognition from investors, and it also adds points to the company's valuation." Lao Bai didn't get annoyed after hearing this, and explained seriously.

"The question is, do you have a group to give to others? If the investors don't believe it, how can you convince them?"

"I recently realized that although SARS dealt me ​​a heavy blow, it was not all bad. Many small travel agencies were pushed to the brink of bankruptcy by SARS. Lebai was lucky and received investment last year, otherwise it is hard to say whether it would go bankrupt. It is true that Lebai has no groups to give to others, but this is temporary. As long as the financing is successful and we have money in hand, we can take the opportunity to acquire travel agencies with resources and customers. This is the opportunity SARS gave me." Lao Bai became more and more excited as he spoke.

Dong Qiangqiang was about to ask: Why would those travel agencies go bankrupt if they had customers? But when the words came to his lips, he remembered that the initial investment in operating a travel agency is not a small amount. If the cash flow of a travel agency is particularly tight, it can only watch customers leave.

As for the so-called opportunities mentioned by Lao Bai, because he was forced by Duanmu to read too many reports in the early stage, Dong Qiangqiang understood that the opportunities referred to expanding the scale of the company through mergers and acquisitions. Many listed companies in the United States like to quickly integrate third-party institutions through mergers and acquisitions, so as to achieve rapid development of the listed company in the short term.

Short term means there is no accumulation of time variables.

Trying to eat a fat man at once will often bring about false prosperity in the short term and a large number of problems in the long run. The shortcomings in company management and corporate culture may not be exposed overnight, but after the acquisition, the parent company usually cannot immediately achieve a substantial increase in revenue. However, sales costs will remain high after the acquisition, and a decrease in profits is not surprising. At this time, the irrational capital market and investors are still looking forward to the acquisition bringing a beautiful and sexy story, and listed companies are left with only one way left, which is financial fraud.

"Does this count as empty promises to investors?" Dong Qiangqiang asked knowingly.

"Of course it counts. Financing is just about drawing big pictures, and investors also draw big pictures for me, so no one loses out." Lao Bai admitted without hesitation, "But I don't think I'm drawing big pictures in the strict sense. Last year, I didn't organize Germans to go to China. As soon as the epidemic ended this year, I realized the development of customized tours to China for Germans. From this perspective, I have made some progress. I haven't gone bankrupt, and I haven't stood still."

Dong Qiangqiang couldn't find any words to refute for a moment.

"Travel agencies like Zhou Zhihai's won't last long. It will go bankrupt in one or two months. Once I buy his travel agency, I can use his two travel licenses. Among the partners, there are several of acceptable quality. It means that Lebai has gained a bridgehead in the south for free, which will be of great help to do business in southern Europe in the future. Munich in the south and Hannover in the north are in harmony. It's great to think about it. The only drawback is that (his travel agency) has been fined by the administrative authorities, but it can be used as an excuse to bargain."

"Why does this sound so familiar?" Dong Qiangqiang thought, "Last year...it seems that (you) also said something similar." (End of this chapter)