The Super Rich: Start from when the family business is about to go bankrupt!

Chapter 814 WPG's Salary Cuts, Layoffs, and Low Compensation? The Old Fox Isn't Easy to Foole! How Much Equity Can Be Retained?
The joyful weekend passed by in a flash.

An Wuyang and Sui Chunsheng went on dates like any ordinary young couple, shopping, watching movies, and An Wuyang even took Sui Chunsheng to a hot spring.

Sui Chunsheng had a very happy weekend because she had a hallucination that An Wuyang belonged entirely to her.

The last day of February, Monday.

An Wuyang and Sui Chunsheng continued to work on the pre-selection class project, this time targeting Shengqing Medical University.

I was supposed to deal with this matter last Friday, but I was delayed by moving to a new house, so I had to deal with it this Monday.

Given the successful collaboration with Northwest A&F University, the exchange with Shengqing Medical University went very smoothly this time. The cooperation agreement was almost identical, with the only difference being the number of students in the pre-selection class and the selection system.

The work at the Tianjingyan medicinal herb planting base is simpler, at least the basic work is simpler, and any normal agricultural college graduate can basically handle it.

But the medical field is different!
Therefore, when collaborating with medical universities on pre-selection programs, Wu Gengtian conducts more rigorous screening.

This means that even if you get into the pre-selection class, you still won't be able to work at Wugengtian if you fail the Wugengtian assessment after graduation.

While An Wuyang and Sui Chunsheng were dealing with the pre-selection class project, Jiang Yingyu was also continuing her planning on Hongkang Island.

Taking advantage of the end of February, Jiang Yingyu secretly released new rumors.

Rumors suggest that SmartBrain's cash flow is no longer sufficient to cover salary payments.

Although the number of employees at Smart Brain Company is small, with only thirteen full-time employees, all of them are PhD students in the field of botany and are located in the Hong Kang Island area, resulting in a high total monthly salary.

For example, the three founders each received a monthly salary of HK$25.

The average monthly salary of the other ten botany PhDs also exceeded HK$100,000.

Even Jiang Yingyu, who works as a temporary worker, is a PhD candidate in botany and earns a part-time monthly salary of HK$50,000.

Based on this calculation, the human resource cost of SmartBrain Company exceeds two million per month.

Although the employee's salary is only 1.8 million, the company needs to pay much more for salaries, after all, there are various insurance benefits.

On Friday, Guo Zhongyang of BEA East Asia Bank revealed that Smart Brain Company's cash flow was only a little over one million. This means that the rumors deliberately spread by Jiang Yingyu, indicating that Smart Brain Company's cash flow was insufficient to pay the next round of salaries, do not seem to be just rumors.

SmartBrain Company, WhatsApp employee group.

Zeng Shiquan: @Jiang Fangyan: @Huang Yuan: @Jin Minquan: Bosses, there's a rumor circulating outside that's very detrimental to our company.

Zeng Shiquan: [Link: "Cash Depletion: The Brain Turns into a Dry Walnut"]

Zeng Shiquan: @Jiang Yingyu: Has the young boss discovered this inside information?

Jiang Yingyu: I saw it too. This rumor is pure nonsense!

The payday at SmartBrain Company is earlier than that of Wugengtian, whose payday is the 5th of each month, seemingly corresponding to the name Wugengtian.

But SmartBrain Company pays its employees on the 2nd of every month!
It's already February 28th, and there are only 28 days in February this year, which means that in two days it will be the payday for SmartBrain.

Jia Dezhang: I've also heard this rumor.

Jia Dezhang: And the source of this rumor is the financial sector.

Jia Dezhang: @Jiang Fangyan: Mr. Jiang, is our Smart Brain Company really in trouble?

Apart from Zeng Shiquan and Jia Dezhang, the other employees, although they did not send messages, were clearly also observing from the sidelines.

Jiang Yingyu's father, Jiang Fangyan, finally replied to the message in the WhatsApp employee group.

Jiang Fangyan: @Everyone: Colleagues, I've seen the rumors you've been spreading.

Jiang Fangyan: The company is indeed facing some cash flow problems at present.

Jiang Fangyan: We will do our best to ensure that all colleagues receive their salaries.

Jiang Fangyan: But we also hope that all our colleagues will stand with our company through this difficult time!

Jiang Fangyan: After discussions with @Huang Yuan, @Jin Minquan, and myself, our combined salaries have been reduced from 25 to 5, until the company's situation improves.

Huang Yuan: @Everyone: I have agreed to @Jiang Fangyan's salary reduction proposal. I am willing to weather this storm with the AI!

Jin Minquan: @Everyone: I agree with @Jiang Fangyan and @Huang Yuan!

Jiang Fangyan: We hope all colleagues will learn from us, and that we can weather this storm together with the company and overcome the current difficulties.

Jiang Fangyan: Of course, we don't force any of you to live or die with the company. If you have better options, we wish you all continued success.

Hong Kong Island and the mainland implement two different legal schemes.

According to mainland Chinese law, in cases like the one involving Smart Brain Company, the legal requirement is to pay N+1 in compensation.

But it's different on Hong Kong Island!
Although Hongkang Island also needs to pay compensation, the amount is much less.

Take Zeng Shiquan as an example. He has been with Smart Brain Company for five years and currently earns a monthly salary of HK$100,000, according to the laws of Hong Kong Island.
First, Zeng Shiquan worked at Smart Brain Company for more than 24 months, and Smart Brain Company reduced its employee needs due to financial problems, which means it is legal to initiate layoff procedures.

Zeng Shiquan is entitled to severance pay of N, subject to certain conditions!

Condition 1: The base coefficient of N corresponds to [2/3 of the last month's salary].

Condition 2: The maximum value of N is HKD 15,000.

Taking Zeng Shiquan as an example again, his monthly salary is HK$100,000. According to the calculation of two-thirds, it should be HK$66,700, but according to the law, the maximum limit is only HK$15,000.

Therefore, the base coefficient for N is HKD 1.5!
If the maximum limit cannot be reached, then the representative value of N should be based on the actual data.

Secondly, there is a maximum limit of HK$390,000 for severance pay, which means that the maximum compensation is only for 26 years of severance pay.

Assuming an employee has worked for forty years, the maximum compensation would only be severance pay for 26 years.

In short, if an employee like Zeng Shiquan, who earns HK$100,000 a month and has worked for five years, is to be dismissed, the company will have to pay HK$75,000 in compensation.

It's less than a month's salary!

The cost of such dismissal is very low.

It was precisely because the cost of dismissing employees was so low that Jiang Fangyan bluntly expressed in the employee group that he was unwilling to accept a pay cut and that he would leave if necessary.

Of course, Jiang Fangyan's expression of the intention to lay off employees was not just for the purpose of layoffs, but also to send a signal to the outside world that Smart Brain Company was indeed having cash flow problems and could not even pay its employees' salaries.

In this situation, is it possible that SmartBrain Company could go out of business at any time?
The smart brain company needs to project an image of being ready to collapse at any time in order to repurchase the equity that was previously sold cheaply.

Jiang Fangyan: @Everyone: Colleagues, you don't need to give me an answer immediately, but I hope you can reply as soon as possible.

'Jiang Fangyan: As for this month's salary, we will try our best to pay it.' After Jiang Fangyan finished speaking, the large group chat for employees of Smart Brain Company fell silent, and no one posted any information.

Jia Dezhang sent a private message to Zeng Shiquan directly.

Jia Dezhang: Want to grab a drink tonight?

Zeng Shiquan: No problem, I also have something to discuss with you.

Jia Dezhang: No problem.

Jia Dezhang: Besides me, there's Lao Jin and Xiao Qian.

Zeng Shiquan looked at Jia Dezhang's message, seemed to be deep in thought, and then replied.

Zeng Shiquan: That would be even better!

After all, there are many people and great power!

Inside Jiang Fangyan's office, Jiang Yingyu was explaining the company's situation.

"Dad, I reckon that once the news of our pay cuts and layoffs gets out, those investors will start to get restless. When do you think we should proceed with the next step of our plan?" Jiang Yingyu asked.

Jiang Fangyan shook his head in denial, "We shouldn't do this!"

“Those investors aren’t fools!” Jiang Fangyan added.

"Do you think your methods of spreading rumors are very clever?" Jiang Fangyan sighed. "How could those cunning investors not find out about such tricks?"

"So if we were to offer to buy back the shares now, those old foxes would definitely not agree," Jiang Fangyan explained.

Jiang Yingyu was stunned. He had planned so much, from releasing rumors to spouting nonsense like a clown, but in the end he still couldn't achieve his goal?

"Then what do we do?" Jiang Yingyu asked.

Jiang Fangyan responded, "We'll do the opposite!"

"Oh?" Jiang Yingyu asked, puzzled.

"If we partner with Wugengtian—or more accurately, Ruizhi Pharmaceutical R&D Company—do you think we can maintain our current equity stake?" Jiang Fangyan asked.

Jiang Yingyu shook her head without hesitation, "Impossible!"

“It’s impossible for them to allow us to retain so many shares,” Jiang Yingyu added.

Compared to WiseBrain Pharmaceutical R&D Company, SmartBrain Company has no advantage whatsoever.
Perhaps historical accumulation can be considered an advantage?

However, this advantage is too fragile and is not irreplaceable at all.

However, with the backing of the powerful Wugengtian Pharmaceutical Group and the support of several top hospitals in mainland China, Ruizhi Pharmaceutical R&D Company is extremely strong.

Given the pros and cons of Wise Medicine R&D Company and Smart Brain Company, how could it be possible to allow the founding team of Smart Brain Company to retain too much equity?
Jiang Fangyan gave him a look that suggested he was easy to teach, "So, how much equity do you think they'll allow us to retain?"

Currently, the equity of SmartBrain Company is roughly divided into two parts:
The three founders hold 26% of the shares; external investors hold 74%.

Jiang Fangyan holds 10%, while Huang Yuan and Jin Minquan each hold 8%.

Jiang Yingyu pondered for a moment, then guessed, "I think we should at least keep half for ourselves, right?"

"At least five percent of our family's ten percent should be left to us, right?" Jiang Yingyu explained in detail.

"What is our company's current valuation?" Jiang Fangyan didn't directly answer whether it was right or wrong; he simply continued to ask.

“During our last funding round, our valuation was HK$4.33 million,” Jiang Yingyu replied.

"And what about now?" Jiang Fangyan pressed on.

"Well... given that we are a private company, we are more referring to the situation of our last round of financing, but our current situation is not very good, so the latest valuation may be relatively low," Jiang Yingyu said uncertainly.

"Given the current situation of our Smart Brain Company, if you were an investor and you were unaware of our plans, what valuation would you be willing to give?" Jiang Fangyan again used this example, asking his son to analyze it.

“If that’s the case,” Jiang Yingyu hesitated again, “I might not be willing to invest even if the valuation exceeds 100 million.”

This is already a polite way of putting it by Jiang Yingyu!

If he didn't know the real situation, let alone a hundred million, even if the price were cut in half again, he would think it over and over again before refusing.

"Then let's assume a valuation of 100 million, with us holding 10% of the shares, which would be a valuation of 10 million, right?" Jiang Fangyan asked.

Jiang Yingyu nodded.

"Let's still assume you're an investor now, but we've already partnered with Ruizhi Pharmaceutical R&D Company, disclosed its situation, and revealed that Wugengtian Pharmaceutical Group holds absolute control behind Ruizhi Pharmaceutical R&D Company." Jiang Fangyan then listed the hypothetical scenario.

"Under these circumstances, what valuation would you accept for Smart Brain Company?" Jiang Fangyan asked.

Jiang Yingyu pondered silently. If the latest assumptions were taken into account, and considering his blind confidence in Wugengtian Pharmaceutical Group, he figured he could accept a higher valuation.

“Dad, if we take your assumptions into account, I’m afraid I’d be very accepting of it!” Jiang Yingyu replied.

"How tall?" Jiang Fangyan asked bluntly.

"Is one billion acceptable?" Jiang Fangyan directly presented a concrete figure.

"Yes!" Jiang Yingyu nodded affirmatively.

"What about 5 billion?" Jiang Fangyan asked again.

"Yes!" Jiang Yingyu replied without hesitation.

"What about 10 billion?" Jiang Fangyan raised the valuation again.

This time, Jiang Yingyu hesitated slightly, but still answered confidently, "I can do it too!"

"Two hundred billion? Three hundred billion?" Jiang Fangyan asked arrogantly.

“Then we’ll have to consider it. I need to see the specific disclosures, including the research progress of the Ruizhi project, the product plan, the raw material supply, and even the raw material base, etc. I need to examine them carefully,” Jiang Yingyu explained.

"Now let's get back to the original question. Take into account your psychological valuation and the equity we currently hold, and analyze how much equity they would allow us to retain?" Jiang Fangyan brought the question back to the main point.

Jiang Yingyu quickly began to think, ignoring the valuations of 20 billion and 30 billion for the time being, and only considering the 10 billion valuation that he could directly agree to. His family currently owns 10% of the shares, and he had previously thought that they could retain 5% of the shares.

If we take a valuation of 10 billion as an example, wouldn't that be worth 500 million Hong Kong dollars?

Can they really retain the equity value of this share?
Jiang Yingyu looked like she suddenly understood!
(End of this chapter)