The Rich Man's Life Begins with a Comeback

Chapter 162 Equity Structure and Risk Isolation (3k)

At 10 a.m., the city was bathed in bright and clear light. The sky was like blue glass that had been washed clean. The sunlight had lost its morning reserve and become direct and intense.

"Om-!"

Accompanied by the deafening roar of the engine, a red and black Lamborghini supercar emerged from the rolling traffic and finally slowly pulled up in the empty space next to the main entrance of the Bund Center Building.

The scissor doors opened, and Gu Heng, wearing sunglasses and casual clothes, stepped out of the car. His tall and upright figure, red lips and white teeth under his sunglasses, and the limited-edition supercar worth millions beside him attracted the attention of many girls.

"Good morning, Mr. Gu."

Qin Ying, Chief Strategy Officer of Deloitte China, had come downstairs early to prepare to welcome Gu Heng when she learned that he was coming today. At this moment, a hint of surprise flashed in her eyes as she looked at Gu Heng.

Compared to when she first met Gu Heng a few days ago, Gu Heng's demeanor had changed significantly; he had become more relaxed, confident, and composed.

"Good morning, Mr. Qin."

Gu Heng took off his sunglasses, casually tucked them into his collar, and shook hands with Qin Ying, saying, "I really didn't expect you guys to be so efficient."

“Mr. Gu, you are Deloitte China’s most valued private client. Any needs of yours will be given the highest priority here, otherwise how can we live up to your trust?”

Qin Ying responded with a smile, demonstrating her profound understanding of the art of language.

In Jingye's words—

That's comfort~
The two exchanged pleasantries as they walked into the Bund Center building.

Several senior managers from Deloitte China surrounded the two, with the million-dollar executives helping them press the elevator buttons. This caused other white-collar workers in the Bund Center Building to hesitate to enter the elevator.

The elevator ascended rapidly and soon arrived at the 33rd floor.

"Chairman Gu, our General Manager Wang flew to St. Petersburg yesterday to attend an economic forum. He won't be back for about four days."

Qin Ying gestured to Gu Heng, "Before President Wang left yesterday, he specifically asked me to convey his apologies."

"It doesn't matter."

Gu Heng waved his hand, his attitude quite casual.

As the head of Deloitte China, Wang Shunfu is so busy that it would be no exaggeration to say he is extremely busy. It would be strange if he spent his days idly drinking tea at Deloitte China headquarters.

Led by Qin Ying, Gu Heng was invited into Deloitte China's VIP room.

"Good morning, Chairman Gu."

Inside the VIP room sat a middle-aged man, wearing a white shirt with a light brown suit vest and silver-rimmed glasses, looking quite refined.

Xu Ke is the President of Deloitte China's Private Clients Group, a Senior Partner at Deloitte China, and an Honorary Professor at Antai College of Economics and Management, Shanghai Jiao Tong University. He is also the head of the Joint Services Committee dedicated to serving Gu Heng.

Gu Heng and Xu Ke had met once in real life, but they mostly communicated by phone or WeChat.

When the two met again, they exchanged a few simple pleasantries and then took their seats, their tone and expressions showing a familiarity with each other.

Gu Heng sat in the main seat, while Xu Ke and Qin Ying sat on either side.

Everyone values ​​their time, so naturally they couldn't waste it on meaningless small talk and quickly got straight to the point.

"Mr. Gu, based on your asset size and risk isolation needs, we have designed an equity structure plan for you that complies with the Company Law and tax regulations. You can take a quick look at it."

As Xu Ke spoke, he handed Gu Heng a document about half a finger thick.

"Dual-class share structure?"

Gu Heng opened the file, and the first page was a clear and concise mind map, allowing him to see and understand the specific structure of the equity structure at a glance.

"Yes."

Xu Ke nodded: "Given that you, Mr. Gu, control both high-value heavy assets and light assets, we have designed a dual-class share structure for you."

"First is the top-level structure, which is what people often call a family company."

"This family company is a limited liability company wholly owned by you. In the future, it will serve as a vehicle for the inheritance of your family's wealth, and will only be responsible for holding ownership of core assets. In the future, it will act as an investment holding platform company and will not directly operate the business to avoid the risk of penetration."

Gu Heng browsed through the plan while listening to Xu Ke's explanation.

As Gu Heng's assets grow, establishing a family equity structure specifically for him becomes increasingly urgent.

Most people's impression of family equity structure is only a superficial understanding of wealth inheritance. They believe that family equity structure can provide a clear path for the inheritance of wealth for future generations and ensure that family wealth can be smoothly passed on to the next generation.

In fact, the more important significance of family equity structure lies in risk isolation.

A reasonable equity structure helps to isolate personal risks from corporate risks, protect overall wealth from the operational risks of individual companies, and also avoid legal risks and compliance issues.

Gu Heng is only 18 years old this year, and the matter of inheriting wealth is still a long way off for him. Therefore, the part of the family equity structure that he values ​​most is the benefit of risk isolation.

Every company faces operational risks.

For example, Zhencui Group, which is wholly owned by Gu Heng, is involved in food safety risks.

For example, Ruyi Airlines, in which Gu Heng holds shares, is involved in flight safety risks.

For example, Xingchuan International, in which Gu Heng holds shares, would be involved in gray market security risks.

Risk is like a time bomb. Once it explodes, the consequences can range from minor troubles to imprisonment.

In this situation, a reasonable and excellent family equity structure is like a protective shield, ensuring the safety of those inside when the bomb unexpectedly explodes.

Avoid risks and seek benefits while avoiding harms.

Since Gu Heng has Deloitte China as a top-tier partner, there's no reason for him not to take advantage of it.

The sooner you build it, the sooner you'll benefit.

"Below the top-level architecture is the risk isolation and capital operation layer."

"Here we have designed a dual firewall structure for you, which will respectively hold your heavy assets and light assets."

Xu Ke continued to explain to Gu Heng: "Firewall Company A, which holds your heavy assets, will be 100% controlled by your family company, which will bear the operational risks of your heavy assets. Firewall Company B, which holds your light assets, will control the investee company through a limited partnership structure, which will bear limited liability."

Firewall companies, as the name suggests, primarily function to isolate assets and diversify risks, separating family wealth from personal risks and ensuring that risks are contained within them and not passed on to higher levels.

The dual firewall architecture is more secure and stable than the traditional single-layer firewall architecture. At first, Gu Heng could barely understand the various professional mechanisms involved, but gradually his head started to spin, as if he were listening to gibberish.

Below the firewall architecture is the main corporate layer.

Zhencui Group, Beichun Junlan Hotel, Xingchuan International, and Ruyi Aviation are all parent companies, belonging to Firewall A Company and Firewall B Company respectively.

Among them, Zhencui Group and Beichun Junlan Hotel are both 100% owned by Gu Heng, so there is not much room for maneuver for them.

However, Gu Heng only holds partial shares in Xingchuan International and Ruyi Aviation, and does not have absolute control over these two companies. In order to enable Gu Heng to better control these two companies, Xu Ke and others redesigned a completely new shareholding structure for him.

In the future, Gu Heng will adopt the GP+LP model to hold shares in these two companies.

In the venture capital world, GP and LP are two important concepts, representing different roles and responsibilities.

GP is an abbreviation for General Partner.

LP is an abbreviation for Limited Partner.

GPs typically assume the role of managers, responsible for the company's day-to-day operations and investment decisions, and bear unlimited liability for the company's debts;

Limited partners (LPs) are investors who provide funds but do not participate in the company's specific management and investment decisions. Their liability is limited, usually to the amount of their investment. This means that if the company encounters problems, the losses they bear will not exceed their investment amount.

In this scenario, Gu Heng's firewall company B will act as the GP, and Gu Heng's family company will act as the LP.

The former holds 1% of the shares of the main company, and the latter holds 99% of the shares of the main company. Then, the two main companies under these two firewall companies B hold 34% of the shares of Xingchuan International and 13.67% of the shares of Ruyi Aviation respectively through limited partnerships.

At the same time, an AB share structure will be added to ensure that Gu Heng retains absolute control over the two main companies indefinitely.

As Gu Heng listened to Xu Ke's eloquent explanation, he had only one feeling at that moment:
That's because my brain is so itchy!
Countless pieces of knowledge pass through my head, yet leave no trace.

Gu Heng had never heard of LP, GP, AB equity, limited liability, unlimited liability, and so on before. Moreover, many of the financial terms were in English, and Xu Ke would occasionally throw out a couple of English descriptions, making Gu Heng's already muddled head even more confused.

Fortunately, Qin Ying was by his side, and she and Xu Ke had a clear division of labor.

Xu Ke was responsible for explaining the plan, while Qin Ying was responsible for providing a detailed explanation.

"Chairman Gu, in order to further strengthen your control over the main company..."

"We suggest that you include special clauses in the company's articles of association, namely, a clause that grants the founders veto power over major matters and a clause that grants the founders preemptive rights to subscribe to new shares."

"In this way, even if your main company needs financing in the future and needs to introduce external funds, you can still rest easy and not worry about losing control."

These last two special clauses are clearly mainly aimed at the two wholly-owned subsidiaries of Firewall Company A.

"Mr. Gu, would you like to take a break?"

Qin Ying glanced at the time and softly asked Gu Heng, "There's a very authentic Shanghainese restaurant near our company."

How much more content is left to be included?

Gu Heng rubbed his temples and asked Xu Ke.

"If we finish explaining everything, it will probably take another three hours."

Xu Ke glanced at it and gave a rather conservative timeframe.

"go!"

"Have a meal!"

Gu Heng gave Xu Ke a polite smile, then turned to Qin Ying and replied.

"Food is the most important thing for people. Eating is very important."

Qin Ying noticed that Gu Heng looked tired, and she gave Xu Ke a look: "We'll talk about the rest of the plan after we finish eating and come back."

With the customer's interests at the forefront, Xu Ke naturally had no objections.

Then, they got up one after another and walked towards the VIP room...

PS: Q-Reading's godfathers, do you have any monthly tickets to support me? I was so close to making it into the top 100, orz!

(End of this chapter)