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McKinsey and BCG, you guys are broken and making us all look bad. Get some talent and some senior people in execution. Stop with the inexperienced nonsense. Quality and results driven work or fold up shop. https://www.washingtonpost.com/health/2021/08/22/private-consultants-vaccination-drive-outsourced/
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After your first year, use your bonus. First year is tough on cash flow
Use free cash versus a loan.
Why would you pay it off? Usually the borrowing rates and the ROI arbitrage lets you earn 1.5% on the dollar. Wouldn’t it make sense to take that extra free cash and diversify into an alternative investment eg real estate portfolio, franchises. I’m a new partner as well and I have the same conundrum but I don’t see the benefit of paying off the loan. Also note that you are going to pay taxes on your deferred income when you exit and that’ll come out of your loan amount as well so it wouldn’t be the full value.
Agree with P1. I suspect our deal is somewhat similar to DTs and, as a new partner, taking these loans forever is an option but having less debt is more attractive to me—Peace of Mind and the ROR on capital is better than other investment options I have—we all have plenty of $ in mutual funds etc and a high fixed return is vastly more attractive than dumping more money into equities in my view. As far as real estate, being a rental baron is hard work—we sold our rental and only have primary and a vacation home (that I will not rent out to scuzzy Airbnb people—been there done that) and find that exposure to be good. Would like to invest in apartments or something like my buddy does—but be passive. Active is way too much work.