When a consortium of dealers puts a bid together for a BIG coin, how are the proceeds split?

Longacre

I am sure there are any combination of arrangements, but I was wondering what the standard arrangement is when a consortium of dealers bands together and buys a BIG coin.

Let's say there are four dealers, and they bid on a coin (and win) in auction for $200,000. Up front, do the dealers agree that they will each kick in $50,000, or do they negotiate a maximum cash contribution, regardless of what the ultimate selling price is? For example, if Dealer A only has $20,000 on hand, does he agree to kick in a maximum of $20,000 regarldess of the selling price, or does he agree to a percentage ownership in the total coin (which is calculated only after the purchase price is known)?

Also, when the coin is flipped to a collector (let's assume the dealers are all equal partners), does the selling dealer get a "kicker" if he finds the buyer? It would seem to make sense that if Dealer B pounds the pavement and one of his regular clients buys the coins the day after the auction, that Dealer B should get more than 25% of the profits. If not, then what incentive do the dealers have to be the first to try to get the coin sold?

Any thoughts?

GoldenEyeNumismatics

I would assume the profits are split proportionally to the money that is put in.

Longacre

<< <i>I would assume the profits are split proportionally to the money that is put in. >>




That might be correct, but why shouldn't I get paid more if I find a buyer, when some other slacker in the consortium just kicks in money and mooches off of my connections?

ziggy29

<< <i>That might be correct, but why shouldn't I get paid more if I find a buyer, when some other slacker in the consortium just kicks in money and mooches off of my connections? >>

Just like the market price of something, in that case the profits would be split in whatever way a "connected insider" and a "mooching slacker" agreed upon...

adamlaneus

A wise dealer would negotiate this up front with his group before entering into the deal with the three other fellows. And he needs that cash or there is no deal, so words like "slacker" and "moocher" would probably not be used during those negotiations.

An unwise dealer would make assumptions without settling it up front. I am not aware of any sort of 'business standards' along these lines.

Other than Common Sense, Common Courtesy and CYA.

ArizonaJack

Me and 3 other " very high end " Lincoln dealers all pitched in on a VF 1926-S. We bought it at $11 and sold it for $16.......Huge profit. It paid for our first pitcher of miller MGD with some left over, now THATS livin the hilife........

KentuckyJ

I think it's already been noted we shouldn't trust Dealer A

sinin1

what, wouldn't they just start a LLC?

like the '1933 double eagle LLC'

with percentages detailed out, officers stated and named, maintainence costs and insurance described

oops
maybe a C corp or a partnership




or maybe just a handshake?

no investment credit, but could they depreciate item for yearly loss until sale?

speety

<< <i>or maybe just a handshake? >>



With many dealers I've seen the potential loses seem less freightening!

Just kidding...

I'm sure it's mostly based on percentages paid in, perhaps a little bonus to the one who finds the buyer. Most of the times I hear about this type of thing happening, one "buys out" the other, presumably at a small percentage of their original buy-in, once a buyer is located.

I'm sure a dealer will come along soon and tell you how they usually do it, as i'm sure it varies somewhat by dealer.

dbldie55

Yes

Type2

It's like tihs one for you and two for me one for you and one two three for me and so on.