Page 299 - James Caan - The Real Deal

30 · Private Equity

it now. When you know what it’s like not to have it, and when
you know what it takes to create wealth, the idea that you would
fritter it away on depreciating assets or a party lifestyle is pretty
ludicrous. The people who spend money recklessly tend to be those
who come into it overnight, either via the lottery or an inheritance.
When you’ve earned it, trust me, you want to be sensible with it.
I was starting to find that it was actually quite difficult to spend
money. Not only was there nothing I could buy that would make
any real difference to my life – if I had moved from St John’s Wood
to Chelsea, it wouldn’t have made my family any happier – but
there’s often not a clear-cut way to spend a lot of money. Let’s take
the example of property. Let’s say you have £50 million in the bank
and you decide you’ll buy a selection of central London buildings as
an investment. Do you buy them with cash? If you do that, you’ll
have a huge income from letting them on which you’ll pay 40 per
cent tax. Is that the best return? So maybe you should buy them with
mortgages so that the profit, and therefore the tax, is reduced. And
if you are borrowing, who do you borrow from? At what rate? On
what terms? Are you better off paying arrangement fees and fixing
the rate for a long time? What if your tenants default on the rent?
Should it be in your name? Your kids’ names? Or held in a trust?
Whatever I thought I would do with the money – whether it was
buying a company or giving it away – there were so many options
that the natural response was paralysis: it’s easier just to leave the
money in the bank. But when you’re an entrepreneur, leaving
money in the bank is frustrating. You want to make it work, you
want to seize opportunities: putting your money in the bank is
both boring and unnatural. Sure, it’s nice to have money put away,
but it doesn’t change anything unless it’s doing something. With
the basics of my life covered and confident that I had enough
money to live on if I never worked again, what became interesting
to me was the concept of change. What could I do with my money
that would change my life?

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