Matt Levine’s Money Stuff: Slicing Cash Flows for Better Ratings

CFO ratings

We talk from time to time around here about the cash-flow-slicing business. The way it goes is:

1. You have some business that will make somewhere between $75 and $150 next year.

• 2. You can sell it to one owner who gets the cash flows from the business. If it makes $75, she gets $75; if it gets $100, she gets $100; if it gets $150, she gets $150; etc.

• 3. Her ownership stake is worth some amount of money, presumably between $75 and $150. Let’s say it’s $100. She would pay $100 for this ownership stake.

• 4. Or, you ...