Cluster Family Office Blog

As part of our day-to-day work, last week we negotiated the possible purchase of a plot of land for development (let’s say between Seville y Albacete…) a very substantial sum: €58 million. The negotiations centred on the interest payable on the 50% for the payment deferred over three years. So far, so normal, and the preliminary contacts were made through the intermediary on duty – an old acquaintance of ours and an expert professional who, if you’re not careful, will sell you the Palace of Versailles as chateau for the summer, with a discount for early payment. But we insisted on dealing directly with the sole owner, whom we had not yet met: a middle-aged man with a rustic, prudent air about him. However, when we got down to business, he told us very seriously that the deferred payment of 29 million € had to be paid with «»the same interest rate as the bank, plus one olivo’. I must admit that although I have fought bulls in many arenas (I’d say almost all of them), it took me a few seconds to react. It wasn’t irony or a joke, nor even a metaphor. I found it hard to believe that someone who confuses the Euro interbank offered rate With the oil-related profits, plus one unit of something I don’t even want to imagine, he’s set to become the owner of €58 million any day now: €29 million of that in cash and the rest over three years with the corresponding interest… very interesting Olivos plus one. Both comical and alarming, although many of us envy him from our modest background.

What will become of this man and his family in a few years« time? Based on our experience as wealth advisers, I do not believe they will be any happier than they are today. They will be manipulated, robbed, swindled, flattered and squandered in the broadest sense of the word. They will be at the mercy of everyone around them, whether they are part of the family or not. Mutual animosities, fuelled by their limited education, may well end tragically. The best thing that could have happened to them would have been to sell land worth no more than a couple of million euros. That way, they would have savoured the sweet taste of abundance, but within a few years everything would have returned to »normal’ – at most, leaving a few residual properties that their children could make use of.
I wish you all the best for the future, but paradoxically Life isn’t going to be easy for them from now on, unless I just steal a honest a law firm that sympathises with their limitations and cuts them off from their fortune in exchange for the «business» of their lives. To end up in a family office, even if it were the worst in Spain, it would be like winning the ‘Primitiva’ jackpot for a second time, but unfortunately the chances of that are virtually nil (unless we bring it on ourselves…).
As for our economic system, I have to say that I consider it an aberration that, overnight, a farming family should find their land – which has been used to feed comfortably to their ancestors, in the face of such a turn of events for which no one has ever prepared them. Perhaps it is an aberration comparable to that which the buyers of the homes to be built on this land will have to endure, with mortgages that their children will inherit if the properties are not repossessed.
In the case of the farmer, it seems to me to be a wealth creation contrary to every law of the capitalist economy. And amongst the buyers of those flats, a the creation of poverty, interestingly enough, the same interest: Olivo plus one.