Mechanics of Money
Stop saving. Start allocating.
Mechanics of Money is the technical manual for high-net-worth individuals moving from "High Earner" to "Sophisticated Allocator."
Hosted by Sam Silverman (Silverman Capital), this show strips away the "get rich quick" hype to focus on the operational and financial mechanics of wealth preservation. We sit down with founders, fund managers, and tax strategists managing billions in assets to decode exactly how the ultra-wealthy structure their capital.
We cover:
• Private Markets: Deep dives into Multifamily Syndications, Private Credit, and PE.
• Tax Strategy: Advanced frameworks like 1031 Exchanges, Bonus Depreciation, and Opportunity Zones.
• Risk Management: How to vet operators and protect your downside.
Whether you are looking to place your first $50k into a syndication or managing an 8-figure family office, we provide the blueprint.
Subscribe to the weekly newsletter: https://www.mechanicsofmoney.co
Invest with Silverman Capital: https://silvermancapital.co
Mechanics of Money
Preferred Returns Explained: How Private Equity Waterfalls Actually Work
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An 8% preferred return is not an 8% yield. It is not a coupon you clip, and it is certainly not a guarantee. In this episode of Mechanics of Money, Sam Silverman demystifies the most misunderstood number in private equity: the Preferred Return.
We break down the critical difference between "Priority" and "Promise", explaining why being first in line for cash flow doesn't matter if the cash flow doesn't exist. Sam dissects the two most common Waterfall Structures, revealing how some sponsors structure deals to take profits before your capital is returned, leaving you at risk while they realize upside.
We also explore the "High Pref Trap," explaining why a higher headline number (like 12%) often signals a riskier deal rather than a better investment.
In this episode, we cover:
- The Yield Myth: Why a "Pref" is simply a mechanism to determine who gets paid first, not a floor for your returns.
- Current vs. Accrued: The massive difference between getting quarterly checks from a stabilized asset versus "paper money" accumulating on a development deal.
- Waterfall Mechanics: How to spot "Structure B" deals where sponsors participate in profits before your original capital is returned.
- Risk Pricing: Why sponsors offer high preferred returns (11-12%+) and what it tells you about the asset's risk profile.
- Due Diligence: The 5 specific questions you need to ask to uncover the true incentives and clawback provisions in any deal.
Links & Resources:
- Newsletter: Join the Mechanics of Money weekly deep dive: https://www.mechanicsofmoney.co
- Invest: Invest with Silverman Capital: https://silvermancapital.co
About the Host: Sam Silverman is the Founder of Silverman Capital, a private equity and real estate investment firm. Mechanics of Money is the audio playbook for high-net-worth individuals moving from "High Earner" to "Sophisticated Allocator."