178 transactions, 50% IRR

A quick note before we jump in…

The MoM growth of our consumer loan business has been 16%

Great news: we issue bonds.

If you’d like to co-invest with us? Read more about what we do.

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Tomorrow is another meeting with the founder of this company:

• He is interested in selling majority of the company.

• The good news: there is an extremely motivated operator. A lady in her 30s who is also the co-founder of this company.

• The gentleman told me that the lady is so passionate about business that the company is a God to her.

• The 2023 goal is $4 million in revenue and $800,000 in EBITA

• They just moved to a brand new production facility (located in Estonia), but it has a great brand and exports 95% of its production to Sweden, Germany, France and soon to South Korea.

• They sell a premium product and according to the founder, they always aim for 20% net profit, but with different products they achieve 25% net profit.

• They sell to wealthy clients.

I talked a little about this deal last week, 4-5 people showed interest in investing, so if you also like to invest with us. Send me an email.

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Last week Thursday and Friday I was at London.

Spending 36 hours together with extremely smart indivuals: investors, partners in PE firms, and serial acquirers.

• People managing tens even hundreds of millions

• A co-founder of a $500m revenue gaming companny

Fascinating, and extremely humble individuals.

Eight 1-on-1 meetings.

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An example of how people at the highest level operate.

A gentleman who founded a $500 million gaming company, a few years ago he became interested in M&A, PE and deal making.

What do 99.999% of people do in this situation?

They start googling, watch some YT videos and read a thread or two on Twitter.

What did this gentleman do? He took a M&A course at Stanford and Wharton.

Speaking of humility and curiosity.

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Another guy runs a private equity firm, "in 5 years our goal is to be a $1 billion fund, so this is what drives me today. Don’t get me wrong, I am really enjoying the journey every single day.”

He has a partner who NEVER has to work a day in his life. Also his children and their children in the future, none of them will have to work a day in their lives.

You get what I mean.

However…

When it comes to the fund.

He doesn't want to work on finding and souring deals... but when it comes to the negotiation phase, this guy goes all in.

He even does it on vacation, it's just his passion. Putting together excellent deals.

His goal is to increase his net worth by 10 times.

What else did we discuss… the big question is always talent.

“Where do you find the people who can grow these businesses from 4 million to let’s say 40 million?”

Lessons from this 2-hour meeting:

1. Having a clear vision is extremely important. (What exactly do you want to accomplish?)

For them, like I said, it’s a $1B aum fund in 5 years.

2. Everyone has fears, regardless of level. People you probably look up to have fears as well.

So… what is the difference?

Well, they do anyway.

Whatever it is, have a plan and do it!

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Did you know that there is a fund in the US, they have done over 178 deals and their returns are 40-50% per year for the last 10 years.

I couldn't really say anything when I heard about it. I still don’t, so I'll leave it here for you.

For inspiration :)

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From online to offlice.

Meeting people in real life is great. People thank me for taking the time to meet them, when in fact it's the exact opposite — I should be the one to thank. I wouldn't be able to meet these people without Twitter.

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“Try to launch a product or service before its ready.”

The simplest example I can give you: Tesla

And that's the story I got from this PE fund manager.

• Why are Americans so different from Europeans?

• What mistakes have BMW and Mercedes made and how it can they be avoided? This could cost the 100s of millions of dollars.

“Selling your product and a service before it’s ready…”

When did Tesla launched Cybertruck?

3 years ago!!!

How many have they delivered? 50, 100?

Certainly not hundreds, or thousands.

What can you learn from it? And what I did as well.

Launch your product or service before its ready! Experiment and test the market.

When talking with companies, $1-5M revenue traditional busuinesses, I do not have to tell them every single detail about invetors. (Which I thought I always had to do to.)

I’ve had this chicken-and-egg situation. Having built a pipeline of companies, I should have making offers much earlier.

Once I’m making offers I can start presenting them to our investors.

Great lesson.

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Do you raise prices based on the rate of inflation?

Because if you're not raising your prices 3%, 4%, or 5% a year, you're losing money.

When it comes to raising prices in general. Even great players make mistakes to this day…

President of a company with 400 employees:

“Yes, that's one of the things we weren't professional enough about. We should have increased prices more aggressively and had stronger price escalation clauses in every contract. We learned a lot from that, and it's not all bad with TransDigm. We now ask ourselves how we could have ever accepted something like this in the past."

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On the flight to London, I was reading a true masterclass in manufacturing business pricing.

Obviously this is an extreme example, in most industries this kind of pricing tactic will cause your customers to flee to all your competitors.

But it works for TransDigm, they have a P/E of 46

Take care,

Mikk aka PrivatEquityGuy

P.S. Over the next month I will continue to promote our bonds as we see a lot of demand for what we do.

56 people have already done so.

A total of more than $2,020,000; here is what we do.

Lastly,

I have interviewed nine people on the HoldCo Builders podcast. People have said they loved the show. Which is pretty cool.

Here's a recent one with Ranjit:

As always, thanks a lot for following the journey!