From $20m to $150m in healthcare industry

Just a quick note before we dive in…

The longer you live, the longer you can compound your holdco portfolio at 15-20% per year.

Knowing this…

I perform and feel best when lifting heavy weights 2x a week, 10k steps 3-4x a week.

What works best for you?

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Btw, want to achieve a better IRR?

Or a higher MOIC and an overall return on investment?

Either way...

Your goal is to bet heavily on portfolio companies whose customers enjoy the act of giving your business money.

There are many ways to achieve this...

Best ones are when... even if they don't enjoy doing it, they still have to.

Ideally on a recurring basis.

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Imagine this:

You're in your late 20s or early 30s

$100k in your savings account…

With all the time and energy in the world.

What career to pursue?

Investing in profitable $2-25M businesses might be the way to go.

Yes, good money and prestige are one thing.

At least for 90% of the folks...

However, I look at it from a completely different view.

Which I believe are EVEN BETTER reasons than money:

1. This game can be played till old age

2. You'll never be lonely (which is probably the worst thing that can happen when getting old); as you're always surrounded by young & energetic people

3. The longer you play, the better you get (usually)

Lastly, please make sure you rely heavily on your strengths and curiosity (otherwise very hard to get good at it)

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You want to compete with folks sitting in the office waiting for the phone to ring.

When you want to be the guy on the streets, cold calling founders and brokers, building relationships with investors by flying 5 hours to other cities, recruiting talent and finding differentiated investment.

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The secret to huge success:

Ask bigger and better questions.

Your co-founders, investors, employees… as well as your wife and kids will thank you.

Selling a box of $99 food supplements is just as difficult as selling $8,500 worth of solar panels or raising millions in debt for your business.

It's all the same…

It's all hard.

Why not choose something that has a much bigger upside.

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So… the motto in both business and life:

You get in life what you have balls to ask for.

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Talked to a gentleman who builds a permanent holding company with profitable businesses.

So far, the average deal size has been 2.5 times earnings.

One recent one did $550k in Ebitda, they were able to acquire it for ca $800k.

He lives in an English-speaking country but said it's like Mars compared to New York where he lived for 8 years.

To this day, he said they've been able to maintain an extremely high discipline when it comes to deals.

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Building a portfolio of small- and medium-sized businesses??

You need this intrinsic hunger and desire to do the work.

There are many layers to master and get very good at it:

1. Find these VERY good deals – so how do you do that?

Is it you who finds them?

Do these deals come to you?

In the early days, I have yet to find a better way than number one – go out and find them –  by building your own pipeline, calling these founders and management teams, building relationships with brokers or even becoming one yourself first?!

To do all this… there is this need for that intrinsic hunger and drive to do the work.

Next,

2. Connect with 10/10 people

This COULD be one big competitive advantage…

Who do I know and trust who’s going to be able to put me in touch with someone else who they trust..

Your job is to become creative find ways to interact with these people

Building a network of people, which THEN creates these special opportunities.

Doing this, again, requires that intrinsic hunger and drive to do the work.

Finally…

3. What and where is your edge?

Is it a specific niche or knowledge of a specific industry you have worked in for the last 5-7 years.

Or… is it building your investing edge through networking - having people to share ideas back and forth. The fact that you may be in the early days of your career… no problem at all. There will be many folks 10, 20, 30 years ahead of you, willing to give you time IF you have good questions and ideas to discuss.

Here we go…

There’s no way of getting around it.

You need that intrinsic hunger and desire to do the work.

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Just don't give up and you'll get there!

One of the most overlooked pieces of advice in my opinion.

There is a small group of partners who founded a private equity firm — he and all the co-founders are very smart and experienced. Age ranges from 40 to 60 years.

It took them about 2.5 years to raise the first fund. They finally got it done.

$50m it is.

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Starting or buying a small business is a VERY smart way to build wealth.

A steady $150k to $180k annual salary is fine, but a company with the SAME revenue in the right industry could be worth $2.5 million, if not more…

Let me explain.

There are companies in the SaaS industry that are valued at 10-20x revenue, if not more.

I'm not a SaaS guy, but I know a bit about the consumer lending space, where companies trade at 3-4x revenue. I mean the private market.

Imaging running a company in this space doing $1.5 to $2 million in revenue.

It doesn't seem like much, but the recent valuation of such a company is $5-8 million.

Now the crazy part:

Imagine not selling and doubling revenue from $2 million to $4-5 million in three years.

In terms of revenue, the business is far from the big boyz league, but it is a very attractive way to build 8-fig wealth.

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And then it comes down to how much equity do you have in this business?!

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How has been the week in the small private equity world?

Consumer loan company

We told the potential buyer that we would get back to them in early September.

They're offering about $5 million for what we've built, but obviously we want a little more…

Let’s see, I'll keep you posted on how it all goes.

Take care,

Mikk Markus / PrivatEquityGuy

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This week’s podcast:

Imagine this…

You help grow the home care and hospice company from $20m to $150m and then they fire you.

Then you think whether you should start your own thing or not, “I always knew I wanted to be an entrepreneur but I wasn’t ready for it…”

Voila…

You still decide to do it.

Today, at 38, Nikolas runs a diversified portfolio of 5 companies. ("A small portfolio of a few companies,”, as he put it.)

Although he said "we're just having fun" 7-10 times during the interview; their next goal is to generate $100m in revenue.

What a humble man.

Fantastic and very open conversation with Nikolas Hulewsky from the holding company called CoFounders.

Here are the links to Spotify, YouTube and Apple Podcast.

Thanks a lot for following the journey.