26 acquisitions and $116m EBITDA

Just a quick tip before we dive in…

If you have some time and decide to read two pages of a great book.

Here you go.

They did a research which shows how difficult it is to keep increasing company’s revenue and profits at very high rates for a long time.

Thank you Mr. Seymour Schulich

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The overall goal is to invest in well-managed owner-led profitable $2-15M niche companies whose management teams are eager to continue running and growing the business.

The companies manufacture or sell products and services in well-defined markets.

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Next step:

Make smaller, add-on acquisitions through existing companies to strengthen market position.

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When you start looking to acquire a traditional $500k to $1m EBITDA business.

A great saying to live by:

• Do what’s hard and you’re going to achieve a high IRR and MOIC;

• Do what’s easy and your IRR and MOIC are going to be FAR from good.

So what's the hard part about building a great pipeline of these <$1m Ebitda businesses?

First, it would be easy to sit in an office and wait for brokers to send you deals.

A hard thing:

It's cold calling these business owners, build a quick rapport so they want to talk to you, then you go and meet with founders and CEOs. Build a relationship with them so that eventually, one day, maybe in 3, 6 or even 12 months, you can do business together.

Statistically, it means 15-30 cold calls + emails per day, and max 4-5 meetings per day when going on a road trip.

And if you make the trip to meet them IRL, you can have 3.4, max 5 meetings per day.

If you do this for one quarter, you can be sure you find those potential high IRR deals.

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I forgot who said it…

• Hard choices, easy life.

• Easy choices, hard life.

(Same with deals, IRRs, and MOICs… Often, the harder the choices, the higher the %%% and multiples.)

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Unpopular opinion:

Many of even THE smartest people from Ivy League schools lacking confidence in themselves…

As a result, they need others to confirm their actions all the time.

In finance, deal-making and investing, they constantly call others, “hey, noticed you’re a big holder of XYZ, can I talk to you why you own it?”

This can be a good discussion, but what folks often look for is confirmatory evidence.

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All this shows that they are not confident enough in their own work.

And this holds them back from making the big decision with confidence.

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My father is a truck driver in Scandinavia, a simple man who works very hard.

6 years ago he passed on some of the best business advice to me.

“Mikk, I don’t know much about business but I know a guy who does…”

He then sent me an article by Jamie Dimon. (CEO of JP Morgan)

I still remember how surprised I was because generally he has been sending me YT Fail compilation type videos or funny Tik-Tok shorts…

"I've taught you a lot about work ethic, but it's not enough... So read what this man has to say."

I don’t have the exact article by Jamie Dimon, but here are the notes I had on my phone:

1. Spend life learning. Read a lot.

2. Treat people the way you wanna be treated

3. Don't worry about salary

4. Take care of yourself

5. Management

• He reads 4-5 newspapers every morning; “I read tons of stuff, I read everything people send me. Read, read, read, learn, learn, learn. Talking with small businesses gives you the best lessons.

• Treat people the way you wanna be treated.

• Be willing to change your job a little bit.

• Don’t worry about your income level. Be prepared to do a bunch of different things.

• It’s your job take care of your body, your mind, your soul, your spirit, your friends, your family

• You gotta go take care of kids baseball game; you don’t feel well; you need a spiritual getaway… you should go and do those things and it could be done.

• you have to arrange your life so it works for you in a way that you’re taking care of your health

• when it comes to management: get it done; follow up; discipline; planning; get the right people in the room

• the real keys to leadership aren’t just doing that or making yourself but having people who want to work at the place. Humility, openness, fairness, being authentic  

Good stuff, isn’t it.

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At a dinner with an older gentleman in construction business :

The real magic of staying in one industry starts to happen 10+ years later.

So hang around.

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Everyone should start at least one business in their lifetime.

Not to learn to make money but to experience personal growth through rejection, risk taking, a special group of people, survival, and winning at all costs.

It’s beautiful.

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Want to raise more capital for your deals?

Want to have dinner with people who have over $5M in liquid who constantly keep asking you to send them great deals?

Want to build a list of 150+ accredited investors who know, like and trust you?

I believe I found a strategy that makes all of this a reality. Honestly, it sounds simple… BUT IT WORKS.

The strategy is called:

"Cold outreach to content"

What??

Let me explain,

Imagine approaching 137 HNWIs, investors, members of family offices who look for investment opportunities to park their capital.

You can find them on Twitter, Linkedin, events… They are everywhere.

The message to use when approaching them:

Here are 3 ways to build a list of business owners in growing industries who run $1-5m EBITDA businesses and want to sell at least 25% in the next 1-2 years.

They will then (hopefully) find your article very valuable.

With an article you provide tons of value by ACTUALLY helping them.

Remember, they are looking for good deals....

Next step,

1. They can build a pipeline on such businesses themselves (Requires a lot of time and effort that they prefer not to do at this stage of their career).

2. You do all the work yourself and then give them an actual list of companies, or access to businesses with $1-5m EBITDA and the owners that are willing to sell at least 25% of the company in 1-2 years.

3. Or you just send them deals if you have something really interesting. You become the so-called deal guy.

Either way, you have provided these investors enough value so they pick up the phone, answer your email, and come to dinner when you invite.

Great place to be!

Again, because you offer a lot of value, people will start reaching out to you and introducing themselves.

And if you're in the game for a long time, build trust, show your expertise, send them GREAT investment opportunities that can potentially make great returns – many of them will one day invest in your deals.

That's it, that's the game plan. I hope you found this strategy helpful and can apply it to your journey.

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

Consumer loan company

We are working on the deal with the buyer. Lots of back and forth.

I have never sold a consumer loan company of this size (estimated around $5-6 million) so not sure how the process will go with the loan portfolio and all.

In the meantime, we will do another fundraising round to grow the business (additional $1,000,000 in debt).

So there's a lot going on.

I will keep you updated on how it goes.

Traditional companies

Great news! I met some very smart (and generous) people who help me with the deals I find.

• Contracts,

• Lawyers,

• Due diligence,

• Deal structures.

A very big step in my journey, because until now I have been doing it all by myself (very time and $$$ consuming, plus I haven’t had enough experience with it all.)

The summer is over and the pipeline is getting better, so the last quarter of 2024 will be very interesting.

Take care,

Mikk Markus / PrivatEquityGuy

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This week’s podcast

Imagine being so unhappy with your boss that you leave…

Start the exact same business.

Following exactly the same strategy.

Today, 6 years later, you've made 26 acquisitions while the holding company generating $600M in revenue and $100M+ EBITA

Here's a 74-minute in-depth summary of two full interviews with Fredrik Karlsson, a true buy-and-build pioneer, and Johan Bladh, the CFO.

NB! (I often learn by reading and listening, so I decided to read these interviews out loud).

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

Thanks a lot for following the journey.