4 acquisitions and 65% YoY growth post acquisition

A quick note before we jump in…

Next time you're too worried to ask for a sale.

Remember, there are three folks among us who in their very early 30s started an asset management fund and raised $450 million.

Without ANY track record and no rich uncle or family member.

All they had was a desire to be independent and a willingness to ask.

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Not wanting to sound like your dad, older brother, or a drunk European investor at 4:37am in a London bar…

But…

High-achieving men in their 20s and 30s can be VERY stupid.

2/3 of them are never happy and satisfied because they ALWAYS want more.

• More revenue,

• better margins,

• higher IRR,

• more deals,

• more aum,

• higher fees.

Yet what they don't realize is that they VERY often already have it all.

Beautiful wife, kids, health and mates…

STILL potentially messing it up by spending all their waking hours working, chasing that extra… something.

That being said…

The goal should be to stay healthy, spend time with family, maintain great relationships, and get rich a LITTLE slower.

Playing the so-called long game.

A few percentage points of returns here and there — it doesn't matter to the wife and kids.

Friends still love you and want to watch the NBA with you.

The point of my post is not that excellence should not be pursued... No, no, no!

It's the opposite.

My point is that one SHOULD strive for excellence WITHOUT losing sight of what is MOST important and what is probably already there.

It's just that the cost of losing it is too high and it might never recover.

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“If you think you are on the right path, you are on the wrong path because there is no path. You are creating your own unique path every day.”

Well said by Jeffery Walker, isn’t it?

(Jeffery is a co-founder and a managing partner of Chase Capital Partners; $12 billion aum.)

“There are many talented people around, but very few nurture their natural gifts with the focus and intention of becoming an elite high achiever.

Too many of these talents forget the importance of cultivating your natural talent and enjoying what you do (big one!!).

Otherwise, it can become tough to keep yourself on the path for the long haul. That being said.”

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What I've seen work best for growing a small niche business from $0 to $5 million valuation in 3 yrs:

• Dream in years

• Set goals in quarters

• Plan in quarters

• Evaluate in weeks

• Execute violently daily

You gotta sit down, put on your blinders and go underwater and not come up for air for three years.

In the early days I’ve found there is no such thing as balance.

It’s all war before you see any success at all.

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A very typical (and not positive) opinion about private equity firms:

"There is a story about the UK market that private equity firms are buying up veterinary practices (Vets) and then immediately doubling (at least) the cost of care and providing medicines, because they know people will pay above the odds for the care of beloved pets.

It's an absolute cash cow for PE firms.

It's not illegal, but morally it's pretty despicable."

-

IMO this is often said by people who wish they could do the EXACT same thing... but lack the capital, knowledge and balls to do so.

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It doesn't matter what you do...

Whether you're trying to raise $47 million for your PE or a VC fund, or selling flowers at the local flower fair.

You have to fight for it.

The grass isn't greener anywhere and the sharks are there no matter what you do.

So pick something worth fighting for.

- - - -

An European PE firm acquired an SMB.

They wanted the founder to still work as the CEO and couldn't understand why he wasn't happy with a 60k salary (after making an 8 figure exit).

True story!

- - - -

Talked to the business owner: manufacturer of forest equipment and machinery.

$36M in revenue and about $6M in net income (ca 15-17%, depends of the year)

A long history and a great brand.

Where do you invest your profits?

"Whatever is needed in the company remains, the rest is invested in real estate."

Nothing new in this world — most of the manufacturing company owners I'm talking about invest their profits in real estate.

Eventually that is the case 95% of the time.

Thinking out loud, I always wonder why don't more folks in this situation partner with private equity or serial acquirers and start investing in SMBs instead?

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The hard truth for serial acquirers, PE people and M&A professionals:

The owners of traditional $2-10m niche businesses are not as dumb as you may think.

That is my realization after meeting with 100s of such owners. Folks in their 50s, 60s, 70s.

Many still believe they can just buy them and grow 20-30% year over year.

Not so easy. And whoever is selling that, could be lying.

These companies are very often small for a reason.

I'm not saying there aren't such opportunities, but you have to dig very deep to find them...

Because finding the right business at a very attractive price. And then executing a growth plan well can be life-changing in every possible way.

So it pays to be patient to find the right one.

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

Traditional companies

Lesson learned with these small businesses: Key-man-risk could be too high.

Going through the new list of traditional companies that generate up to $15 million in revenue.

As always, I'll keep you posted as talks with the owners get serious.

Consumer loan company

This is an overview of the April numbers.

We just finished the spring bond issue round. So far we’ve raised more than $500,000, but since we have a few days left, I know there are some larger tickets coming, I'm confident we'll hit our target of $650,000.

Enough to fund our portfolio for the next few months.

Take care,

Mikk Markus / PrivatEquityGuy

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This week’s podcast:

Imagine raising millions for your startup…

A team of 50 and significant revenue…

Then getting FIRED from the same company you started…

Then starting a boring traditional company that generates significant cash flow, so you could buy another company…

And not just one, but 4 companies!!!

And THEN, growing these businesses an average of 65% in the first year post-acquisition.

All this in four short years.

What a WILD story and an even wilder life for 34-year-old Chase.

“It was a condensed MBA – 50 employees. Millions in revenue. Scaling the company at a double- and triple-digit YoY growth rate. I was a 23-year-old clueless entrepreneur trying to keep a ship together… Ultimately, getting fired from my baby.”

Today, Chase is a new man, happy, relaxed, builds a business he never wants to retire from, travels the world with a kid, and Decada Group has 5 companies in its portfolio.

I hope you enjoy listening to this episode as much as I enjoyed recording it.

Links to Spotify, Apple Podcast and YouTube.

Thanks a lot for following the journey.