$500m rev $100m EBITDA in 5 yrs

An important note before we jump in…

As of last week, I know four VERY smart, intelligent, and experienced M&A people who decided to give up the journey of acquiring profitable traditional businesses.

They gave themselves 9-10 months…

Tomorrow is Tuesday and another day for them to go back to work for those who DID NOT give up.

Imo that's the beauty of business and life.

It’s very difficult for all of us. No matter the background, resume, age, experience… It's damn hard.

All this means one thing:

There are huge and very rewarding opportunities to pursue… but only for those who choose to keep moving forward and just not give up.

That being said, one great acquisition can change the life of you and your children.

Forever.

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• 2013      $5 264 077         $637 833

• 2014       $6 201 977       $750 136

• 2015         $9 614 871            $1 356 465

• 2016         $12 684 727            $1 919 088

• 2017         $14 281 281        $1 691 079

• 2018        $18 439 272           $1 938 391

• 2019         $18 259 913             $1 938 860

• 2020         $16 857 419          $1 820 085

• 2021          $26 029 405            $3 377 087

• 2022           $33 602 379          $3 649 809

Btw these are the revenue and net profit numbers of a business that buys, repairs and sells trucks.

The gentleman who owns the business has been doing it for 15+ years. Lives in a very modern $1,500,000 house in the countryside with a lake and tennis court in the backyard.

When asked why you decided to sell the truck?

"Well, you've got to sell something. For me, it was trucks—look, there's trucks everywhere. For you, it might be something else—I know a guy who sells bananas, he's doing well, too."

He also said he has absolutely no desire to sell the company since he turned 50, and the kids also really like working alongside him.

"It's a 100% family business with no debt"

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A very recent realization after meeting with 100+ profitable traditional business owners:

— Owners mostly in their 50s, 60s, 70s

— Companies with $2 to $10 million in annual revenue

There are two types of business owners…

Number 1, owners who are still working 40, 50+ hours a week – trying to manage it all.

(Often because they haven't been able to delegate enough. Everything is still on them. When they leave, it's over.)

And then there are owners who have a management team in place, who work 1-2 hours a day, enjoy life, travel and spend a lot of time with their family and children.

Mainly due to the following reasons:

• Stable & diversified client base

• Healthy layer of non-owner management

• Quality brand name/strong reputation

• Established niche expertise

The focus has been building relationships with these 2nd types of business owners... with the goal of getting them to sell their business to me and my group of investors.

I believe this to be a very rewarding journey.

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The older I get, the more I realize that the wealthiest folks in the business world are the ones who sell what people NEED, not what they WANT.

It’s not about solutions or technology or chemicals or lines of codes or artichokes. It’s about what people need and it’s about solving problems.

People buy 4 things and 4 things only. Ever. Those 4 things are time, money, sex, and approval/peace of mind. Everyone who tries selling something other than those 4 things… end up failing.

Good old need to have vs. nice to have.

Take aspirin and vitamins. People always buy aspirin. They buy vitamins only occasionally and at unpredictable times. Wealthy people know they need to sell aspirin.

Unsuccessful ones keep buying into nice-to-have and the “if you build it, they’ll come” fairy tale…

While the wealthy folks ONLY sell stuff that customers absolutely NEED to have.

An example of a very successful company solving a very big problem:

Problem: Try to transport massive, heavy and complex equipment without packing it properly.

Very difficult or...impossible.

That's all this company does: it specializes in packing goods and equipment.

Customers include ABB, Siemens, Ericsson and other conglomerates.

Those firms need to pay top dollar because this service company solves a huge problem for them.

Do you think ABB, Siemens, Ericsson would want to pay less – of course! But they can't because it's a service they MUST have in order to sell their products to customers worldwide.

The owner of the packaging company is sleeping like a baby. The demand will always be there.

On top of that, they are growing like crazy and making millions of dollars a year in net profit.

Each time I call the owner to ask if he would be interested in discussing the sale of part of the business, "No way Mikk, would you sell the egg that lays the golden eggs??"

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I don't want to sound as your love-life and relationship expert...

That being said, today I read about a Canadian self-made billionaire, Mr. Seymour Schulich.

I really like how he described love:

“Love is a hormonal imbalance that usually occurs in our twenties. If we are lucky, we outgrow it. It should evolve into respect and loyalty, which are the real foundations for a long-term relationship.”

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One (right) person can change your career… forever.

Take private equity investing for example.

There's a gentleman 10, 20, 30 years ahead of you – a true master of industry – who decides to take you under his wing. Hiring you.

In the next moment, you’ll learn the fundamentals of a value investing, buy and build approach in a specific industry: whether it's traditional businesses, B2B software, or startups...

Or whatever specific sector that person has experience in.

Next step is him letting you proceed with the first buyout of the company — from start to finish, all the way to the first post-acquisition steps and beyond.

Imagine the lessons you will learn in 12-18 months.

This is why I strongly believe that everyone needs someone else to learn from. The goal is not to create something yourself.

Instead...

The goal is to take all of your mentor's values ​​and apply those lessons under his watchful eye.

It's you being a sponge and gathering/learning as much knowledge as possible.

Regardless of industry...I believe this is the way to achieve outstanding returns when acquiring companies.

You have limited time for what you do, 4 to 5 bullets (max!!!) in your lifetime...

Less trial and error, more learning and following the right person.

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

Traditional companies (I'll keep you posted once I've moved forward with the term sheet and spoken to the bank.)

Consumer loan company (modena.ee)

From May 1 to 15. We issue bonds publicly on following terms:

Although this round ends in mid-May. Many people have asked questions about our build. So that's what's going on.

Our goal for this round is to raise 600-700k. I am very confident that we will achieve this.

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Did you know you can reverse engineer your 30%+ type IRR returns by changing who your friends are?

What??

Yes, keep reading…

And I mean you wanting to achieve a 30%+ type IRR...

This doesn’t mean saying bye-bye to friends if they're not investors and business builders... It is rather a set of social influences that follow this rule.

Deep friendships are hard to form anyway, on average they said it takes 10 years.

So, let’s call them NEW friends or "Ten Years Ahead Of You Type Friends."

You in the middle of the circle. 3-4 people around you.

These three four people need to be financially more successful than you are (We are talking about YOU making more money, right?!).

The purpose of all this is simple:

Ideas having SEX — a famous saying from a Harvard scientist who studied creativity.

When you get different people together, ideas like bouncing off different people’s heads and they reproduce.

For example six people around you:

• 1 lawyer

• 1 PE investor

• 1 runs a company

• 1 financial advisor

• 1 fundless investor

• 1 management consultant

You have to spend time with these people, be around them. Talk to them.

Too busy?? No time for that? Not good!

You have to cut some things off from other activities.

Ideally, you spend time with these people weekly. If not every week, then once or twice a month.

The more, the merrier.

There is no such thing as too much.

This is your new learning (and earning) environment.

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 the exact same strategy

Today, ONLY 5 years later, $500m in revenue and $100m in EBITDA

Here is my full research on a true M&A and buy-and-build pioneer Mr. Fredrik Karlsson:

(Links to Spotify, Apple Podcast and YT can be found in the comment section below.)

Thanks a lot for following the journey.