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- $60M revenue, $8M EBITDA and 4 biz holdco
Just a quick note before we dive in…
A 31% IRR isn't worth it if your two 20-something daughters don't want to spend time with you…
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You will meet many top 0.01% people in your lifetime.
Successful startup founders
Real estate developers
Hedge fund investors
NFT specialists
Ecommerce people
etc.
And whatever niche they're pursuing looks awesome and you might be tempted – should I do the same?
The short answer is no.
Be yourself as the grass is not greener, although it may seem… do YOUR own thing instead.
Take a week or even a month off before tackling the next big thing…
I remember doing this in 2018 when I decided to spend a few weeks in Doha, Qatar to plan my next move. I was 24 and it was a good decision.
Give yourself enough time to build a positive vision of a future fund instead of simply reacting against someone else’s vision or your own prior frustrations.
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True masterful leadership mixed with entrepreneurial craziness,curiosity and courage.
Exactly as it should be.
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Context:
Henry Kravis played to win and would give up everything he won just for the chance to play again.
Taking the risk and going all-in is the reward. The journey is the prize.
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When I first started cold-calling and emailing traditional business owners, I asked directly whether or not they were interested in selling their business, and if not, how about getting additional capital to acquire a competitor to do an add-on?'
It worked well...
However...
What has worked EVEN BETTER is adding my personal story and a story about why I'm doing it in the first place - being open and transparent has led to great conversations and, again, even better meetings.
Still, not all situations are like this, but when the story clicks, it works wonders.
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Simply put, there are tons of challenges in whichever industry you choose to pursue.
Buying and selling real estate
Investing into securities
Trading commodities
Acquiring traditional $1-3mm EBITDA businesses
Etc.
The goal is not so much to figure out how best to play the game but to ASAP figure out what game you want to play.
Then comes dedication for decades to come, and only then (perhaps) mastery.
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When you take almost all successful business owners who are now in their 60s, 70s, 80s…
And if you read old books and watch interviews when they were young, hungry, more active.
What you see is 8 times out of 10 these are two COMPLETELY different people.
Today they are semi-retired, relaxed, calm, and talk about the importance of passion...
Whereas when they were young and 100% focused, they were ruthless, crazy and not too pleasant to be around.
That's why you can learn more about them by going back in time and read/watch old stuff.
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Stating the very obvious, but when starting to build a holding company or an investment firm, you should focus on small niche markets rather than larger ones, you can then avoid direct competition with larger, established firms.
By serving the right customers — doing it well for a long time — you will be then rewarded with MORE customers and more opportunity…
Eventually grow bigger and find yourself under intense competitive pressure from larger, established players.
Doing a great job and building a great product or service; there's no way of getting around it, but at least then you have a chance against them.
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An interesting observation after meeting with many traditional business owners recently.
People who run very profitable $5-$15mm businesses...
The BEST often have this one thing in common:
They're extremely competitive not only in business but very often in the hobby they have:
Kitesurfing
Motocross
Tennis
Padel
Cycling
Triathlon
etc.
They want to compete, they want to win. They want to prove themselves that they can do better every time.
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Downside:
Due to constant pressure, long working hours, add extreme physical exertion on the weekends – they tend to exhaust their bodies too much.
Older folks say that recovery takes much longer than it used to.
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Talked to a guy who’s been a CEO of a traditional $2.5mm EBITDA business for the past 5-6 years.
Although he has offered equity, he never wanted as he didn’t want to lower his salary and bonuses.
He is a simple guy, loves his job as he works very long hours, earns big commissions and invests it all in real estate. Today owns a significant RE portfolio.
There is no right or wrong when it comes to building wealth.
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How has been the week in the small private equity world?
I found an interesting company, we’ve already met and talked for 4-5 times. I sent them my quote.
Companies does around $2 million in EBITDA and has a management team in place.
In addition, there is a ton of real estate on the balance sheet, which provides a great opportunity to do sale-leaseback.
I keep you updated.
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This week’s podcast:
Meet Dan Tamkin, co-founder of Resurgent Capital Partners:
Portfolio of 4 companies in different industries
$60M in revenue
$8M EBITDA
No LPs
Happy, excited about life, spend tons of time teaching kids to play hockey
What makes this episode special is Dan's generosity in sharing his very honest opinion on why he's happier managing a portfolio of four small companies than one big, say, $50M EBITDA company…
This is a must listen for someone who is very good at growing and building a large company, but deep down feels that they are not the happiest and need more moving parts in their life:
“When I started to understand who I am—I get really bored if I do one thing for over 3 years. After realizing that about myself, my dream has always been owning four businesses because I thought it would keep me curious and interested – and it has! I’m the happiest right now.”
I hope you enjoy listening as much as I enjoyed talking to Dan Tamkin.
Here are the links to Spotify, YouTube and Apple Podcast.
That’s all for today.
Thanks a lot for following the journey.
Take care,
Mikk Markus / PrivatEquityGuy