$7.3m IN; $2.19b OUT

A quick note before we jump in…

I hardly share any motivational quotes, but here is one for you this week.

“You can fail at what you don’t want, so you might as well take a chance on doing what you love.” – Jim Carrey

Take a moment to really think about it and then move on with your week.

I found it important because I read this quote 24 months ago after graduating from the University in Geneva.

“What should I do next??”

1. Go work for a local PE firm in Switzerland?

2. Or go build one without any prior experience?

I chose the latter.

Other than becoming a father, it was the best decision of my life.

- - - -

There are people in this world to whom I feel I owe more than I can ever repay.

Yesterday, I was on the phone with a gentleman, discussing our journeys.

One moment he said:

"You know Mikk, I was thinking... I can make an intro to one of the richest folks in Latvia, I went to the same school as him."

Funny enough (today, Friday, we already booked a call for next week's Tuesday).

This is not the first time he has done such intros.

I have a list of people in my CRM, his name is followed by other names and “favors".

One of the reasons I work quite a lot is to pay back the people who helped me in my early days.

Anyway.

The least I can do is leave his name below.

His name is Alex, he is a serial acquirer of SaaS companies. He was formerly the CFO of ecomm app consolidator ($7 -> $50M under his watch)

Feel free to get in touch.

A very smart guy and an even better person!

Met him 3 times in real life. Go say hi to him and tell Mikk sent you :)

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The story of the MOST profitable private equity buyout of all time.

Company: Polyplus-Transfection

Sector: Healthcare

Sponsor: Archimed 

Here is how Archimed achieved a 300x MOIC on its initial investment.

$7.3m IN

$2.19b OUT 

1/ In July 2016, French private equity firm Archimed specialized in healthcare closed the acquisition of Polyplus.

Polyplus is a company that supports gene and cell therapy and life science research with

innovative nucleic acid transfection solutions (seems clever!).

2/ Archimed acquired 89.9% ownership of Polyplus at an EV of €8.1 million. 

Back in 2016, Polyplus generated a few million in revenues and a positive EBITDA. It was acquired at 4.5x EBITDA in a sector trading at 17x.

3/ Archimed identified the company could skyrocket with the right distribution channels in the the booming sector of Cell & Gene Therapy

Polyplus was only selling its tech to academic labs. Instead, the sponsor decided to focus on Cell & Gene Therapy drug manufacturers.

4/ As a result, the company doubled its EBITDA each year to €33M in 2020.

In 2020, due to its outsized growth, Polyplus was too big for the fund owning it (MED I).

Archimed decided to launch a continuation vehicle (Polymed).

5/ This returned a whopping 70x MOIC and 254% IRR for MED I which retained a 5% ownership. 

Polymed was co-controlled by Archimed and Warburg Pincus. From 2020 to 2023, Polyplus continued its growth journey and will reach an EBITDA close to €50M this year.

6/ Archimed and Warburg Pincus decided to sell the company to Sartorius, a listed biopharma company for €2.4 billion in April 2023.

This represents a 4.6x MOIC for Polymed and a 300x+ MOIC for MED I on its cost Base.

7/ This deal alongside many other successes makes MED I the most profitable buyout fund of its vintage (2014), returning more than 7x money to investors. 

And makes Archimed a true champion in its League.

Every other fund at Archimed is top decile.

Read more about this acquisition on the Archimed’s website — Thank you, Loic from X, who has put together an excellent conclusion for Polyplus story.

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300x MOIC

Pretty remarkable, isn’t it?

Imo it's great to see that it only takes one business to change your life.

That being said.

Company’s growth often reflects on the revenue sheet.

Since it can only start with marketing and sales, it can also be controlled by it.

And after meeting with 100+ niche manufacturing company owners and management teams, often gentlemen in their 50s, 60s, 70s…

When it comes to sales and marketing.

They don't have a proper setup, they don't even talk about KPIs.

Yes, they don't need to know all the knobs and bolts of marketing.

But having the right setup and KPIs would help these businesses grow by 10-30% per year.

All this in order to make better (and more predictable) decisions.

- - - -

How has been the week in my small holdco world?

The consumer loan company which we’re built for the past 2.5 years.

Our portfolio is growing steadily (all organic) – the organic part with 2000 to 3000 new customers per month makes us very attractive for local banks.

We have received two purchase offers from them in the last 2 years. (We did not agree on the terms.)

We consider our portfolio to be very healthy. Default rate is at 1%; as we do in-house debt collection we see the default rate to even drop to 0.3%.

Our portfolio is very-very small compared to the bigger players. Talked to the guy who runs a $400 million portfolio company, their default rate is at 4%.

In the last 6 months we have only started to see an increase in customers wanting to extend their payment schedules. Instead of paying in 12 months, they prefer 18-24 months.

Traditional “boring” companies

This week there were two meetings with business owners — they hired consultants to value their business.

I am currently working on three cases.

• Acquisition from both industry-leading manufacturing companies here in Estonia

• They are the two main competitors.

• One already sells to the Finnish market, which is 10x bigger than the Estonian market.

• Spoke to the owners; they would like to work together, but they expect us to acquire a majority of both companies. Putting them under one umbrella.

• Both have revenue of more than $4 million. Together, they could raise prices by about 15% and generate $10 million in revenue with a much healthier margin than they already do.

To understand your interest in what we do, get on my list here and I’ll send you more information about the deals. (39 investors have already done this past 5-6 weeks).

I will put together a Business Overview of all three and share it with you.

Q1 of 2024 is going to be interesting.

Take care,

Mikk aka PrivatEquityGuy

Lastly,

I have interviewed 17 people on the HoldCo Builders podcast. People have said they loved the show. Which is pretty cool.

Here is a recent one with Michael Huseby, who’s an investment fund formation attorney who represents both LPs and GPs.

As always, thanks a lot for following the journey.