- PrivatEquityGuy
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- a $6M biz with ZERO money down
A quick note before we dive in…
You can just do things…
When I started this, I doubted I was capable.
I didn’t have a traditional finance background.
None of my relatives are in this field.
I went to a state school.
I’m not a slick salesperson.
I don’t know any of the right clothes to wear.
I can’t play golf.
I’m not some superhuman that can function on 4 hours of sleep.
I was a good worker but mostly looked over.
I had no money when I started.
I had a newborn child and was facing eviction at the time.
I was terrified, but knew that if I stayed still I would crumble.
The only option I had was to keep moving forward.
This gentleman ended up being a top performer in the world of activist short selling.
Again, you can just do things.
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A common thing for founders building HUGE holding companies, VCs, and private equity firms.
A KILLER first deal.
(So good you won't believe it.)
The brothers and founders of Danaher bought their first business with ZERO money down, and three years later they were generating $40M in revenue and $6M in operating profit.
"That's how we launched."
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Many people read the book Outsiders - insights about the most successful CEOs of US public companies.
The biggest lesson is often the capital allocation part.
But if you look further, almost all of the CEOs in this book did one thing — they spent little or no time on investor relations. And a lot of time on oneself - reading, thinking, writing.
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This is something I wish I would have known 10 years ago.
Whether you're starting a business or mastering the art of investing:
You make small decisions and changes every day that add up to nickels, dimes, and quarters that become dollars. And those things add up to a lot of money over time if you do it for 30, 40 years.
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Let's say you’re doing something you haven’t done before:
acquire great niche traditional $2-5M EBITDA businesses,
growing a consumer credit company to a $15M portfolio
building a network of investors for the future 8-fig aum fund
The next moment, somewhere along the way, uncertainty hits, big time.
I’ve found that there are VERY few self doubt and confidence problems that cannot be defeated by:
1. Focusing on the work and NOT the outcome/result
The activities you have 100% control over:
reading/learning/writing each day,
getting a little better today than you were yesterday, - introducing yourself to more business owners,
creating more offers,
improving/growing your current company for better track record in the future.
2. Always outworking the other guy
You have 100% control over that, too.
And control = confidence in what you're doing.
Easy? Absolutely not.
And you'll still have setbacks.
That is life.
But doing the above means you'll always at least be in the game, making progress, being able to lift your head up with pride whatever the outcome.
It also helps to think in terms of not success or failure — but results. Win or lose it's just a result. Learn what you can, regroup, go after it again.
Nobody learns anything from their successes, so might as well fook up as much as you're going to and embrace it.
Who knows?
You might even catch yourself having some fun in the process...
Also:
Every time you're under pressure, frustrated, emotional, prone to bad decisions... remind yourself, "it's just a test, and I'm going to pass it. " then proceed accordingly.
It is surprisingly effective in getting your priorities straight, focus on point, and staying calm, cool, collected. Until you achieve what you set out to do.
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Read about two asset managers investing in the public market (about $500m in aum):
"Obviously we admire every company that we have in our portfolio. The admiration is for the management and not for the company.
Sometimes the company is so large and we don't have access to the management, but the company itself is a reflection of what the management does. And the values they hold."
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Did my early morning walk and listened to an interview with activist investor Paul Singer.
He was asked: are you having fun?
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I have come to the conclusion that it doesn't matter how great the company is.
There will come a point where current shareholders are willing to sell their shares at a deep discount.
This is for various reasons – health, lifestyle, home, real estate, other investments and sometimes a demanding wife.
This probably also applies to how Steve Ballmer has become Microsoft's biggest stakeholder.
It has taken many decades, but here we are.
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How has been the week in the small holding company world?
Traditional business
The $12M heavy equipment seller is in an interesting situation—one owner is ready to exit and sell his shares, while the other wants to stay involved but isn’t willing to hold a minority stake. I’ll keep you posted on how things develop.
Fintech/Consumer loan company
David Frankel from Founder Collective have said:
'Be slow to delegate, and when you do, choose your delegates carefully'
That said, we're 100% bootstrapped, one full year profitable. Next week we are hiring our VERY first CFO from a local large bank.
From day one, we have believed that revenue from paying customers is the best source of capital.
Update on equity investment:
We have a commitment for 800,000 euros; we’re trying to close by the end of March.
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This week’s podcast:
It's hard to find a more charismatic, passionate and transparent lender than Bruce Marks.
Some of my favorite things Bruce said:
1. You want to buy a business? Go get your credentials first. Don’t just jump in blind. Spend a year or two learning the industry, working in it, understanding how it actually runs.
2. You don’t need to be rich to buy a business. I’ve seen a young guy - military background, top business school - who had just $40k and bought a $10m business.
3. Lenders bet on the jockey, not just the horse. It’s not just about the business you’re buying—it’s about you. Your experience, work ethic, and ability to run the business matter.
4. Know your numbers inside and out. When you’re in front of a lender or seller, you better be able to explain the financials, how you’ll operate the business, and what the risks are.
5. Character matters more than cash. A lender will work with someone they trust over someone who just has money. If you’ve got integrity, a strong work ethic, and a plan, you’ll get more doors opened for you.
6. Sellers care who they sell to. A lot of business owners don’t just want the highest price; they want someone who will take care of their employees and continue what they built.
7. Underwrite the downside, don’t just dream about the upside.
8. The worst thing that can happen to a buyer? Having your employees come to you with a question - and you don’t know the answer.
9. I don’t finance ‘want’ businesses. And last time I checked, no one needs a kayak. When I look at a deal, I ask myself - does this business serve a need or a want?
That’s all for today.
Thanks for reading and talk to you again next week.
Take care,
PrivateEquityGuy / Mikk Markus