How to buy 1 dollar bills for 30 cents

A quick note before we jump in…

A received a call from the founder of this company last week:

• He is interested in selling majority of the company.

• The good news: there is an extremely motivated operator. A lady in her 30s who is also the co-founder of this company.

• The gentleman told me that the lady is so passionate about business that the company is a God to her.

• The 2023 goal is $4 million in revenue and $800,000 in EBITA

• They just moved to a brand new production facility (located in Estonia), but it has a great brand and exports 95% of its production to Sweden, Germany, France and soon to South Korea.

• They sell a premium product and according to the founder, they always aim for 20% net profit, but with different products they achieve 25% net profit.

• They sell to wealthy clients, the owner said, attending the Monaco Yachting Weekend with his potential clients.

If you’d like to co-invest with us? Send me an email.

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The most important thing about entrepreneurship of any kind is that you are always moving forward, pivoting as you see fit and grinding.

Take the “grinding” part for example.

Why intensity (grinding!) might be more important than strategy?

This is a lesson learned from Romeen Sheth, who bootstrapped his business to $60M before bringing in private equity. As well as Nathan Barry, the founder of ConvertKit.

“Not only do we attribute the success to strategy, we glorify this attribution. Think about the last time you read a story about a successful company or individual - the focus is nearly always on the strategy.

I think something far more important is missing from these stories: intensity. Too many people focus on strategy. Not enough focus on intensity. Most of the time if you turn up the intensity, it will far outweigh a shift in strategy.”

What about you? What would happen if you did the same thing, but you dialed up the intensity?

Few examples:

• “Our content isn’t reaching enough people. We should focus on SEO, make our formatting nicer and optimize the time of day we send our content out.”

  • What if instead of these tweaks, you deliver quality content every single day instead of 1 day a week?

• “We aren’t reaching enough new prospects. We should revisit who our ideal customer is, create email templates for our team and create a presence on all major social platforms.”

  • What if instead, you sent 250 customized 1:1 messages that were individually tailored for each of the people you are trying to reach?

• “Our customers aren’t having a good experience. We should create a FAQ and put a chatbot in the product for them to help themselves.”

  • What if you sat down with each individual customer, listened to their specific problems and understood it in the context of their business?

Now you may be thinking - if this was as simple , then why do most people not do it?

It is simple, but it’s not easy. Upping the intensity is uncomfortable. It requires you to be hyper disciplined, to push outside of your comfort zone and to be consistent.

My two lessons:

1. put the strategy to the side and increase the intensity

2. “even a broken clock is right twice a day

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Received a message from Watson.

Sharing you the truth of my fundraising experience.

1. It's tough and takes time.

NB! I'm not complaining at all.

I have met more people who are 10-15 years ahead of me than I can imagine.

This would not have been possible without fundraising.

On Thursday of last week, I was on the phone with a gentleman who runs a holding company that manages $150 million in assets under management.

During the 20-minute speech, he was very emotional about the difficult times he had in building his company.

Hearing a story like that and hearing that people you look up to are also struggling. It makes the journey easier because you know you are not alone. It's hard outside, but if you try harder, there are many opportunities :)

The biggest thing right now has been that I've talked to a lot of American investors and for them the European market is too far and the problem is my lack of experience.

But we'll get there. No problem.

In 2021 while studying in Switzerland, I received an offer to work for a PE firm in Geneva, Switzerland. That would have meant a very comfortable salary and an office in the center of Geneva.

Instead, I went all in building a pipeline of potential businesses we would like to acquire.

Fast forward to this January this year we received a $5,000,000 commitment for what we want to build. The first acquisition should have been closed at the end of July.

In hindsight, thankfully that didn’t happen.

1. It would have been too easy;

2. It would not have been a great acquisition (EBITA multiple wise. Free cash flow wise.)

The managers of Lagercrantz and other Swedish serial acquirers advised me to make a list of 100-150 Family offices.

“Your idea makes a lot of sense; keep talking to more people. Your goal should be to get 1 or 2 meetings from it. Fly to their office if necessary.”

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At the moment there is one goal and one goal only.

To maximize my time. I turned 30 in April, no point in making a deal for the sake of making a deal. (This is what I believed when I started the fundraising process – I should buy something…wrong!)

In reality it's the exact opposite.

The aim is to make the first deal so good for investors (a very attractive cash-to-cash return); so who invested $50,000 or $100,000 or even a million dollars; would like to double the investment in our second acquisition.

And in the near future, we won't have to struggle too much to get another round of financing for our next purchases.

A great example for you from industry legend Mr. Gores who was 31 years old when he started calling companies.

The 1st company was acquired in 1995.

From there, Gores oversaw 32 acquisitions in a short 5 years.

Key takeaways:

1. It's 2023 and cold calling still works

2. Knowing there are plenty of good opportunities out there, now more than ever. This means waiting when it comes to buying attractive companies at good prices.

I learned a lesson from an investor in Switzerland: "Move on only when the valuation is right." He added: "There is a $1 billion PE fund in the US that did 178 deals last year with a 50% return."

Which is, again, a proof that enough that there are plenty of great deals out there.

Take care,

Mikk aka PrivatEquityGuy

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P.S. Our company, Modena, is issuing bonds.

Few people are already interested.

That being said, we will raise another round of bonds in October. The interest is 12%-14% per year, with quarterly payments.

For additional information, we are building this business in Estonia and when it comes to investment risks, I have great news:

*Investment capital is secured and controlled by 3rd party vendors LHV Bank and LEXTAL.

Click here to read more.

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P.S. 89% chance I'll be in London this Thursday (5th of October) - wanna catch up?:) Please send me an email or DM me on Twitter.

Lastly,

I recorded an episode about the lessons I learned from a gentleman who recently invested $30 million in a $170 million company.

I was lucky enough to spend 48 hours with him visiting 7 small businesses.

People have said they really liked the 22 notes I shared. Which is pretty cool.

As always, thanks a lot for following the journey!