Estonia & Europe to the U.S.

Buyers and Builders,

Personal update.

For everyone following the journey over the last 3.5 years.

I think it's worth separating, where I've built the audience from, and where the next phase of the business gets built.

There’s been something fairly unusual while still living in Estonia:

First: Built a 58k audience, a weekly podcast and a meaningful network in the $1-10m EBITDA / lower middle market from Europe & Estonia.

Second: Relationships with family offices, operators, PE professionals and founders across the US and Europe, I’ve been fortunate to see the best opportunities constantly traveling through networks long before they reach the public.

With technology, the first could be built from almost anywhere, just need stable Wi-Fi!

The second has much higher impact and opportunity if I’m physically located where the network compounds.

Charlie Munger repeatedly talked about going where the opportunities and great people are, rather than waiting for them to come to you.

The ambition was never to just grow an X account and podcast. If that had been the case, Estonia would be perfectly viable and I could stay here forever.

The clear plan has always been to build a business on the backend of media and distribution…and because of that, the center of gravity is the US market.

That doesn’t mean Europe has become less important. Quite the opposite, actually.

I believe one thing that actually differentiates me is that I naturally bridge both continents. There are very few people who have access to both European lower middle market deals and US private capital and vice versa.

There hasn’t been a week over the last two years that I haven’t spoken with folks who have acquired companies, run private equity firms, or manage family office capital. I can’t wait to replace half of those Teams / Zoom calls with breakfasts, office visits, conferences, portfolio company tours, etc…(read online to offline). 

Life is energy. And in person activity is what breeds energy… which means relationships and businesses compound much faster in person than over video.

What started as an experiment sharing my journey has become an asset. The question now is where that asset earns the highest return…and the strongest argument we’ve found is that the next stage compounds faster with me being in the US rather than in Estonia / Europe.

- - - -

The next one is interesting because I met Chris, the founder of PieLAB Capital, in person in Stockholm while attending the Swedish Serial Acquirers conference.

We then recorded a podcast a few months later on how he has done the almost impossible (and importantly, has been living an interesting life - let me back it up).

1. Running businesses for 20 years & 4 exits
2. Going from operator to investor quickly realizing these are very different (time to become a learning junkie)

-Studying private equity investing at Harvard Business School
-he studied venture capital investing at the University of California in Berkeley
-he studied value investing at the University of Columbia

Middle-aged work experience in a private equity firm fixing struggling portfolio companies for a couple of years:

The approach was very simple: “He found a few PE firms which had struggling companies in their portfolio, so Chris said how about I help you fix those companies AND in return you show me what there is to learn about.”

3. Started his own holdco, as of today 13 acquisitions and 9 portfolio companies.

A few practical insights (also repeating the basics); I want to bring out from our conversation:

Why does private market investing generate better returns…(and why it’s such an attractive asset class)

Chris shared three reasons:

1. There are simply more businesses to invest in.

The number of publicly listed companies in the U.S. has declined significantly between 1996 and 2025. Meanwhile, the number of private businesses continues to grow.

“Are you looking at enough cars?”

Imagine standing on the side of a busy road…

First, you count the first 10 cars that drive past. You can take any one of them home.

Second, you count the first 1,000 cars. Again, you can take any one home.

Which option do you choose? Which is why there are groups who talk to 9,000 companies per year, and eventually make 5-7 acquisitions.

With companies, same with cars..

Because statistically you have a much higher chance of driving home in a Ferrari, Bentley or Rolls-Royce instead of an average car.

The larger the opportunity set, the greater your chances of finding an exceptional business.

2. Private companies are cheaper to buy.

Chris has acquired businesses at an average of just over 5x EBITDA over the past decade.

Compare that to public markets.

The average listed company trades at roughly 22x earnings. Those figures aren't directly comparable, but a 22x P/E ratio roughly translates to 13-15x EBITDA, depending on the company.

If you can buy one business for 5x EBITDA and another for 14x EBITDA… the answer is obvious.

However, much of that difference exists because of the liquidity premium.

If you buy shares in a public company today, you can sell them tomorrow.

Buying a private business today, and selling it tomorrow… Very hard.

3. Better information leads to better decisions.

When acquiring a private business, you can sit down with the owners and have as many dinners as you want.

-You can speak with the executive team.
-You can interview key employees.
-You can talk to customers.
-You can review contracts.
-You can understand the strategy.
-You can ask about specific customers and whether they're likely to renew.

You can then make a genuinely informed investment decision vs doing the same with a public company could be insider trading.

Lesson learned. Investing in private markets, that is the way to go.

However, an important thing to understand.

Taxes: Capital Gain Tax

Warren Buffet on tax:

“We have a wonderful business. We do not have to pay any tax on the increase in value of the business as long as we hold it. The money will compound for our shareholders.”

Chris himself then started a PE firm. Long story short, this is what happened:

“We got the end of the fund and we had to sell some really great companies. And being an operator, if you have a great company which is growing, and generating cash - you don’t want to sell such companies.”

So, they had to sell those companies, generating capital for investors (with the returns of 25% IRR).

But then he started looking around the world, searching for people who have bought large numbers of small private companies and kept them for a long term.

He found this group of Swedish serial acquirers.

While investing in serial acquirers is similar to private equity, there are a couple of advantages:

-Using less leverage than private equity - it's because they usually buy smaller businesses, they buy them at lower multiples, and therefore they don't have to use large amounts of debt. (The typical serial acquirer around the world, even the publicly listed ones that could have access to much more debt, typically operates with less than 2x EBITDA of debt.)

In private equity firms, that's usually a lot more – 3x, 4x, or 5x.

Again, they buy smaller businesses at lower multiples.

-They provide more diversification of risk for investors - a standard private equity fund will have somewhere between 7 and 10 portfolio companies in it. Some of the serial acquirers in Sweden, for example, might have 200, 300, or even 400 portfolio companies that they have been building over decades. If one of these businesses fails in their portfolio, it's irrelevant. If one of their acquisitions fails, it is largely irrelevant.

-Their overall strategy is buy and hold, as opposed to buy, grow, and sell.

Serial acquirers are after companies that don't grow rapidly. They are after companies that generate a lot of cash and that cash is then sent back to head office, very similar to Warren Buffett's Berkshire Hathaway model, where it is allocated at the highest possible returns.

If you still have a question…

Why do serial acquirers generate such good returns?

I'll give you the reasons, and then an example from one of Chris's portfolio companies, an acquisition they made two years ago.

-There's a lot to choose from.
-They cost less to acquire.
-They are more nimble and therefore easier to improve.

Chris and his partners bought a small business two years ago. It was in the property services space. During due diligence, they found that it had 40 employees. They paid what was, for them, quite a high price - around 7x EBITDA.

What they discovered during due diligence was that the business hadn't implemented a price increase for 11 years.

Picture that in the inflationary environment we've had in recent years.

So they bought the business.

They increased prices by just over 20%.

They didn't lose a single customer.

Within 30 days of buying the business, the effective 7x EBITDA acquisition multiple had declined significantly.

That business has generated a cash return of 26% per annum over the three years they've owned it.

And that's what they do.

It's not rocket science, as Chris said.

But there is a fair bit of time and effort involved in finding these companies - and understanding how to operate them.

The final reason serial acquirers generate such good returns?

They compound over time without having to deal with tax leakage.

If you're interested in permanent capital, serial acquirers, private equity, and building businesses designed to compound for decades, I think you'll enjoy this conversation with Chris Rolls.

Here is the full episode with Chris Rolls (links here: Spotify, Apple Podcasts and YouTube).

Oh, and one thought worth remembering from Chris...

I asked how he maintains energy knowing this journey could easily take 20 or 30 years.

His answer was simple.

"I enjoy building things. Not every day is enjoyable. Not every acquisition works. But if you continue learning, continue improving your people and continue making slightly better decisions each year...

Compounding eventually does the heavy lifting.”

As they say: Simple, but definitely not easy.

That’s all for today.

Take care,
Mikk Markus / PrivateEquityGuy