sub 45x P/E ration, and 755.02% revenue growth from $698k to $5.97m

A very important note before the dive in:

I gotta tell you something.

On Friday evening 8:45pm when the kids were sleeping.

My lovely girlfriend said to me: "We should move to New York."

"You're young, hungry, and love what you do. I really mean it."

My take on this:

My girlfriend sees my daily work and very often (if not 75% of the time) PrivateEquityGuy inbound DMs and emails related opportunities/deals/investments/capital DMs are from the States. And I have to (very often, almost always, regrettably) say no.

Although this would be a big move with my family, because we have a house and life here.

(When it comes to work, the consumer loan company Modena keeps getting more and more mature we are on a final stage securing the equity + debt financing).

Moving to New York, this indeed is a great idea, I will let this idea marinade a bit and then give you an update of what I came up with.

In conclusion, as I’ve lived, and started and built small businesses in Australia and Switzerland – in retrospect, one of the best times of my life, both in terms of growth and money.

Slmost every time I've shared what I’m building with people close to me, they've said, "If I were you, I'd go to the States..."

People often see things in you that you don't because you're too busy building.

Thinking ahead, the US game plan would be:

1. Find, partner or work with world-class operator(s);

2. Go from online to offline (finally meet both brokers as well as investors in real life – there’s been hundreds of people I've interacted with over Zoom and Teams) Could be an in person event? 1-on-1 lunches, dinners? It's all very easy when you're in town.

3. Then raise capital from those willing to bet on us (either deal-by-deal and/or using a fund structure)

4. Acquire and consolidate companies in a specific industry (based on operators’ expertise).

OR

1), 2) and 3) being the same, but 4) would invest in experienced entrepreneurs who want to manage and expand.

Together with the right people – the ones with a strong track record in operations, or successful investments, be it deal-by-deal, under fund structure, etc. – add here immigrant mentality and work-ethic, all this could do some serious “damage” and achieve very attractive returns.

Read: partnership/talent/experience, deal-flow, capital and distribution

PrivateEquityGuy’s Twitter analytics for the last 365 days:

Add to that 3,000 email subscribers, 15,500 monthly podcast downloads. So far it's been a short 2 year journey but I plan on doing it for another 10 years.

Long-term games with long-term people.

(And long-term games are good not just for compound interest, they're also good for trust.)

Again, everything is in the idea phase, but if you think the same. Feel free to get in touch. Very happy to connect.

- - - -

When building your acquisition or investment career. You want those around you to be financially more successful than you are.

Although, make sure you're offering them something they can't get anywhere else. Must be a win-win.

You want to have all shapes, ages, races — the more variety the better.

The more variety, the better.

IDEAS HAVING S3X—that’s the famous saying, Dan Gilbert, one of these Harvard scientists who were studying creativity.

When you’re getting different people together, ideas like bouncing off different people’s heads and they reproduce.

For example six people around you:

• 1 lawyer,

• 1 runs a company,

• 1 is an investor,

• 1 a financial advisor,

• 1 is a professional athlete, or a top musician, or a scientist etc.

• 1 maybe in charity, not rich but their charity is making a lot of money.

You need to spend time with those people, you need to be around them.

Not everything is easy, but it’s simple! You have to cut some things off from some things.

Ideally, if you could be spending time with these people every day.

If not every day, once a week. Minimum would be 3 hours every week.

- - - -

Someone tweeted the other day:

Karl Marx failed to consider the male urge to create a diversified HoldCo with highly profitable businesses purchased at low EBITDA multiples

My take was if only Karl Marx had known…

An average P/E ratio of 40 or more:

That said, the beauty of these long-hold and permanent capital holding companies is there is no need to exit, they can let their winners run and really enjoy the benefits of compounding.

- - - -

The more I talk to these top top business buyers and builders, the more I get this advice that there is a lot more value-creation in fixing a $16-25 million revenue business than growing and doubling a business which does $2-10 million in revenue. 

Based on their experience it is easier to fix an inefficient larger business than to simply grow a very small one.

- - - -

1. Real excitement about investing and good deals;

2. Love of the game (you can't fake energy, excitement and curiosity). Regardless of their age, 99% of them want to do this until they die.

These are just a few takeaways from 100+ conversations I've had with people from investors, entrepreneurs, serial acquirers and folks from private equity.

- - - -

Running a business? Building and raising capital for an investment fund?

You need time and time takes money.

This is often the #1 reason why people fail in both business and trading.

Undercapitalization.

If you have no room to learn and get the inevitable early swings, you will struggle or give up completely.

- - - -

Talked to the gentleman who has a portfolio of 10+ businesses:

"Going to the operating partner model has been the best decision I've ever made."

Me: Why??

"Well, I've always wondered how to get other people to think and act like it's their business?

And the ONLY way I've ever found to get other humans to think and act like they're the owner is to essentially make them the owner."

- - - -

How has been the week in my small holding company world?

Traditional businesses

Additional information about the deal I’m pursuing:

The $12mm heavy equipment seller and rental company I’ve talked about – three weeks ago another buyer joined the conversation, but they said this guy is 20-25 years older than me.

They don't like it, although he is willing to pay more and with better terms (mostly cash compared to my complex structure of A and B shares and property sale leasebacks).

I received more information last week. We’ll come up with a more detailed offer with a fund manager who is generous enough to guide me.

I will share an update next week.

Fintech/Consumer loan company

1. We secured 10 million euros of debt-financing for the next two years from a Lithuanian credit fund.

2. We are trying to raise 600,000 to 1M euros as an equity investment in two short weeks; 400,000 euros committed so far.

I will keep you posted.

- - - -

This week’s podcast:

I did an episode with one of THE BEST young long-term thinkers in the franchise space.

Here is a real life example of why they focus on compounding results & not month to month PnL's.

This is their #1 unit (they have 13 such locations):

05': $698,201 (lost money)

06': $785,343 (lost money)

07': $902,776 (lost money)

08': $1,068,264 (lost money)

09': $1,158,044 (broke even)

10': $1,279,912 (made a tiny bit of money)

11': $1,380,860 (made a tiny bit of money)

12': $1,630,858 (made decent money)

13': $1,880,814 (made good money)

14': $2,280,202 (made good money)

15': $2,640,812 (made great money)

16': $2,907,840 (made great money)

17': $3,272,645 (printing press)

18': $3,739,033 (printing press)

19': $4,170,081 (printing press)

20': $4,834,016 (printing press)

21': $5,301,443 (printing press)

22': $5,968,474 (printing press)

"These are the timelines that create real wealth. And you have to be willing to stomach the pain for long stretches feeling like a loser."

Enjoy my conversation with Ben Little.

After getting to know Ben, I wouldn't be surprised if one day he has more than 100 locations (while owning 80-100% of the entire real estate).

Here are the links to Spotify, YouTube and Apple Podcast.

That’s all for today.

Thanks for reading and talk to you again next week.

Take care,

PrivateEquityGuy / Mikk Markus