Turning $25k into $11m holdco

Just a quick note before we dive in…

We've had a lot of great guests (HoldCo Builders) come on the podcast based on your recommendations – who would you like me to talk to?

Let me know by replying to this email.

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A hint that a man lives a good life:

• Have been running a traditional business for over 20 yrs

• Owns the majority

• Net profit about $1.5mm per year

• 3 kids, married for 25 years

His attitude to life and business:

"I'm still fairly young and have a long runway to continue operating this business."

Haven't seen this positive 49-year-old in a while.

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Whatever company you're building.

• Be it a startup,

• VC fund,

• Commercial real estate business,

• Or a portfolio of traditional $1-3mm EBITDA companies

Intelligence and emotional quotients do matter…

But in my experience, after interviewing and meeting folks with VERY successful firms…

The ones that do well are the people with the highest grit quotient.

If they see a wall, they go over, under, around or through it.

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Most of the $1.5-3mm EBITDA traditional businesses I've met have this one thing in common (and I have met many of them!):

They've funded almost all of the expansion through reinvested earnings, with around 80-90% of the cash from operations going directly back into the company.

In 10+ years they have created a large amount of wealth.

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Typical example: 

Year 2014: Very small company with 5 employees

10 years of reinvesting cash flow while using small amounts of debt…

Year 2024: Sub $3mm EBITDA company; thinking about exit

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One of the biggest problems facing investors today?

Lack of high-return & safe investment opportunities.

If you want to find great (yet safe) investment opportunities, read this:

1. Don't settle for less than 20-30%+ returns

There are many investors looking for 5-7% bonds, which leaves a lot of money on the table.

Finding a great opportunity takes work.

It's the same as looking for great deals

It could take months if not a year.

2. Realize that 20-30%+ opportunities are hidden gems

Nobody wants to hear this, but..

Yes, there are broker-deals…

But you can also find great ones through cold calling, cold-emailing, & networking.

Again, can be very difficult and time consuming.

But the numbers will be surprisingly good.

3. Can good opportunities find you?

I'm nobody with less than 47,000 followers.

I still get approached by high net worth individuals from time to time.

The last gentleman messages manages an 8-fig fund. Pretty crazy.

Put yourself out there.

4. Seek to understand different markets

20-30%+ opportunities aren't just for high-risk & high-reward crypto, and early-stage startups.

For example, construction chemical wholesaling…

Net-margins can be 15-25% (year-on-year)

With 20+ years of operating, it's rather safe.

5. Create value (by providing help)

What can I do to improve ROI?

Call the founder:

"Is there anything I can do to improve the portfolio company?"

You can expand them into a new market just by knowing someone.

The right founder will agree to this and give you the task.

6. Create your own luck

Fight the urge of thinking there aren't 20-30%+ return opportunities.

Luck can be created through habits:

• Send that cold-email

• Attend to that event

• Build relationships

• Study the market

Control your destiny.

To recap, 6 tips for finding high-return investment opportunities:

1. Create your own luck

2. Create value (by providing help)

3. Seek to understand different markets

4. Can good opportunities find you

5. Realize that best opportunities are hidden gems

6. Don't settle for less than 20-30%+ returns

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You're a small player in the early stages but still looking for attractive returns on the lower middle market?

I believe you need to be able to acquire a $2mm EBITDA company for very reasonable pricing.

To win the competition on reasonable pricing you gotta be likable to the founder and management team. Add a compelling story about what you've done in the past and why you're the right buyer for their company.

Not saying you have to be two-faced...

But deep down you have to have different motivations than institutional buyers.

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You have 3-4 ten year bullets when it comes to starting a business and building $$$ for your family.

So when choosing the game to play (read: game selection and the importance of it):

• Be it investing in search funds,

• Buying and operating micro-PE firms

• Investing in distressed commercial RE

• Acquiring a traditional sub $2.5mm EBITDA businesses

• Building a <$2mm revenue B2b Saas holdco

• Buying stakes from existing shareholders in VC space

• Selling an $4997 info product

• Establish a small hedge fund

• Forming a holdco in marketing agency space

Whatever you choose...

Don't forget to analyze who you are going to compete with.

The last thing you want in life is to be a sucker at the poker table – when that happens, it's not good and you have no chance.

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How has been the week in the small private equity world?

Consumer loan company

Update: After a long development time, our investor portal will be ready VERY soon, and it will look like this :

I'll keep you updated when we're live!

Traditional businesses

When grown up men act like children...

Visited a $2mm EBITDA traditional business.

They have an open office with 3-4 salespeople.

When I asked about people, the CEO told a funny story:

A gentleman in his 40s nags a 25-year-old man why he spends 1-2 hours playing Counter Strike and scrolling tiktok every day while in the office.

If you look at the numbers, a 25-year-old sells nearly $150,000 worth of products per month, while a 40-year-old sells $50,000—almost three times less.

CEO: "they have completely different time management styles -- when looking at the numbers -- we all know which style seems to work better..."

"He's very consistent with his $150,000/mo... if it went down to $120,000; then I'd be worried..."

Jokes aside…

There is another company we’ll start doing a DD very soon.

(Since I've shared too much too soon in the past, I'll share more this time when we're in the final stages. The company itself has been in business for 20+ years and has an EBITDA of about $2M.)

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This week’s podcast:

Alex Schultz, the founder of Turnbury Group.

Not too many folks are willing to quit their job at Goldman Sachs to start a holding company.

But it gets even better...

To build his dream, he decided to move from the US to Hong Kong.

Alex grew the live lobster business Turnbury Group to $11mm a year; which today grows by 20-30% per year.

We describe how he convinced the Hong Kong government to grant him a visa to start a business

How he printed out Google Maps to find his first suppliers (IT WORKED!!)

And how to this day, it's 100% bootstrapped, and how he sells $11m worth of live lobster a year in Hong Kong.

I hope you enjoy!

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

That’s all for today.

Have a great week and thanks a lot for following the journey.

Take care,

Mikk Markus / PrivatEquityGuy