Success Story (1 Viewer)

[TheIronSheik]

pfft, get back to us when he's sporting this bad boy. then we'll know he's finally made it.

I love that it's $990,000 crossed out, and "our price" is $990,000. SOLD!

Can't pass up a deal like that. That's almost 1% off. Not quite, but almost.

 

[IC FBGCav]

I had dinner with a friend--let's call him Ray--last week. 4 years ago, he was an M&A attorney and hated his job. One day he quit and told me and some other friends he was going start a private equity firm. I introduced him to another friend--David--who'd started a successful PE fund some 10 years earlier. David said Ray was incredibly naive after they'd done an introductory call.

6 months later, Ray identified his first acquisition candidate and asked if I wanted to invest. I politely declined as it wasn't the right industry, risky etc. He got the deal financed but almost bankrupted his family because he got to the closing and didn't realize he needed to prepay the legal and accounting fees. Somehow, he cobbled together the ~$300k needed to pay the lawyers and accountants and closed the deal.

3-years later, he's bought 5 other companies and has started buying out the original equity investors so he can own everything outright. His group of companies does $25-30MM in cash flow annually. I had dinner with him last week and he was sporting a $100k Patek and was looking at a $25MM plane and getting ready to build or buy a $20MM house.

From zero to hero in under 4-years. Very impressive.

None of these businesses have employees or expenses? Since when does cash flow equal profit?

I define cash flow as EBITDA so that number is after most cash expenses.

He is paying 10 million a year in state and federal corporate taxes then. Interesting.

 

[sublimeone]

Chet, couple questions I've been wondering for a while about PE:

1. What kind of returns are PE funds looking for? For example, are they only interested in unique ideas that have the potential to go stratospheric or are some interested in a lower risk with solid returns.

2. Do PE funds typically take a role in management?

3. If you had a small business with great growth potential would you look to PE for needed capital or would you go elsewhere?

TIA

 

[TheIronSheik]

Chet, couple questions I've been wondering for a while about:

1) Have you ever thought about adopting a 41 year old Middle Eastern man?

2) No, seriously. Have you?

TIA

 

[Maik Jeaunz]

heartwarming stories like this always make me feel like crap.

Why? Just cobble together the ~$300k and you'll be set.

let me check the couch cushions...

 

[chet]

I had dinner with a friend--let's call him Ray--last week. 4 years ago, he was an M&A attorney and hated his job. One day he quit and told me and some other friends he was going start a private equity firm. I introduced him to another friend--David--who'd started a successful PE fund some 10 years earlier. David said Ray was incredibly naive after they'd done an introductory call.

6 months later, Ray identified his first acquisition candidate and asked if I wanted to invest. I politely declined as it wasn't the right industry, risky etc. He got the deal financed but almost bankrupted his family because he got to the closing and didn't realize he needed to prepay the legal and accounting fees. Somehow, he cobbled together the ~$300k needed to pay the lawyers and accountants and closed the deal.

3-years later, he's bought 5 other companies and has started buying out the original equity investors so he can own everything outright. His group of companies does $25-30MM in cash flow annually. I had dinner with him last week and he was sporting a $100k Patek and was looking at a $25MM plane and getting ready to build or buy a $20MM house.

From zero to hero in under 4-years. Very impressive.

None of these businesses have employees or expenses? Since when does cash flow equal profit?

I define cash flow as EBITDA so that number is after most cash expenses.

He is paying 10 million a year in state and federal corporate taxes then. Interesting.

He still has interest, depreciation and amortization to deduct before figuring his tax but yes, he has a big tax bill.

 

[chet]

Chet, couple questions I've been wondering for a while about:

1) Have you ever thought about adopting a 41 year old Middle Eastern man?

2) No, seriously. Have you?

TIA

You should seek out my friend. He's the one making bank.

 

[TheIronSheik]

Chet, couple questions I've been wondering for a while about:

1) Have you ever thought about adopting a 41 year old Middle Eastern man?

2) No, seriously. Have you?

TIA

You should seek out my friend. He's the one making bank.

This is a good point. Aim high.

 

[chet]

Chet, couple questions I've been wondering for a while about PE:

1. What kind of returns are PE funds looking for? For example, are they only interested in unique ideas that have the potential to go stratospheric or are some interested in a lower risk with solid returns.

2. Do PE funds typically take a role in management?

3. If you had a small business with great growth potential would you look to PE for needed capital or would you go elsewhere?

TIA

1) Because of the illiquidity and leverage, PE funds will target mid-high teens in terms of returns. Anyone promising more than that is not being realistic IMO. It does happen but shouldn't be expected.

2) Not typically. They will have one or more board seats but usually won't become involved in day-to-day management unless the company gets into trouble.

3) Depends on what the investor can provide outside of cash. Most friends and family can only provide cash; PE can often provide business advice and help in additon to cash. Think Shark Tank if you've ever watched the show.

 

[Dentist]

Chet - i'm not sure if you saw my question - what's the difference between a Corporate controller and a CFO at a PE firm?

TIA

 

[Joe T]

Pretty sure all PE firms are the devil's spawn

 

[chet]

Chet - i'm not sure if you saw my question - what's the difference between a Corporate controller and a CFO at a PE firm?

TIA

I'd assume only larger PE firms would have a separate controller who'd report to a CFO. Dunno though.

 

[chet]

Pretty sure all PE firms are the devil's spawn

No, GB, they're not. Some are but most aren't.

They provide important financing to companies and aid in business growth and employment. Of course, there are exceptions.

 

[xulf]

Please provide your buddy's address

 

[CletiusMaximus]

Pretty sure all PE firms are the devil's spawn

No, GB, they're not. Some are but most aren't.

They provide important financing to companies and aid in business growth and employment. Of course, there are exceptions.

If a friend or family member was happily building his career working for a successful small company, and that company announced it was being acquired by private equity, would you congratulate him on the good news?

 

[Joe T]

Pretty sure all PE firms are the devil's spawn

No, GB, they're not. Some are but most aren't.

They provide important financing to companies and aid in business growth and employment. Of course, there are exceptions.

Your objection has been heard and overruled

 

[Joe T]

Pretty sure all PE firms are the devil's spawn

No, GB, they're not. Some are but most aren't.

They provide important financing to companies and aid in business growth and employment. Of course, there are exceptions.

If a friend or family member was happily building his career working for a successful small company, and that company announced it was being acquired by private equity, would you congratulate him on the good news?

Congratulations, your work just tripled and 2 out of 3 of your friends and co-workers will be gone by Tuesday!

 

[CletiusMaximus]

Pretty sure all PE firms are the devil's spawn

No, GB, they're not. Some are but most aren't.

They provide important financing to companies and aid in business growth and employment. Of course, there are exceptions.

If a friend or family member was happily building his career working for a successful small company, and that company announced it was being acquired by private equity, would you congratulate him on the good news?

Congratulations, your work just tripled and 2 out of 3 of your friends and co-workers will be gone by Tuesday!

We tripled your debt service, and added a management fee, but we know you can afford it after layoffs and other cuts, because that's what our model says!

 

[chet]

Pretty sure all PE firms are the devil's spawn

No, GB, they're not. Some are but most aren't.

They provide important financing to companies and aid in business growth and employment. Of course, there are exceptions.

If a friend or family member was happily building his career working for a successful small company, and that company announced it was being acquired by private equity, would you congratulate him on the good news?

It could mean more opportunity for him or it could mean being laid off or it could mean status quo. No different from a strategic buyer.

 

[chet]

Pretty sure all PE firms are the devil's spawn

No, GB, they're not. Some are but most aren't.

They provide important financing to companies and aid in business growth and employment. Of course, there are exceptions.

If a friend or family member was happily building his career working for a successful small company, and that company announced it was being acquired by private equity, would you congratulate him on the good news?

Congratulations, your work just tripled and 2 out of 3 of your friends and co-workers will be gone by Tuesday!

I sense that you had a bad experience. However, that doesn't mean that all PE transactions will result in the same.

 

[Dentist]

Chet - i'm not sure if you saw my question - what's the difference between a Corporate controller and a CFO at a PE firm?

TIA

I'd assume only larger PE firms would have a separate controller who'd report to a CFO. Dunno though.

The PE firm this guy works for (after some deep googling) is owned by an even bigger PE firm... so it's like a pyramid here

There are some small companies and brands in the transportation field owned by the PE firm my acquaintance works for, then a larger PE firm owns this PE firm.

Is this what corporate America looks like? My eyes are really being opened up here.. Sounds like a lot of people on here have been pounded in the ### by these things.

 

[Joe T]

Chet - i'm not sure if you saw my question - what's the difference between a Corporate controller and a CFO at a PE firm?

TIA

I'd assume only larger PE firms would have a separate controller who'd report to a CFO. Dunno though.

The PE firm this guy works for (after some deep googling) is owned by an even bigger PE firm... so it's like a pyramid here

There are some small companies and brands in the transportation field owned by the PE firm my acquaintance works for, then a larger PE firm owns this PE firm.

Is this what corporate America looks like? My eyes are really being opened up here.. Sounds like a lot of people on here have been pounded in the ### by these things.

Predator's Ball

Den of Thieves

Barbarians at the Gate

pretty much are all required reading on this subject.

 

[Dentist]

Chet - i'm not sure if you saw my question - what's the difference between a Corporate controller and a CFO at a PE firm?

TIA

I'd assume only larger PE firms would have a separate controller who'd report to a CFO. Dunno though.

The PE firm this guy works for (after some deep googling) is owned by an even bigger PE firm... so it's like a pyramid here

There are some small companies and brands in the transportation field owned by the PE firm my acquaintance works for, then a larger PE firm owns this PE firm.

Is this what corporate America looks like? My eyes are really being opened up here.. Sounds like a lot of people on here have been pounded in the ### by these things.

Predator's Ball

Den of Thieves

Barbarians at the Gate

pretty much are all required reading on this subject.

I'm not going to read those, but i'll consider reading the wiki entry on those books or I'd be happy to read your take if you summed them up into a 3 paragraph or less post.

I did watch Danny Devito's "Other People's Money" is it like that?

 

[El Floppo]

Chet - i'm not sure if you saw my question - what's the difference between a Corporate controller and a CFO at a PE firm?

TIA

I'd assume only larger PE firms would have a separate controller who'd report to a CFO. Dunno though.

The PE firm this guy works for (after some deep googling) is owned by an even bigger PE firm... so it's like a pyramid here

There are some small companies and brands in the transportation field owned by the PE firm my acquaintance works for, then a larger PE firm owns this PE firm.

Is this what corporate America looks like? My eyes are really being opened up here.. Sounds like a lot of people on here have been pounded in the ### by these things.

Predator's Ball

Den of Thieves

Barbarians at the Gate

pretty much are all required reading on this subject.

I'm not going to read those, but i'll consider reading the wiki entry on those books or I'd be happy to read your take if you summed them up into a 3 paragraph or less post.

I did watch Danny Devito's "Other People's Money" is it like that?

Brewster's Millions IMO.

 

[ConnSKINS26]

4-years

Oh my god. You're Eminence?

 

[Joe T]

I'm not going to read those, but i'll consider reading the wiki entry on those books or I'd be happy to read your take if you summed them up into a 3 paragraph or less post.I did watch Danny Devito's "Other People's Money" is it like that?

I haven't seen Other People's Money so I can't comment.

My summary on those books and PE: Soulless financial types lie, cheat, steal, coerce, collude in order to take over companies that are not for sale all in the name of bigger fees, boats, parties, nicer cars, nicer watches, nicer homes, at the expense of the average American worker.

 

[sbonomo]

Good for him. I wouldn't be sporting the 100k watch or buying $20M homes if I had that money, but to each his own. Pretty quick and cool success story.

You're in for the plane though?

quickest way to go from rags to riches back to rags. You are a financial planner right? Time to talk some sense into him. I May be too conservative but, we all know that markets can change quickly. Buying a plane is idiotic. I have multi billion dollar companies that struggle with the decision. Good for him though. Who picked up the check?

 

[Guest]

Chet - i'm not sure if you saw my question - what's the difference between a Corporate controller and a CFO at a PE firm?

TIA

I'd assume only larger PE firms would have a separate controller who'd report to a CFO. Dunno though.

The PE firm this guy works for (after some deep googling) is owned by an even bigger PE firm... so it's like a pyramid here

There are some small companies and brands in the transportation field owned by the PE firm my acquaintance works for, then a larger PE firm owns this PE firm.

Is this what corporate America looks like? My eyes are really being opened up here.. Sounds like a lot of people on here have been pounded in the ### by these things.

Predator's Ball

Den of Thieves

Barbarians at the Gate

pretty much are all required reading on this subject.

I'm not going to read those, but i'll consider reading the wiki entry on those books or I'd be happy to read your take if you summed them up into a 3 paragraph or less post.

I did watch Danny Devito's "Other People's Money" is it like that?

Brewster's Millions IMO.

Pretty Woman. chet's friend is dating a hot former prostitute. They go to the opera and stuff. They have their issues, but it all works out in the end because chet's friend really has a heart of gold.

Richard Gere's middle name is Tiffany. I did not know that.

 

[sbonomo]

I had dinner with a friend--let's call him Ray--last week. 4 years ago, he was an M&A attorney and hated his job. One day he quit and told me and some other friends he was going start a private equity firm. I introduced him to another friend--David--who'd started a successful PE fund some 10 years earlier. David said Ray was incredibly naive after they'd done an introductory call.

6 months later, Ray identified his first acquisition candidate and asked if I wanted to invest. I politely declined as it wasn't the right industry, risky etc. He got the deal financed but almost bankrupted his family because he got to the closing and didn't realize he needed to prepay the legal and accounting fees. Somehow, he cobbled together the ~$300k needed to pay the lawyers and accountants and closed the deal.

3-years later, he's bought 5 other companies and has started buying out the original equity investors so he can own everything outright. His group of companies does $25-30MM in cash flow annually. I had dinner with him last week and he was sporting a $100k Patek and was looking at a $25MM plane and getting ready to build or buy a $20MM house.

From zero to hero in under 4-years. Very impressive.

None of these businesses have employees or expenses? Since when does cash flow equal profit?

are you serious? Cash flow loosely defined is the amount of cash a business generates. There are non cash factors that are added back (depreciation, amortization, impairments, etc.). Net profit is a tax definition.

 

[sbonomo]

Chet - i'm not sure if you saw my question - what's the difference between a Corporate controller and a CFO at a PE firm?

TIA

if they have a Cfo and a controller the controller will be in charge of accounting. The CFO will ultimately sign off on the f/s but will not be the day to day accountant. Generally the CFO will be more big picture dealing with banks, clients, investors, etc. Controller deals with accounting staff, auditors, etc. This position for smaller companies is typically combined.

 

[sbonomo]

Pretty sure all PE firms are the devil's spawn

No, GB, they're not. Some are but most aren't.

They provide important financing to companies and aid in business growth and employment. Of course, there are exceptions.

If a friend or family member was happily building his career working for a successful small company, and that company announced it was being acquired by private equity, would you congratulate him on the good news?

Congratulations, your work just tripled and 2 out of 3 of your friends and co-workers will be gone by Tuesday!

unfortunately you actually have to work now. The 5 hours per day you were working before no longer cuts it. If you don't like it there is the door, we'll bring in someone that is willing to work. We are going to turn this into an efficiently running business again which will enhance the value. These companies are not all bad.

 

[Joe T]

Pretty sure all PE firms are the devil's spawn

No, GB, they're not. Some are but most aren't.

They provide important financing to companies and aid in business growth and employment. Of course, there are exceptions.

If a friend or family member was happily building his career working for a successful small company, and that company announced it was being acquired by private equity, would you congratulate him on the good news?

Congratulations, your work just tripled and 2 out of 3 of your friends and co-workers will be gone by Tuesday!

unfortunately you actually have to work now. The 40 hours per week you were working before no longer cuts it, its now 60+. If you don't like it there is the door, we'll bring in someone that is willing to work 60+ hours a week at the same pay. We are going to turn this into an efficiently running business again which will enhance the value and make me a lot of money, but employees will not longer enjoy working here. These companies are not all bad.

Did you enjoy the coffee bar you had before? Say bye bye to that too. It was inefficient.

Pretty true, but fixed a few parts for you.

 

[sbonomo]

Pretty sure all PE firms are the devil's spawn

No, GB, they're not. Some are but most aren't.

They provide important financing to companies and aid in business growth and employment. Of course, there are exceptions.

If a friend or family member was happily building his career working for a successful small company, and that company announced it was being acquired by private equity, would you congratulate him on the good news?

Congratulations, your work just tripled and 2 out of 3 of your friends and co-workers will be gone by Tuesday!

unfortunately you actually have to work now. The 40 hours per week you were working before no longer cuts it, its now 60+. If you don't like it there is the door, we'll bring in someone that is willing to work 60+ hours a week at the same pay. We are going to turn this into an efficiently running business again which will enhance the value and make me a lot of money, but employees will not longer enjoy working here. These companies are not all bad.Did you enjoy the coffee bar you had before? Say bye bye to that too. It was inefficient.

Pretty true, but fixed a few parts for you.

i have found that many companies i have gone into need a major overhaul. granted my expertise is companies teetering on bk but I see it with healthy companies as well. Yes I have to put in 60-70-80 hours per week. Guess what, it has opened a ton of doors for me. So if you are looking for sympathy for only doing the minimum to get by you are barking up the wrong tree here.

 

[Joe Summer]

From zero to hero in under 4-years. Very impressive.

Wow, I didn't realize that M&A lawyers were zeros.