Latest / Financial Survival Network / The Big Players in Private Equity: Insights on KKR, Blackstone, Carlisle, and Apollo - Adam Coffey #6131

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The Big Players in Private Equity: Insights on KKR, Blackstone, Carlisle, and Apollo - Adam Coffey #6131 · Financial Survival Network

0:00
Speaker 1: Well, today it's like KKR, Blackstone, Carlisle, Apollo. Those would
0:04
Speaker 1: be the names that most people would hear about, you know,
0:07
Speaker 1: in the news. But thousands upon thousands of funds you know, and.
0:13
Speaker 2: Firms out there, and a lot of really.
0:16
Speaker 1: Small ones that that people would not have heard of.
0:19
Speaker 1: That you could have less than one hundred million dollars
0:22
Speaker 1: in a fund and be a private equity firm, and
0:26
Speaker 1: generally they wouldn't have a five million dollar minimum investment.
0:29
Speaker 1: They may have a one million dollar minimum investment.
0:31
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0:59
Speaker 4: Ed Welcome you are listening to and watching the Financial
1:02
Speaker 4: Survival Network. I'm your host, Carrie Letz. Hey, we've got
1:05
Speaker 4: to a guest, one of my favorites. Haven't talked to
1:09
Speaker 4: him in a while. He's the author of the Private
1:12
Speaker 4: Equity Playbook, which is the best seller on this topic.
1:16
Speaker 4: A new version is coming up and his name is
1:21
Speaker 4: Adam Coffee.
1:21
Speaker 1: Adam.
1:22
Speaker 4: Great to have you back on. So before we get started,
1:25
Speaker 4: you got to refresh our recollection. What is private equity? Well,
1:30
Speaker 4: Carrie's good to see you. It's good to be back.
1:32
Speaker 1: Hell out all your listeners out there. You know, in
1:34
Speaker 1: lay terms, what's private equity? Everybody on the planet seems
1:38
Speaker 1: to understand and grasp the concept of a mutual fund.
1:41
Speaker 1: We can go on our Schwab account, we can pick
1:43
Speaker 1: a fund, we can invest our money, and then we
1:46
Speaker 1: have instant liquidity.
1:47
Speaker 2: These are public funds. We can sell them.
1:49
Speaker 1: Today later on, you know, this, afternoon, tomorrow, next week,
1:53
Speaker 1: ten years, always total liquidity. A fund manager pools all
1:57
Speaker 1: of the money from the individual investors and then picks
2:00
Speaker 1: a basket of stocks with which to buy and invest.
2:03
Speaker 1: Sometimes we pay fees, you know, or loads to those
2:07
Speaker 1: fund managers, and that's how they make their money, and
2:11
Speaker 1: we're looking for the return. So private equity is similar
2:15
Speaker 1: in construct and concept. You know, most private equity firms
2:19
Speaker 1: they have a fund and the fund lasts for about
2:22
Speaker 1: ten years, you know, so it's a ten year fund life.
2:25
Speaker 1: They can invest money for the first five to six years.
2:28
Speaker 1: They typically when they buy a company a private company,
2:31
Speaker 1: they typically own that company for about five years, and
2:34
Speaker 1: so they're seeking to improve it, grow it, do the
2:37
Speaker 1: things that they do, and then eventually they have to
2:39
Speaker 1: sell it because within that ten year window they have
2:41
Speaker 1: to return all of the capital the proceeds back to
2:45
Speaker 1: the investors. The difference is is that minimum investment size
2:50
Speaker 1: of a private equity fund is about five million dollars
2:53
Speaker 1: and you have to be a credited investor with a
2:55
Speaker 1: ton of money because it's ill liquid This is a
2:58
Speaker 1: private fund buying private companies. You have no liquidity for
3:02
Speaker 1: it could be as long as ten years. So you
3:04
Speaker 1: have to be willing to invest large sums of money
3:07
Speaker 1: and essentially write it off for a very long period
3:10
Speaker 1: of time until it comes back to you at Thentickel
3:13
Speaker 1: end of the fund's life and so no liquidity. Large
3:16
Speaker 1: minimum investments. Ool money from a bunch of investors and
3:20
Speaker 1: then pick, you know, a basket of companies to invest in.
3:24
Speaker 1: Usually they all invest six to eight percent of their
3:28
Speaker 1: fund in any one company and not more than twelve,
3:31
Speaker 1: which means a typical PE firm could own between eight
3:34
Speaker 1: and sixteen companies in one fund. Big funds you know,
3:38
Speaker 1: buy big companies. Small funds buy small companies. A big
3:42
Speaker 1: fund like a KKR or a Blackstone with a thirty
3:44
Speaker 1: billion dollar fund, they couldn't possibly buy small companies. They
3:47
Speaker 1: only have five years to invest the capital. It would
3:49
Speaker 1: take them one hundred years if they were buying small companies.
3:52
Speaker 1: So big funds buy big companies, little funds buy little companies.
3:56
Speaker 1: And you know, thirty three million small businesses in the
3:59
Speaker 1: United State dates only three thousand on the planet that
4:02
Speaker 1: have a billion in revenue.
4:04
Speaker 2: And so as you get bigger, you get rare very quick.
4:08
Speaker 1: Multiples being paid for companies are much higher as a
4:11
Speaker 1: company gets bigger because those you know, large funds have
4:15
Speaker 1: fewer opportunities to put money to work. There's there's more
4:19
Speaker 1: competition and they have to pay more to get the companies.
4:22
Speaker 1: So that's kind of the ecosystem.
4:24
Speaker 4: You know.
4:24
Speaker 1: When I wrote the first edition of the Private Equity
4:26
Speaker 1: Playbook in twenty eighteen, there was two point eight three
4:29
Speaker 1: trillion in assets.
4:30
Speaker 2: Under management at the time.
4:32
Speaker 1: Now there's over six trillion, you know, so we've private equity,
4:35
Speaker 1: even though we thought it was bloated back then, it's
4:38
Speaker 1: more than double than size.
4:39
Speaker 2: Just in the last five years.
4:41
Speaker 4: Okay, So who are the biggest players in the field.
4:45
Speaker 1: Well, today it's like KKR, Blackstone, Carlisle, Apollo, those would
4:49
Speaker 1: be the names that most people would hear about, you know,
4:53
Speaker 1: in the news. But thousands upon thousands of funds, you know,
4:58
Speaker 1: and firms out there, and a lot of really small
5:02
Speaker 1: ones that people would not have heard of. That you
5:05
Speaker 1: could have less than one hundred million dollars in a
5:08
Speaker 1: fund and be a private equity firm, and generally they
5:12
Speaker 1: wouldn't have a five million dollar minimum investment. They may
5:15
Speaker 1: have a one million dollar minimum investment. But just like
5:18
Speaker 1: the amount of companies, how you got a ton at
5:20
Speaker 1: the bottom of the pyramid and you've got only three
5:22
Speaker 1: thousand on the planet with a billion at the top.
5:25
Speaker 2: You've got a bunch of.
5:25
Speaker 1: Pe firms, and there's a whole lot more smaller ones
5:29
Speaker 1: than there are really giant, big ones.
5:31
Speaker 4: Okay, so hey, these little where do you think the
5:35
Speaker 4: opportunity is, Because, like you're saying, there's only so many
5:38
Speaker 4: billion dollar companies out there, maybe you aim lower and
5:42
Speaker 4: you can get higher returns.
5:44
Speaker 1: I think so, I think I'll call it the action
5:47
Speaker 1: in private equity right now is kind of going on
5:49
Speaker 1: in the lower middle market. So these are funds that
5:52
Speaker 1: would be sub a billion, sometimes a billion million and
5:56
Speaker 1: a half, you know, so one hundreds of millions up
5:58
Speaker 1: to a few billion, and call it, you know, in
6:01
Speaker 1: fund size. Lower middle market is where you really can
6:05
Speaker 1: take advantage of this thing called arbitrage. So let me
6:08
Speaker 1: give you an example. I'm working on three buy in
6:10
Speaker 1: builds right now in the accounting, bookkeeping, payroll services type space.
6:16
Speaker 1: And so there's one point eight million small bookkeeping and
6:21
Speaker 1: accounting firms in the US, and so they trade for
6:24
Speaker 1: really low numbers. They generally have very high free cash
6:28
Speaker 1: flow and a very nice profitability profile. They have no
6:32
Speaker 1: capital expenditure, a lot of free cash flow. So if
6:35
Speaker 1: I buy a bunch of small ones and don't pay
6:38
Speaker 1: much for them, I can create something a little bit bigger,
6:41
Speaker 1: and that little bit bigger company now trades for a
6:44
Speaker 1: higher multiple, and so the difference in arbitrage. I might
6:47
Speaker 1: have been paying three times to buy the small one.
6:50
Speaker 1: So every dollar of earnings I'm paying three dollars to buy.
6:53
Speaker 1: You know, I could be selling for ten dollars, you know,
6:57
Speaker 1: five years down the road, making a seven dollars p
7:00
Speaker 1: by doing nothing other than putting a bunch of small
7:03
Speaker 1: good companies together, you know, and helping integrate them and
7:07
Speaker 1: teaching them to scale and and learn how to improve
7:11
Speaker 1: margins and what have you. And as a result of that,
7:15
Speaker 1: the lower middle market, you know, I tend to see
7:17
Speaker 1: multiples of invested capital being higher. So you know, the
7:21
Speaker 1: big boys, if you're buying a company and you're paying
7:23
Speaker 1: a lot for it, because there's not many of them,
7:25
Speaker 1: your return profile is very different than when you're buying
7:28
Speaker 1: these small ones. So in the lower middle market, it
7:31
Speaker 1: would be typical to be modeling four x multiple of
7:34
Speaker 1: invested capital five x multiple invested capital, so for every
7:38
Speaker 1: dollar I invest, I get four to five dollars back.
7:41
Speaker 1: And higher up the food chain, you know, they're underwriting
7:45
Speaker 1: two and a half times you know, maybe maybe three,
7:49
Speaker 1: but really hard to do when you're buying something that
7:52
Speaker 1: that costs you, you know, hundreds of millions of dollars
7:54
Speaker 1: or a billion dollars to buy, you know, and get
7:57
Speaker 1: that kind of a turn in a short period of time.
8:00
Speaker 4: What what are some of the biggest private equity flops
8:03
Speaker 4: that you know about?
8:05
Speaker 1: The biggest private equity flops? Wow, I think there's been several,
8:10
Speaker 1: you know, over over the decades. You know, I could
8:14
Speaker 1: think back to you know, like when when Hostess you
8:17
Speaker 1: know was uh was going from private company or public company,
8:20
Speaker 1: private company, you know, and PE bought it.
8:23
Speaker 2: You see it in a lot of retail.
8:24
Speaker 1: You see a lot of big retail companies that have
8:27
Speaker 1: have have been.
8:28
Speaker 2: Bought by private equity.
8:30
Speaker 1: You know, I mean, without getting into specifics of which
8:33
Speaker 1: fund or which name company, I see a lot of
8:36
Speaker 1: action in retail. That's that's I won't call it questionable,
8:39
Speaker 1: but these are these are typically longer shots. So you've
8:44
Speaker 1: seen a real change, like in just American consumer behavior.
8:47
Speaker 1: So a lot of these big anchor you know, retailers
8:50
Speaker 1: that used to be found in shopping malls.
8:52
Speaker 2: Well as malls are dying.
8:53
Speaker 1: A lot of those big brands are dying too, and
8:56
Speaker 1: private equity has stepped in trying to reach you innate them.
9:01
Speaker 2: You know, we talked off camera.
9:02
Speaker 1: It's like, you know, there are some some subsets of
9:04
Speaker 1: private equity that are called distressed asset funds. So they're
9:08
Speaker 1: they're looking for these companies that are like one step
9:11
Speaker 1: away from from bankruptcy. And you know, once upon a
9:15
Speaker 1: time they may have been very successful companies, but now
9:18
Speaker 1: they've fallen on hard times, and there's funds out there
9:20
Speaker 1: that look for deals like that where potentially you have
9:24
Speaker 1: enough assets in the company to kind of recover your investment.
9:29
Speaker 1: So you're you're kind of buying it below book value
9:31
Speaker 1: of the assets and you're swinging for the fences trying
9:34
Speaker 1: to bring them back. And if you can't, you know,
9:37
Speaker 1: oh well, I sell off the assets and I make
9:40
Speaker 1: some money on you know, on the assets for my investors.
9:43
Speaker 1: So some people are out there looking for those distressed opportunities.
9:47
Speaker 1: These are companies that probably would have failed, you know,
9:49
Speaker 1: somewhere along the way eventually, and uh and private equity
9:54
Speaker 1: brought in some capital and tried to tried to save them.
9:57
Speaker 2: Yeah, okay, So.
10:00
Speaker 4: You know, there's going to be winners and losers in
10:03
Speaker 4: every endeavor in life, in business, just the way it is.
10:09
Speaker 4: But if you're looking to invest in private equity funds,
10:15
Speaker 4: how do you do it? What's the best way to
10:17
Speaker 4: go about it?
10:18
Speaker 1: Well, you know, so first we have to pick our
10:20
Speaker 1: kind of our favorite flavor. Let's say I like the
10:24
Speaker 1: lower middle market, as I said, because I think the
10:26
Speaker 1: average returns are higher and there's so many small companies
10:31
Speaker 1: in the US, you know, and around the world in
10:33
Speaker 1: every country that that.
10:35
Speaker 2: The mechanics of what's going on in.
10:37
Speaker 1: The lower middle market, I think are just more favorable
10:39
Speaker 1: to good returns, and so I can do research about funds.
10:42
Speaker 1: You know, one of the companies I ran was owned
10:44
Speaker 1: by a great company, call it called the Autax Group.
10:47
Speaker 2: They're out of Boston.
10:48
Speaker 1: On any given day they own fifty plus portfolio companies
10:51
Speaker 1: that are all lower middle market. They're kind of affirmed
10:54
Speaker 1: that buys companies that have about fifteen million dollars in
10:57
Speaker 1: earnings and they take them up to about fifty and
11:00
Speaker 1: then they sell them upstream to some bigger pe funds
11:03
Speaker 1: and so on. A company like that, if I, if
11:05
Speaker 1: I do some just basic Google research, you know, tell
11:08
Speaker 1: me about private equity firms that invest in the lower
11:11
Speaker 1: metal market.
11:12
Speaker 2: I can get a list of names. I can now
11:13
Speaker 2: go to their websites.
11:14
Speaker 1: I can I can look at their investor you know sections,
11:18
Speaker 1: and I can start thinking and reading and looking at
11:21
Speaker 1: the kinds of companies that they own. And you know,
11:25
Speaker 1: with some basic research, I can develop a profile.
11:29
Speaker 2: There are ratings out there.
11:31
Speaker 1: They're private, you know, it's hard to get a hold
11:34
Speaker 1: of the data without subscribing to a service that can
11:37
Speaker 1: cost a lot of money. But if I'm a big
11:39
Speaker 1: family office and I'm considering, you know, investing in private equity,
11:44
Speaker 1: you know like morning Star for private you know, for
11:47
Speaker 1: mutual funds, I can find ratings on past performance and
11:50
Speaker 1: history of different pe firms and how their funds have done.
11:53
Speaker 1: And you know, as a result, I can try to
11:56
Speaker 1: use you know, call it past history as an indicator potentially.
12:01
Speaker 2: But and then that's it's you know, all of these
12:04
Speaker 2: firms really think they have they have half.
12:06
Speaker 1: Of the firm is focused on raising the next fund
12:09
Speaker 1: and the other half is investing and operating the companies
12:12
Speaker 1: that that they that they buy. And so there's always
12:15
Speaker 1: someone that I can talk to. And they frequently hold
12:18
Speaker 1: conferences and investor meetings where I can then come and
12:21
Speaker 1: hear them talk in person.
12:23
Speaker 2: You know.
12:23
Speaker 1: Annual meetings are always fun where they have CEOs up
12:26
Speaker 1: talking about the companies that they're building. So, you know,
12:29
Speaker 1: with some research, we can we can develop a list
12:31
Speaker 1: of names. We can we can, but it takes it
12:34
Speaker 1: takes the good old fashioned shoe leather of you know,
12:36
Speaker 1: having to sit down and do some research just like
12:39
Speaker 1: any other stock we invest in, you know, we we
12:42
Speaker 1: we have to do.
12:43
Speaker 2: If we do research, we we tend to have better picks.
12:46
Speaker 4: Okay, I'll buy that. Hey, any particular trends at them
12:50
Speaker 4: in private equity now that we should be aware of.
12:53
Speaker 2: Well, so, you know, in in the last four or
12:55
Speaker 2: five years, we we left you know.
12:58
Speaker 1: Call it the period of low to no interest rates,
13:02
Speaker 1: which allowed private equity firms to pay really high multiples
13:06
Speaker 1: for companies and to lever, you know, comfortably lever you know, uh,
13:10
Speaker 1: you'll call it half of the purchase price because the
13:14
Speaker 1: debt was so cheap, and typically what a PE firm
13:17
Speaker 1: buys a company, they used a combination of debt and equity. Recently, though,
13:21
Speaker 1: interest rates have been ticking up, you know, and although
13:24
Speaker 1: they're not record high, they are higher than they've been
13:27
Speaker 1: in decades. And so you know, I remember, I remember
13:30
Speaker 1: as a kid in the eighties, you know, house you know,
13:31
Speaker 1: if you're buying a house, you know, mortgages could be
13:33
Speaker 1: in the teens, you know, but but they are high.
13:36
Speaker 1: And so as interest rates ticked up, that that created
13:40
Speaker 1: an environment where we couldn't lever as much debt when
13:45
Speaker 1: we were buying a company. And so I'll tell you,
13:47
Speaker 1: you know, carry a game of chicken was played last year.
13:50
Speaker 1: For about the first six months of the year. We
13:53
Speaker 1: had sellers, you know, founders, you know, who had high
13:55
Speaker 1: expectations on value and they're looking for really high purchase
13:59
Speaker 1: prices because that's the way the market's been for the
14:01
Speaker 1: last five years. And and then we had buyers who
14:03
Speaker 1: were saying, I can't write you know, as you know,
14:07
Speaker 1: it's like if I, if I can't lever as much
14:09
Speaker 1: debt because of high interest rates, my equity check has
14:12
Speaker 1: to be much much larger to do the same kind
14:14
Speaker 1: of deal that that sellers are expecting.
14:17
Speaker 2: And so let me just tell you that that founders.
14:19
Speaker 1: Won the game of chicken, you know, because the one
14:22
Speaker 1: cardinal sin of private equity is if I have a
14:25
Speaker 1: fond is I can't do anything. I have to invest
14:28
Speaker 1: the capital or I can't raise my next fund. And
14:31
Speaker 1: that's because investors, you know, I'm I'm an LP, a
14:34
Speaker 1: limited partner in several PE funds, and you know it's
14:37
Speaker 1: like if I'm holding my money out on the side
14:40
Speaker 1: waiting for you to call my capital, unlike a mutual fund,
14:43
Speaker 1: I don't send my investment in up front. You know
14:46
Speaker 1: the reason that that happens that ways because then private
14:48
Speaker 1: equity would have to calculate the returns based on.
14:51
Speaker 2: The day I sent the money in, and they're like.
14:53
Speaker 4: You did it right, And then that doesn't look good
14:55
Speaker 4: because tom right yep.
14:58
Speaker 1: So they delay calling the cap until they have a
15:00
Speaker 1: company to buy, and then then they call the capital.
15:03
Speaker 1: So I as an investor, I'm holding the money out
15:06
Speaker 1: and I can't put it in the stock market.
15:07
Speaker 2: I need to be ready to send it in whenever
15:09
Speaker 2: it's called. They've gotten five years to do that.
15:11
Speaker 1: And so you know, if if I can't put in
15:14
Speaker 1: the market where I could get an eight percent average
15:17
Speaker 1: return over a thirty year period, you know, I'm looking
15:19
Speaker 1: for sixteen to twenty percent, which is what the better
15:22
Speaker 1: private equity firms are doing is doubles and p.
15:24
Speaker 2: Five hundred, you know.
15:25
Speaker 1: And if you don't put my money to work, I
15:27
Speaker 1: don't get the sixteen to twenty. I also don't get
15:29
Speaker 1: the eight percent. I get whatever the prevailing money market
15:32
Speaker 1: or you know rate is. And now I'm pissed. And
15:34
Speaker 1: so you come back and say, hey, Adam, I'm raising
15:37
Speaker 1: a new fund, and I say, you know, you didn't invest.
15:39
Speaker 2: My last capital. No way am I giving you more.
15:42
Speaker 1: So this game of chicken that got played last year
15:44
Speaker 1: could only last for a finite amount of time, and
15:47
Speaker 1: eventually the PE money had to start flowing again, and
15:49
Speaker 1: so the founder's won. I'd say that valuations are kind
15:53
Speaker 1: of down a little bit in a lot of industries,
15:56
Speaker 1: but still very lofty valuations being paid. What's happening now
16:00
Speaker 1: is private equity funds are writing bigger equity checks, or
16:03
Speaker 1: they're bringing in co investors, some limited partners that they
16:06
Speaker 1: want to reward and they're letting them. You'll also make
16:09
Speaker 1: co investments, and so the money has to flow. So
16:12
Speaker 1: deal flow is back to kind of normal. And what
16:15
Speaker 1: will happen ultimately, you know, you think of why, and
16:17
Speaker 1: you think of vintage. You know, this year was a
16:19
Speaker 1: good year, that year was not a good year. Well,
16:21
Speaker 1: all private equity funds are rated based on their vintage,
16:26
Speaker 1: and the vintage of a PE fund is the year
16:28
Speaker 1: they make their first investment. So as long as all
16:31
Speaker 1: funds are being rated the same set of economic conditions,
16:36
Speaker 1: you know, it's okay if returns are moderated for this
16:40
Speaker 1: higher interest rate period, because ten years from now, by
16:43
Speaker 1: the time all these funds are dead and gone, they'll
16:45
Speaker 1: have already raised three more.
16:46
Speaker 2: Funds and this will be ageing history.
16:48
Speaker 1: So that's some of the trends I've seen is a
16:51
Speaker 1: little bit higher equity checks, a little bit lower on
16:53
Speaker 1: valuations right now. And you know, hey, everyone's looking for
16:57
Speaker 1: interest rates to come down back half of this year.
17:01
Speaker 1: Is it could be much as a point, which what
17:03
Speaker 1: you're feeling, Yeah, I think, well, I think yesterday we
17:08
Speaker 1: saw that eight hundred and eighteen thousand job you know,
17:10
Speaker 1: job gains were reversed, so that puts extra pressure on
17:14
Speaker 1: the FED. So I'm expecting half a point in September,
17:18
Speaker 1: and I'm expecting could be another half a point before
17:20
Speaker 1: the end of the years. So and they've been saying
17:23
Speaker 1: for for over a year, you know, the downward pressure,
17:25
Speaker 1: all pressure has been interest rates are going to come down.
17:28
Speaker 1: The question is with what speed. And at some point
17:31
Speaker 1: they'll normalize to a more normal level. And you know
17:35
Speaker 1: that that that's a few points down from where we're
17:38
Speaker 1: currently at, you know, and and people are looking for
17:41
Speaker 1: that to happen over the next eighteen to twenty four months,
17:43
Speaker 1: and so that should also aid you know, private equity
17:47
Speaker 1: deal making getting done. You know, a lot of people
17:49
Speaker 1: think private equity brings a ton of capital to the table,
17:51
Speaker 1: but what they actually do is once they buy the
17:54
Speaker 1: platform company using roughly fifty percent debt fifty percent equity historically,
18:00
Speaker 1: they then put the checkbook away. So if they're doing
18:02
Speaker 1: a buy and build and buy in fifteen twenty companies,
18:05
Speaker 1: they're using all their debt, you know, on that are
18:08
Speaker 1: are trying to use as much debt as possible on
18:11
Speaker 1: that part of the equation to build companies so that
18:13
Speaker 1: they can preserve their capital to buy more companies as platforms.
18:17
Speaker 1: And you know, but you know, I would say that
18:21
Speaker 1: most PE firms are not over levering companies. You know,
18:25
Speaker 1: you hear about that in the news, But you know,
18:27
Speaker 1: in reality, if a typical American buys a house and
18:30
Speaker 1: they have a fifty percent down payment on that house,
18:33
Speaker 1: most Americans would say, I'm not over levered. They would
18:36
Speaker 1: be applauding the fact that they've got fifty percent equity.
18:39
Speaker 2: In their in their home, you know.
18:40
Speaker 1: And and so I'm always when I'm looking at deals,
18:43
Speaker 1: you know, I'm looking for at least two times the
18:46
Speaker 1: cash coming out of the company that I need to
18:49
Speaker 1: service the debt. So at two to one debt service
18:51
Speaker 1: coverage ratio is what I personally model when I'm involved
18:55
Speaker 1: in doing buy and builds because if there is an
18:57
Speaker 1: economic downturn in a company's earnings, saw, I want to
19:01
Speaker 1: make sure that there's adequate cash flow within the business
19:04
Speaker 1: to continue to the service the debt that's required. So
19:08
Speaker 1: ideally you don't overlever, you put the right amount of
19:11
Speaker 1: leverage on so that you have good debt coverage ratios.
19:15
Speaker 4: Okay, so private equity it beats working well.
19:19
Speaker 1: You know, I'm still setting in an office. I turned
19:22
Speaker 1: sixty this year. Carry it and I said, I said,
19:26
Speaker 1: after you know my you know, my third company, I
19:29
Speaker 1: was like, I'm not going to do a fourth, big one.
19:32
Speaker 1: I have ten years left in my career, you know,
19:34
Speaker 1: in my own estimation, And so I've decided I'm going
19:37
Speaker 1: to spend the next ten years teaching as many entrepreneurs
19:41
Speaker 1: and business owners how to succeed beat the odds, you know,
19:46
Speaker 1: and use the same tools that private equity uses on
19:50
Speaker 1: a large scale, and I'm going to teach them how
19:52
Speaker 1: to do it on a small scale. So I'm working
19:55
Speaker 1: on eighteen buy in builds in total right now, really
19:59
Speaker 1: smaller entrepreneurs, smaller companies, learning how to use MNA as
20:04
Speaker 1: a tool, learning how to accelerate organic growth, improve margins.
20:08
Speaker 1: And so I'm teaching smaller businesses how to how to
20:12
Speaker 1: use you know, what the private equity world has taught
20:15
Speaker 1: us over the last you know, thirty years, you know
20:18
Speaker 1: or so and use it to their advantage. So instead
20:22
Speaker 1: of making the shareholders you know, of these big funds
20:25
Speaker 1: and firms, you know, billions, let's teach small guys how
20:29
Speaker 1: to make one hundred million, you know, or millions.
20:31
Speaker 2: And I could win with that.
20:33
Speaker 4: Yeah.
20:33
Speaker 1: So that's that's that's going to be the next ten
20:35
Speaker 1: years of my life is working with small companies. So
20:38
Speaker 1: I'm working with sixty eight small companies eighteen doing buy
20:42
Speaker 1: and builds and.
20:43
Speaker 2: Having a lot of fun. I'm working more hours now
20:46
Speaker 2: than when I was a CEO, and you know, so,
20:49
Speaker 2: I guess, but you don't feel like you're working, right,
20:51
Speaker 2: I don't feel like I'm working. I'm having fun. So
20:54
Speaker 2: why not? Yeah? All right, Hey, great having you on again.
20:58
Speaker 4: Just tell us how we find you on the web,
21:01
Speaker 4: how we connect with you, Twitter, social media, website, all
21:04
Speaker 4: that stuff.
21:05
Speaker 2: Yep.
21:05
Speaker 1: I don't, you know, don't have a social media team.
21:08
Speaker 1: You know, I'm on LinkedIn multiple times a day. I'd
21:11
Speaker 1: say best platform to reach out to me directly.
21:14
Speaker 2: Is LinkedIn, and you're going to hear from me.
21:16
Speaker 4: You know.
21:16
Speaker 1: My books are available on Amazon or anywhere you find
21:19
Speaker 1: books and all versions audible and ebooks and softcovers and hardcovers,
21:24
Speaker 1: so whatever you like to read. I can tell you
21:27
Speaker 1: that based on all my sales, seventy three percent of
21:30
Speaker 1: people out there in the world still like holding, you know,
21:33
Speaker 1: a book in their hands and flipping paper pages at
21:36
Speaker 1: least my Yeah, that's that's kind of the demographic numbers,
21:40
Speaker 1: like seventy three percent, you know, and then the the
21:42
Speaker 1: others are are split between ebook and audiobook.
21:47
Speaker 4: All right, excellent, Hey, appreciate you coming on as always, Adam,
21:51
Speaker 4: I want to definitely touch base with you sooner before
21:54
Speaker 4: your next update of book comes out, and just take
21:57
Speaker 4: tell us again the name of the book.
21:59
Speaker 1: Name of the book is the Private Equity Playbook, second edition,
22:03
Speaker 1: the first editions up there on the wall. And you know,
22:07
Speaker 1: I decided after five years it was time to update.
22:10
Speaker 1: You know, so much stuff has happened in the world,
22:12
Speaker 1: so I appreciate everybody out there's for listening and for
22:16
Speaker 1: your support.
22:16
Speaker 2: So Carrie, good to see it.
22:18
Speaker 4: Hey, and I guess we find that book wherever fine
22:21
Speaker 4: books used to be sold.
22:22
Speaker 1: That's it, you know, or Amazon where current books are sold.
22:26
Speaker 4: Okay, Hey, it's got a question for Adam or myself.
22:30
Speaker 4: Feel free to shoot me an email kl Atcarrie lets
22:33
Speaker 4: dot com and you'll find a link to Adam's LinkedIn
22:39
Speaker 4: that works. Yeah. On the show notes this interview on
22:43
Speaker 4: Financial Survival Network dot com. Adam Pleasure. We'll talk to
22:46
Speaker 4: you again soon.
22:47
Speaker 3: Take care, Carrie, thanks for listening to Carrie Letz's Financial
22:51
Speaker 3: Survival Network, your solution to today's trying times. For the latest,
22:56
Speaker 3: go to Financial Survivalnetwork dot com. Financial Revival Network now
23:02
Speaker 3: more than ever