Operating Partner 1.0, 2.0, 3.0, 4.0
The evolution of Operating Partners in Private Equity: Operating Partner 1.0 (1990-2010): Retired CEO. But weren't
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Share Mgmt Fee w/ Seller?
It can feel awkward to impose a ~$250-400k mgmt. fee on a newly acquired company, especially if (i) the
More Upside, Same Downside: What 815 IS Deals Show
815 independent sponsor (“IS”) deals analyzed: IS deals have a similar risk profile to traditional PE deals, with greater upside.
Losing a deal to a strategic
Losing a deal under LOI when a strategic buyer swoops in with $7m more = brutal. Time kills all deals, exhibit
Arrogant NDA
"Please return the signed NDA (no revisions please - we're juggling numerous potential investors and need to be
Cost of a full deal team
$1.0-1.5m per year is the cost of a fully staffed deal team at a PE fund, excluding
Avoid 1st deal in rollup to be premium valuation
I don't love when the first LOI in a rollup thesis is at a premium valuation. "We&
Investor bringing lender
“My deal has $1.6m of EBITDA. I was looking for a conservative, non-PG senior note, of maybe $2m,
CEO threatened to blow up deal
$112m exit, hugely successful deal: I was just chatting with one of the board members. As the big sale got
Good legal hygiene
If you're in a legally sensitive situation: limit written communication. That's my # 1 advice for legal
Do a sell-side QoE when you exit
Do a sell-side QoE when you exit. Benefits: • Higher valuation (see chart below from GF Data). • You can include
US Citizenship
I am officially a US citizen! The Naturalization Ceremony was a memorable & meaningful occasion; Judge Natalie Adams and the
"Our buyer has spent $2.5m on DD so far."
"Our buyer has spent $2.5m on DD so far." If you're exiting, the buyer'
$50m Rollup vs. $2.5m LBO
Just met a first-time searcher with a $2.5m deal under LOI at below 4x. Option A: The Standard
Avoid $2m EBITDA deals
A $2m EBITDA deal is treacherous. At 5x, it's $10m EV. If you double EBITDA, which is a
Where you live affects how you think
Where you live affects how you think. New York: AUM, fees & commissions. Your friends work at funds, your rich
Ping pong duel at SMB Work
Ping pong duel vs. Sam Rosati at SMB Work in Tampa. They do an amazing job hosting independent sponsors and
Estimated deal expenses for independent sponsors
Deal expenses: • Legal: $100-300k • QoE: $20-70k • Misc.: <$100k • R&W insurance: ~1% (uncommon) • Closing fee: 1-
The Big Beautiful Bill
The Big Beautiful Bill just passed. The two biggest and most beautiful takeaways for private equity: 1. Carried interest = No
PE Funds Aren't More Likely To Close
A seller may think a PE fund with committed capital is more likely to close than an IS. I disagree.
Zone-Skipping EBITDA
Zone-skipping is a foundational principle in lower-middle market PE. Scaling EBITDA into the next zone unlocks higher valuation
2nd Tier Cities As Competitive Advantage
Most people in Milwaukee, Wisconsin, are probably not contemplating a career as an independent sponsor, and, if they do, they
5 Pillars of Deal Structure
The 5 Pillars of Deal Structure: 1. Cash at close. Inversely correlated with valuation (the less cash the seller requires
Twitter = Biggest Ever Independent Sponsor Deal
Elon Musk's take-private acquisition of Twitter is the biggest independent sponsor deal of all time. Deal-by-
