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So I received many comments from all of you following my last couple of posts regarding raising capital. Well, they are pretty basic, like, "how do you raise capital?". And of course what this means is that not everyone has a lot of capital, otherwise they wouldn't be doing leveraged buyouts? No, that's not right either. Even if we have capital we don't have enough capital. Private Equity raises capital ...

I had some follow-on thoughts (using an LBO phrase) from yesterday's article about the "superabundance" of capital in today's financial markets. I hope it also gives you some insight into how to handle the changes in attitude towards today's business buyers. First, a story. Years ago when I started out doing deals and talked to many brokers there was one in particular than called me a "leveraged buyer" as if ...

A long time subscriber recently sent me the Global Private Equity Report by Bain Capital for 2015.  Which should spur on a conversation of what is happening with private equity and how it affects us LBO buyers in smaller markets. Let me simplify what should be a complicated subject. The theme of the Bain report is "capital superabundance". Which actually could have been the theme going back 25 years to ...

What did he say? What junk. All saying much the same thing in a different way. First of all let me clear up the confusion about all these crazy letters. 1. What is DCF? Discretionary Cash Flow or Discounted Cash Flow? Big difference. Discounted Cash Flow is a valuation method taking into account the net present value of future income projections. This is not what we are talking about, we ...

I started out doing LBO's on an "ad hoc" basis. That is another word for "bootstrapping" which is another word for "I'm broke and don't have access to capital". I abhorred the idea of putting together a  formal buyout fund, which seemed a daunting task, so I did my bootstrap deals with high leverage, partners and/or individual investors. Managing a horde of small investors, or a bunch of cranky institutional ...

Most of my students and subscribers want to buy a business fast. This is for obvious reasons. Mainly that time is money, money is what they need and the sooner they close a deal the more money they will start collecting. I believe this is why people get sucked into buying very small companies such as main street stores, convenience stores, gas stations, dry cleaners, pizza restaurants etc. Essentially most ...

These are the fathers of modern leveraged buyouts. KKR, Wesray, Textron. Perhaps you haven't heard of Royal Little as much but he was every bit as colorful although before even my time. One could have added Warren Buffett to this group but he started out as, and remains, first and foremost an investor - and a dealmaker as an afterthought. The other guys went on acquisition binges using leveraged buyout ...