Where Private Equity Firms Come into Play

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A private equity firm is in the business of buying, growing, and exiting companies, hopefully for more than they bought it for. For every industry there is a private equity firm out there.

As private equity diversifies, what are the key trends changing the nature of the deal? Today we are discussing where private equity firms come into play in the buying and selling space.

Today’s guest, Andy Jones, is the founder and owner of PrivateEquityInfo, a private equity database that helps investment bankers and private equity firms close more deals by taking a look at the top trends to look out for when scouting an acquisition target. One major trend we discuss is the holding periods for private equity and how those can often reveal the direction of the overall economy. Studying these and other trends are useful for potential buyers to understand what to look out for in an acquisition deal.

Episode Highlights:

  • Andy’s history with Private Equity Info.
  • A look at a typical private equity deal.
  • What sellers should know about the private equity industry.
  • Buyers don’t want the ugly marbles. Why buyers prefer asset deals over stock deals.
  • What ebita sizes private equity firms are looking for and why the size requirements are in place.
  • Smaller ebitas and add-on investment trends in the private equity arena.
  • Why larger acquisitions still make more sense.
  • Best ways to find the private equity for your business.
  • We touch on the topic of microfunds; what they are and how they work.
  • Typical deal structures that Andy comes across.
  • Why business founders don’t have the same appetite for risk as PE firms.
  • The typical holding period before an exit. How long is it?
  • Exuberance trends typically show up when those holding periods experience a decline.
  • Andy shares his top ten trend list for 2018.

Transcription:

Joe: Mark, I understand you had a great conversation with Andy Jones from PrivateEquityInfo.com.

Mark: Yeah private equity is one of these things that buyers and clients that we talk to and even … I’m sorry sellers and clients that we talk to and buyers as well often ask us about. Is private equity buying online businesses? Are they buying Amazon businesses? Are they buying SaaS businesses? Where do they start buying? When do they … what are the lines for it? How does it work? Andy Jones is somebody that I’ve known now for probably seven, eight years. He’s always been very primed by complimenting me on the content we put out. So anyone that complements me is immediately somebody I like and so we talked about having him on the podcast-

Joe: Hold on just a second, you’re awesome Mark. You’re a really good guy and I’m proud to be your partner.

Mark: I thought you’re stopping the podcast here.

Joe: No, I’m just complementing you; that’s all. Like you see I just wanted to be liked by you today.

Mark: Okay well continuing … thank you, Joe. We will talk about increasing your equity stake in Quiet Light Brokerage after this call.

Joe: Awesome.

Mark: It’s kind of easy guys, it’s really that easy. And so Andy has PrivateEquityInfo.com. It’s a fantastic database of private equity activity across the spectrum. So anything from manufacturing to the online world but something that they do at PrivateEquityInfo.com is they take a look at the trends and what is going on in the world of private equity and these can be leading economic indicators. And he gave me one trend in particular, I’m going to let him get into the details of it but it’s

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