By executing a strategy I posted about a few years ago on here, we own a bunch of minority equity slices in profitable companies with decent growth. All in consumer with ~10% - 20% EBITDA margin and usually growing ~1.1x - 1.5x YoY.
Most of them pay dividends.
What should I do with these? Some of the companies will exit, some will keep doing what they are doing for a while, etc...
But I wonder if any of you big brain wall street fellas have ideas for how I can scale up the capital base for this.
Can I get someone to loan $ against it so I can scale the strategy? Do you guys think an LMM private credit fund would be interested in something like that? Just straight up lending against the cash flow from the dividends and a bit more to account for the value of the equity?
I do NOT want to turn it into a fund because I think size makes the strategy way less effective and harder to pull off. I dont think there's much capacity. Also I'm having a lot of fun doing this at the current size. So scaling the strategy via debt is pretty interesting, but probably not via a true fund and raising equity.
Based on the most helpful WSO content, here are some strategies to monetize a bundle of minority equity slices in profitable companies:
Leveraging Debt:
Maintaining Current Strategy:
Potential Investor Interest:
Considerations for Scaling:
By leveraging these strategies, you can effectively monetize your minority equity slices while maintaining the flexibility and enjoyment of your current approach.
Sources: Scaling A Single-Family Rental Acquisition Strategy, Q&A: I’ve held Pre-MBA MM LBO, Growth Equity and Venture Capital investment roles for funds with $500M+ AUM to $5B+ AUM, Raising Capital--Track Record?, Lmao Tesla, Q&A: Currently at a Credit Hedge Fund
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Have dealt with something like this years ago, a portfolio of minority slices but very messy with different structures. Will DM when my day opens up. Think your idea of leverage to scale has legs.
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