LMM Business Owners?
For those of you who work(ed) in LMM PE or IB, have you ever encountered instances where a proprietor may be sitting on a decently run small business, yet seem to not be operating it in the most optimal way, or appear to not even fully grasp the intrinsic value or latent prospects of their asset?
If so, how do you work with them to bridge this perceptual gap, and align their perspective and understanding with your strategic insights? Are there instances where you would be more inclined to gatekeep some information from them?
Would be happy to hear your experiences and insights.
Lol yes, I've encountered so many of these in LMM
Bump interested
You mean every LMM business ever?
Also, what is the context of the business? Do you mean one we've acquired, were considering acquiring, or one that we just know of?
How would your approach or mentality vary in each of these scenarios from your experience?
Or even if you have a friend, extended family member or acquaintance who runs a small business, but could be more efficiently operating it but maybe isn’t seeing it in the way you may
Yes but also see plenty (maybe equal) number of businesses where the opposite is true and the owners overestimate the value of their offering / markets they serve.
I would argue for every “diamond in the rough” there’s about 10 of these.
Some guy who runs a business doing $5M EBITDA that thinks KKR is going to buy it for 30x EBITDA when the thing is worth 7x.
I think the stereotype of LMM businesses is that some guy runs a great business with 0 effort and you can come in and make them use accounting software and make it magically grow 20% a year. That just isn’t the case anymore and most of those assets have already been snatched up by someone
It would be important to help people see the value of their business for what it is, so they don’t get into a potentially unfavorable deal. Unless you’re the buyer of course
This is literally my job lol
Very common, but also common for PE guys to think they know how to run a business :)
Reality is somewhere in-between.
Most of you only have exposure working with top-tier talent curated for you by an old AF bank/PE firm/consulting group...all being paid out the ass.
Guess what happens when the avg person you work with makes $60k and not $300k? lol
:)
Absolutely, try getting Debbie who has been in the accounting department for 22 years to do anything and you're getting a blank stare. Have fun trying to hire a machinist who no-shows or never return after the first day of work. What kind of talent can you hire when you can only afford to pay $75k to an engineer with >10 years of experience? Oh, you want to implement a CRM for the sales team? After all the money spent and effort training everyone, you'll come to find that they've been using it insufficiently at best or stop using it entirely after two months at worst.
Welcome to the LMM
That's what LMM is like? How about other places
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