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I read hundreds of confidential information memorandums ("CIMs") on companies for sale every year. Most are poorly done including many of the ones by the best middle market investment banks. Lets talk about it....
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John Caple
2,950 posts
John Caple
@BigJohn043
20+ Year Value PE Investor
Focus on Industrials and Business Services
Florida
Joined June 2009
- Lots of talk about tariffs for obvious reasons today. I keep seeing people asking for the "smart" argument for tariffs. I am not sure I agree with how the administration is doing this but let me give it a try. A thread....
- This story from @chamath on the experience of 8090 trying to sell software to PE is an almost perfect example of the differences between PE & VC. So 8090 meets with a bunch of PE Partners and pitches the idea that they can do custom built, AI native software, that can make youWho’s going to tell him? @chamath claims his AI software dev company, 8090, has been evaluated by “all the big, major” PE firms and their portcos. Precisely ZERO have hired 8090. He says this is because those are “B and C companies” run by “C and D players.” He literally
00:00 - In my 25 year private equity career I have seen a lot of things change. We used to buy companies for 5x EBITDA with 1x equity. The power of financial engineering was awesome. If you could do drive EBITDA in any meaningful way the leverage meant that the path to 10x your money
- Replying to @BigJohn043Second, we import a ton from China. For most of my life the theory was if China became first world they would move away from being a totalitarian dictatorship and respect human rights. Not going to happen. Very dangerous to be dependent on China.
- In my 20+ year PE career, I have found the easiest way to consistently make money is to play the multiple arbitrage between different size deals. Let me explain. The data below is from GPScout on deals between 1996 and 2024. It is about 12K observations. Deals <$100M EV (think
- Replying to @BigJohn043First, we are getting ripped off in global trade. Our markets are open and almost everyone is charging us both tariffs and non tariff trade barriers. We aren't going to fix this by asking pretty please. We need to say we will do it as well....
- Replying to @BigJohn043BTW, countries like Vietnam, India & Malaysia have a huge opportunity. Lower their trade barriers and production for the US will shift there from China. At least one if not all of them will do this and end up big winners.
- Replying to @BigJohn043Will production move back to the US? Probably somewhat. We aren't going to make clothes here but more of what we consume could be produced in the US.
- I was an investment banker out of undergrad. I worked my ass off. I was 22, what the heck else did I have to do that was so important? I thought it was a blast. I was a young little sh*t that didn't know anything and I was getting to participate in all of these coolRamblings of a (recovering) investment banker: When I was a junior banker, we were working on a sell-side mandate that had at best a 50-50 chance of closing. Highly cyclical business and the economy was shakey. You get the picture. Not great. Grinding away on the CIM all
- Replying to @BigJohn043But the real truth is that tariffs are just a tax. They are a tax on imported goods. Right now we have a ton of debt and a huge budget deficit. We need to close that gap. And while Elon is very smart, he probably isn't going to find $2T.
- Anyone looked at the 13 week cash flow forecast in the First Brands bankruptcy? Expecting to burn almost a billion dollars in 13 weeks. This is very ugly.
- Replying to @BigJohn043So the summary argument: 1) Get us better deals for our products 2) On the margin, shift production to the US 3) Shift production to better trading partners 4) Raise some tax revenue in a reasonably efficient manner.
- Best career advice I ever got was from my Dad. He told me to just start doing your bosses job. Don't ask permission just start doing it. Eventually they will give it to you.....Some good career advice I received when I was younger: Find the 3 to 5 people you want to model your career after. Look at what roles they have held. Work backwards and follow that path Working backwards is much more insightful than thinking forward when career planning
