Rob Parker

A lot of those will do direct investing. That's right. And they're all competing for a lot of the same deals, which drives up valuation. So for the price that they have to pay to buy a great business, for the investing window that they have, typically four to six years, That's a short window to try and double or triple your investment. So leverage is a powerful way to do that.

A lot of those will do direct investing. That's right. And they're all competing for a lot of the same deals, which drives up valuation. So for the price that they have to pay to buy a great business, for the investing window that they have, typically four to six years, That's a short window to try and double or triple your investment. So leverage is a powerful way to do that.

Another powerful way to do that is by doing a lot of acquisitions, which you see a lot of these firms do. You mentioned delayed draw term loan, a DDTL. That's a lending facility that gets put in place by a bank at closing that you can then go tap into to do acquisitions.

Another powerful way to do that is by doing a lot of acquisitions, which you see a lot of these firms do. You mentioned delayed draw term loan, a DDTL. That's a lending facility that gets put in place by a bank at closing that you can then go tap into to do acquisitions.

So using leverage can be very powerful in the private equity world, both for the private equity firm and their investors, as well as for the entrepreneur that rolled equity into the new deal.

So using leverage can be very powerful in the private equity world, both for the private equity firm and their investors, as well as for the entrepreneur that rolled equity into the new deal.

yeah so a platform if you think of a platform platform is sort of as the name implies it's a a platform is a structure that can support a lot of things on top of it so in the private equity world in our world a platform is the initial investment that a private equity firm will make it is the sort of the anchor investment or the platform investment it's the original one that they will then use

yeah so a platform if you think of a platform platform is sort of as the name implies it's a a platform is a structure that can support a lot of things on top of it so in the private equity world in our world a platform is the initial investment that a private equity firm will make it is the sort of the anchor investment or the platform investment it's the original one that they will then use

to add companies onto. So go do acquisitions inside of that platform. So maybe it's a roofing platform or an HVAC platform or garage door services platform. There's the initial core company with a management team and ERP system, processes, technology, all of those foundational things that you need.

to add companies onto. So go do acquisitions inside of that platform. So maybe it's a roofing platform or an HVAC platform or garage door services platform. There's the initial core company with a management team and ERP system, processes, technology, all of those foundational things that you need.

And then you go out and do acquisitions of smaller companies, maybe a little less sophisticated, but that's okay because you don't need them to do that. You've already got that. But they've got great relationships. They're strong in their market. They've got a good name. You then add them onto your business as the platform, and you've created something that's larger and more valuable.

And then you go out and do acquisitions of smaller companies, maybe a little less sophisticated, but that's okay because you don't need them to do that. You've already got that. But they've got great relationships. They're strong in their market. They've got a good name. You then add them onto your business as the platform, and you've created something that's larger and more valuable.

right it used to be enough there was a time where you didn't need to affect a business that you acquired literally just adding those earnings onto the platform and making the platform that much bigger made the whole thing more valuable.

right it used to be enough there was a time where you didn't need to affect a business that you acquired literally just adding those earnings onto the platform and making the platform that much bigger made the whole thing more valuable.

And that arbitrage in valuation, so you paid one price for this add-on acquisition, but when you plug those same earnings into the platform, the whole thing is worth a much higher price, a much higher valuation. And that was enough. And there was a long time where that was simply enough. They didn't really need to be very integrated.

And that arbitrage in valuation, so you paid one price for this add-on acquisition, but when you plug those same earnings into the platform, the whole thing is worth a much higher price, a much higher valuation. And that was enough. And there was a long time where that was simply enough. They didn't really need to be very integrated.

They didn't necessarily have to report their financials on the same system in a timely manner. We've had clients not too long ago, clients who were bringing in financials every month from different divisions on totally different systems and aggregating everything in Excel. Literally that sort of basic system. Today, it's more difficult to get away with that.

They didn't necessarily have to report their financials on the same system in a timely manner. We've had clients not too long ago, clients who were bringing in financials every month from different divisions on totally different systems and aggregating everything in Excel. Literally that sort of basic system. Today, it's more difficult to get away with that.

As more and more capital has come into home services, the expectation of sophistication has gotten higher. So it would be tougher today to go do an acquisition and just not do anything to it, leave it alone, not at least improve the processes, improve the systems, get it integrated onto one ERP, one financial reporting system. It'd be difficult to do that today.

As more and more capital has come into home services, the expectation of sophistication has gotten higher. So it would be tougher today to go do an acquisition and just not do anything to it, leave it alone, not at least improve the processes, improve the systems, get it integrated onto one ERP, one financial reporting system. It'd be difficult to do that today.