Robert Loder’s Post

I talk to so many founders being approached by Private Equity buyers EVERY DAY! It’s overwhelming, and most of them are both energized and scared of doing something wrong… So, what’s my advice? Let’s dive in… Pros: 1. Deep Pockets PE firms have serious capital. They can provide the resources you need to scale rapidly. Think new markets, acquisitions, or major upgrades. 2. Expertise in Tap These aren't just money guys. PE firms bring a wealth of operational and strategic knowledge. They've seen it all before and can help navigate complex challenges. 3. Partial Exit You can often sell a portion of your business while staying involved (and seeing the upside). It's a chance to de-risk personally while still driving growth. 4. Network Effects PE firms have extensive networks. This can open doors to new partnerships, customers, and talent. Cons: 1. Loss of Control Be prepared to share decision-making. You’re no longer the only one at the table. PE firms will have a say in major strategic moves. 2. Short-Term Pressure PE typically aims for exits in 3-7 years. This can create pressure for rapid growth at the expense of long-term planning. 3. Cultural Shift The laid-back startup vibe? It might not survive. PE often brings a more corporate, metrics-driven culture. 4. Potential Job Cuts PE firms often streamline (or centralize) operations. This can mean tough decisions about staffing. 5. Complex Deals Get ready for intense due diligence and complex deal structures. They are full-time hunters, and you’re the part-time prey. Selling to PE can supercharge your growth and provide multiple liquidity events (if done right). But it comes at a cost. There's no one-size-fits-all answer. Your decision should align with your: Vision. Personal goals. Readiness for a new chapter. Choose wisely. Because your legacy is on the line. Need advice? Drop me a DM, and let's start a conversation. P.S.: Follow me for more content like this.

Retrades on the Rise? What do you think about retrades in venture capital or private equity or even among strategics? I and most of my investing clients and colleagues have a zero tolerance policy. 2024 saw a private equity to venture capital rise in retrades, despite claims and calls for responsible, impact and strategic win-win investing. Especially in medical device, climate and nature tech, biomaterials, and medical aesthetics. I dug up this 2016 Brad Feld post that I found for my MBA ethics in finance training at Emory University - Goizueta Business School. Frankly, there is no reason for lead investors and/ or their co-investing or prior investors of that round to accept this, ever. Founders appear desperate, and their boards irresponsible, when more than one lead offer could have been accepted. Prior seed VC investors who imagine this does not impact their reputation amongst relevant family office and other venturing leaders are mistaken, and somewhat delirious if they think it is an acceptable practice on occasion. And the strategic venturing arms doing this clearly have a sharky plan. And this red flag may flag so many others in diligence especially if the same strategic is a customer or distributor or vendor of the same startup they lead invest in. And which value creating investor wants to be on the same cap table with retraders? I don't. Thoughts welcome. And more to come as I unearth unethical practices in the space leading to the opposite of founder and owner/ shareholder friendly value creation that we are proud to advance, always. Downrounds are another matter, and often reflect prior inflated valuations by the very same groups that initially invested and invest again--- hopefully with real diligence reasons. #irresponsibleboards #unethicalvc #valuedestruction #retradesontherise #founderdesperation

🚀 Buy-and-Build Strategies: Revolutionising UK Industries with Private Equity In the dynamic UK business landscape, private equity is reshaping industries through the transformative Buy-and-Build strategy. This strategic manoeuvre accelerates growth, fosters market dominance, and drives operational efficiencies. 🎨 The Art of Buy-and-Build Unveiling the Strategy: Buy-and-Build, or "bolt-on acquisitions," involves integrating smaller companies into an existing platform. Private equity's strategic manoeuvre creates synergies, streamlining operations to build a formidable market player. 🔄 Reshaping Industries Various sectors in the UK, from tech startups to traditional manufacturing, witness the profound impact of Buy-and-Build. Private equity firms strategically acquire and consolidate businesses, catalysing growth and seizing market dominance. 🌐 The Driving Forces Market Consolidation: A response to the need for market consolidation, Buy-and-Build merges complementary businesses, creating consolidated entities with enhanced market share and improved competitiveness. Operational Efficiencies: Integration allows for standardised processes, optimised supply chains, contributing to cost reductions and improved overall performance. 🌟 Success Stories in the UK Tech Titans Emergence: In the UK's tech sector, private equity consolidates innovative startups, accelerating individual growth and creating global tech titans. Manufacturing Renaissance: Traditional industries experience a renaissance as private equity revitalises manufacturing, making it more competitive and adaptive. 🚧 Navigating Challenges Despite advantages, the Buy-and-Build strategy comes with challenges. Successful execution requires adept navigation of regulatory landscapes, cultural integration, and effective change management. 🛤️ The Road Ahead As private equity reshapes UK industries, businesses are urged to evaluate their potential for participation. Whether positioning for acquisition or exploring synergies, staying ahead in this transformative wave is key to thriving. 🔍 In Conclusion Buy-and-Build strategies redefine industries, marking pivotal moments in the UK's private equity revolution. Businesses adapting to these strategies emerge as leaders, surviving and thriving in the transforming economic landscape. The impact is undeniable as industries continue to evolve. #BuyAndBuild #PrivateEquity #UKBusinessTransformations

M&A activity has slowed for most deal types, but not for Private Equity. In Q2 2024, PE saw its strongest quarter in two years with 122 deals valued at $196 billion, nearly doubling Q1's $100 billion (EY). So what is Private Equity? 🤓 PE firms invest in private companies, providing capital to acquire, grow, and sell them for profit. They raise funds from institutional investors and high-net-worth individuals. Key Functions of Private Equity in M&A: ⚡ Capital Infusion: - PE firms provide capital for growth and expansion. - Ex: A PE firm acquires a manufacturing business to upgrade technology and expand market reach. ⚡ Operational Improvement: - PE firms bring management expertise and efficiencies to improve performance. - Ex: Implementing cost-saving measures and optimizing production. ⚡ Strategic Acquisitions: - PE firms build larger entities through roll-ups. - Ex: Acquiring smaller firms in the same industry to create a market leader. ⚡ Exit Strategies: -PE firms plan exits through sales or IPOs. - Ex: Selling a portfolio company to a larger corporation or taking it public. Why Should You Care? 🙇♀️ Understanding PE in M&A can help you navigate opportunities and challenges. PE firms are powerful players that can drive significant industry changes and influence market dynamics. Before you consider this route, it is important to balance the positives and negatives of this deal type: Positive Impacts: ➕ Growth and Expansion: PE firms provide capital for growth. ➕ Operational Expertise: They bring in experienced managers. ➕ Increased Competitiveness: Strategic acquisitions create market leaders. ➕ Profitable Exits: PE firms achieve lucrative exits, benefiting investors and founders. Negative Impacts: ➖ Short-Term Focus: PE firms often prioritize short-term gains, leading to cost-cutting that undermines long-term growth. ➖ Cultural Disruption: Changes by PE firms can disrupt company culture, causing dissatisfaction and turnover. ➖Debt Burden: PE firms often use leveraged buyouts (LBOs), saddling companies with significant debt, limiting their ability to invest in sustainable practices. ➖ Mission Drift: The push for returns can divert companies from their original mission, especially if it includes social or environmental goals. Real-World Example: Imagine a tech startup with limited resources. A PE firm might invest, providing capital and guidance to scale operations and expand market reach. This partnership can transform the startup into an industry leader, but the focus on quick returns could lead to cost-cutting that undermines its innovative edge. ❓ Got questions? ➡ What should we cover next? BONUS: What is an LBO? 🤔 A Leveraged Buyout (LBO) is when a PE firm acquires a company using a significant amount of borrowed money (leverage). The assets of the acquired company often serve as collateral for the loans. This allows PE firms to make large acquisitions without committing a lot of capital. #wegotthis 💪

The lateral market has really kicked off over the past couple of months. I'm working with a ton of associates who have multiple interview processes and multiple offers. For juniors and mid-levels, we're negotiating for signing bonuses and guaranteed end of year bonuses. For senior associates and counsels, we can discuss which firms offer top-of-market compensation and/or a clear path to equity partnership. M&A Truly market-leading group that has actually remained busy over the past few years and hired very slowly, so the culture of the team is very cohesive. The clients this group works with are second-to-none. This group has such a robust deal flow that they are in the market for associates who want to focus on PE, public M&A, or a mix. Associates here actually do take more leadership on deals than their peer firms; the partners are heavily invested in mentorship and staff leanly so mid-levels can take the lead as soon as possible. Secondaries LP portfolio purchases, GP restructurings, continuation vehicles, spinouts - this elite group does it all. Joining this group is a surefire way to work hand-in-hand with some of the most highly regarded PE shops in the market while working on an unparalleled team that is actually committed to developing and maintaining its culture. The group here gets together out of the office because they genuinely like each other, not because it's mandatory. Finance There are a lot of options in the market for associates at all levels right now. Whether you represent strategic investors, PE firms, and portfolio companies or focus on lender-side work, you have a lot of choices between top-tier firms that are not often hiring at the same time. Senior associates and counsels have opportunities to accelerate their paths to partnership while juniors and mid-levels can evaluate options to find the best match when it comes to development, positioning for an in-house exit, and/or better cultural fit. Capital Markets I've helped several associates join this team over the years - most of them made the move for better culture and mentorship without sacrificing on prestige or limiting exit options, and they continue to be incredibly satisfied. This is a mix of equity and debt offerings (with the group seeing an increase in equity recently) with market-leading issuers and underwriters. Not a lot of firms can match the reputation and prestige of this shop. Funds In this group, you'll get a range of work across fund sizes and sectors, including, credit, PE, venture, growth equity, and more, with sizes ranging from $500,000 to $10 billion+. This is one of the absolute top teams in biglaw, with attorneys who are widely considered the best of the best. If you're thinking of making an in-house exit, this group has a brand name that is at the very top of the market, and the partners actively set their associates up with secondments and in-house roles.

𝗪𝗵𝘆 𝘄𝗲 𝗰𝗵𝗼𝘀𝗲 𝗮 𝗵𝗼𝗹𝗱𝗶𝗻𝗴 𝗰𝗼𝗺𝗽𝗮𝗻𝘆 It is worth reflecting on why we are doing things differently compared to our peers. Nearly everyone in the business of “buying companies” raises a fund (structured as a General Partner/Limited Partner partnership) modelled after private equity. They are typically compensated based on the Internal Rate of Return calculated as the growth in investor capital divided by the time period from time of acquisition to time of an exit. As Charlie Munger says, “show me the incentive and I will show you the outcome.” It is not surprising that private equity firms maximise leverage and aim to “flip” their acquisitions in the shortest possible time. They are playing with other people’s money and other people’s businesses. Your risk, as a limited partner or seller of business, is their reward. If private equity’s business model was completely aligned with its investors, then perhaps this is a fair trade. The reality, however, is that their business model has strayed further and further from this. Many large private equity firms make the majority of their revenue from management fees rather than performance-based fees. Heads they win, tails they win more. Their goal has become to raise as many large funds as possible, regardless of their ability to deploy this capital to achieve exceptional returns. There is another, less obvious, challenge of the private equity model. In private equity, the cash flows from a cash-generating business with low growth potential cannot be redeployed into a capital-hungry business with high growth potential. In essence, each “deal” needs to stand on its own until sold. It seems short-sighted, almost irrational, to invest so much time, energy and money into a great, profitable and cash flowing business, only to sell or abandon it just years later because it hasn’t met an artificial growth rate, dictated by a spreadsheet. 𝗔𝗿𝗯𝗼𝗿 𝗣𝗲𝗿𝗺𝗮𝗻𝗲𝗻𝘁 𝗢𝘄𝗻𝗲𝗿𝘀: 𝗛𝘂𝗺𝗮𝗻 𝗫 𝗖𝗮𝗽𝗶𝘁𝗮𝗹 𝗹𝗲𝘃𝗲𝗿𝗮𝗴𝗲 The advantage of a holding company model is that it creates an internal capital market. In the hands of a skilled team, this allows a kind of discretion and long-term thinking that is impossible to achieve on a “deal by deal” basis. We think of our internal capital market as not only financial capital, but also human capital. Our aim is to share best practices frequently between companies and help place our Operating Partners into whichever roles have the highest possible leverage. We believe that our edge lies in acquisitions that are too sub-scale, too operationally unsophisticated, or too long-term minded to be good bets for private equity.

🚀 Buy-and-Build Strategies: Revolutionising UK Industries with Private Equity In the dynamic UK business landscape, private equity is reshaping industries through the transformative Buy-and-Build strategy. This strategic manoeuvre accelerates growth, fosters market dominance, and drives operational efficiencies. 🎨 The Art of Buy-and-Build Unveiling the Strategy: Buy-and-Build, or "bolt-on acquisitions," involves integrating smaller companies into an existing platform. Private equity's strategic manoeuvre creates synergies, streamlining operations to build a formidable market player. 🔄 Reshaping Industries Various sectors in the UK, from tech startups to traditional manufacturing, witness the profound impact of Buy-and-Build. Private equity firms strategically acquire and consolidate businesses, catalysing growth and seizing market dominance. 🌐 The Driving Forces Market Consolidation: A response to the need for market consolidation, Buy-and-Build merges complementary businesses, creating consolidated entities with enhanced market share and improved competitiveness. Operational Efficiencies: Integration allows for standardised processes, optimised supply chains, contributing to cost reductions and improved overall performance. 🌟 Success Stories in the UK Tech Titans Emergence: In the UK's tech sector, private equity consolidates innovative startups, accelerating individual growth and creating global tech titans. Manufacturing Renaissance: Traditional industries experience a renaissance as private equity revitalises manufacturing, making it more competitive and adaptive. 🚧 Navigating Challenges Despite advantages, the Buy-and-Build strategy comes with challenges. Successful execution requires adept navigation of regulatory landscapes, cultural integration, and effective change management. 🛤️ The Road Ahead As private equity reshapes UK industries, businesses are urged to evaluate their potential for participation. Whether positioning for acquisition or exploring synergies, staying ahead in this transformative wave is key to thriving. 🔍 In Conclusion Buy-and-Build strategies redefine industries, marking pivotal moments in the UK's private equity revolution. Businesses adapting to these strategies emerge as leaders, surviving and thriving in the transforming economic landscape. The impact is undeniable as industries continue to evolve. #BuyAndBuild #PrivateEquity #UKBusinessTransformations

The Big Four blind eye - cog in the wheels While Investing in any startup we often press upon an audit by a reputed accounting firm, often by Big Four. This make me wonder sometimes who are auditors of the startups who have recently gone belly up. As the dust settles, it's become increasingly clear that the blame doesn't lie solely with the founders - the very gatekeepers tasked with protecting investor interests have utterly failed in their duties. Time and again, we've witnessed auditors turning a blind eye to glaring financial irregularities, all while lending their prestigious seals of approval. Why are these auditing firms, often among the most respected in the industry, consistently falling short when it matters most? The answer, it seems, lies in the cozy relationships cultivated between auditors and the startups they're meant to scrutinize. When the paycheck comes from the very entity you're tasked with impartially evaluating, objectivity inevitably takes a backseat to self-preservation. And with billions of dollars in venture capital funding at stake, the incentives for auditors to look the other way have never been higher. The consequences of this systemic failure are now painfully clear. Retail investors, often lured in by the hype and promises of these high-flying startups, have been left holding the bag as valuations crumble and fortunes evaporate. And the damage extends beyond the financial realm - public trust in the entrepreneurial ecosystem, once a source of national pride, has been severely eroded. Relentless chase for unicorns has come at a heavy price. #startup #Investors #auditors #lawyers #legal #venturecapital #bigfour #audit

Investing in the linear growth of a company is limited by that growth. Most companies grow at a rate of 10% or less except startups which can fail more frequently than they succeed. If you want to really expand your money making capacity as a private equity firm, then your best strategy is to create volatility. If you can control that volatility all the better. This allows you to extract a lot of money from trading the swings that you simply would not be able to extract if you simply invested in the company for the long term. Unless you have enough money to actually force companies to cycle between growth and contraction in order to create that volatility then your best bet is to simply try to attach yourselves to existing trends. https://lnkd.in/gjEGpG65