Private Equity Firms

“They're asking for a controlling interest in your company for a 17% of your equity, you know.”

“If a company is bought by a private equity firm, that typically to me means that A, it's a big market that people have sharks, but B, the B firm will like rip out the people. They'll go through like a period of fast growth and they're going to sell it. There's…”

“So it seems to me that that's a more likely outcome, you know Thrive Holdings buying a Kirkland and Ellis and saying, now we're going to, you know, take this thing and AI turbocharge it. I think you're going to see a lot of that out of private equity firms, ou…”

“OpenAI is offering private equity firms a guaranteed minimum return of 17.5%, as well as early access to models not yet in public release.”

“A bunch of them are going to become zombie companies, And they're going to try to add AI features as a last resort, not succeed and be sold to PE.”

“Private equity firms only want to buy if they get a great deal, and they only want to sell if they're getting full value. There's a few turns of multiples in the middle, and you haven't seen that thought quite yet.”

“There are a lot of private equity firms out there today who don't realize they've already raised their last fund.”

“I actually think these private equity firms are going to be pretty good at systematically applying AI.”

“I think what we're going to see more of is acquisitions by private equity firms and other startups, mergers, and of course, strategics being a form of liquidity versus just the IPO.”

“If you see that my name as a key investor and a leader in this industry is making an investment in this company, well, then what does everybody else do? Warren Buffett tells you he's buying something. What does everybody do? They go buy it. Well, if NVIDIA is …”

“Private equity firms aren't interested either. And there used to be from 2012, 2013 until 2023. So there was a decade where if your growth was decent, but not great in SAS, but your burn rate was low and your NRR was high, maybe VCs wouldn't touch you, but a p…”

“For example, in the 19 eighties, there were, you know, 20, 25 private equity firms In 2020, we got close to 20,000 in the U.S.”

“So that's not something that I think you need to do as much if you are at a large established, you know, for 30 years private equity firm and you're one of, you know, 15 partners. It's much more important for us, you know, cause we're kind of doing everything …”

“So if I look at my customer distribution and concentration at eighty-ninety, ok? Run rating into nine figures already, working on a three, four hundred million dollar deal. Not a single dollar comes from a private equity firm”

“Going from what they do to making non-controlled late stage investments Just because, you know, pick a name, Thrive do that well would be, in my view, stupid because Thrive are really good at that, and they're not.”

“What we realized is what PE firms were simply doing was optimizing workforce efficiency. And that was their alpha of why they think they can roll up every dermatology practice in America and flip them to 10% greater EBITDA profitability.”

“We can say now that we're about 10% of the largest private equity firms and investment banks in the world use our product.”

“I think the, Feedback lips and hedge funds are too tight. I think you can convince yourself you're a good investor or convince yourself you're a bad investor too quickly in, in, in hedge funds, and I think there's, which is why, I mean, if you look at hedge fu…”

“If you watch what firms do, maybe not what they say, but what they actually do, their objective statement is go raise the next fund, go raise a bigger fund. And I think that that makes sense, right? That's how they stay in business, but I think it can lead to …”

“What I loved about them was they were a newer, younger private equity firm that wanted to prove themselves. And when they are that way, they're going to show up and be invested in your business succeeding because their name and reputation relies on it. The big…”

“In the current interest rate environment, private equity firms that run startups have demanded over the last three years what they call efficiency. And by efficiency, they almost always mean higher return on investment, higher return on ad spend, higher ROI, w…”

“Folks that in this sort of mediocre growth level, they're getting no, no tire kicking. Are you seeing lots of tire kicking? It's not happening. Cause I ain't seeing it.”

“PE guys ironically love the things that we don't love. Let me tell you what I mean by that. They love a boring ass software company. In a teeny tiny vertical, with 40% market share, where they can screw the customers for the next five years by raising prices b…”

“And we're not seeing as much of, you know, cause what happened in 2021, 22 was you had crossover firms really come in, right? Private equity firms, public firms come in to venture. We don't see that anymore. I think we, at least we're not seeing too much of it…”

“So if you're a private equity firm, if you're Apollo, or Blackstone, or BlackRock, or whoever it is, right, and you're this big entity the people within your firm can't really leave and compete with you, because there's so much institutional infrastructure aro…”

“Changes in the market impact firms that share a level a lot more than firms that share the same strategy. That's pretty unique. A level eight infrastructure firm and a level eight buyout firm are impacted by the market in more similar ways Than a level two and…”

“Those 15 firms, which is .2% of the universe that we track, controls about 20% of the AUM. If you go down just two more rungs that go level seven to level 10, those 700 firms control 90% of the capital.”

“You see a lot of these middle market private equity firms do that. They roll up these small companies. They're doing five, 10, twenty million dollars EBITDA each, and they bat, they just buy a bunch of them, and now they're up to a hundred million or two hundr…”

“Private equity firms typically are optimizing for IRR, internal return. And they're less focused on like ultimately like a multiple on money, basically saying like they're not focused on the biggest possible version of the company that they can build.”

“We looked at some of the big private equity firms starting to raise hundred person sales forces to attack that market, and we thought, well, that's not really implementable for any PC, so let's keep it on there, but we don't really have anything right now.”

“I mean, we have to spend a lot of time to find these things. We have to spend a lot of time to structure these things. We have to spend a lot of time to understand these things. And I think it's something that a lot of other Private equity firms, asset manager…”

“Everybody wants an internship today at a private equity firm or an investment bank, and I would call it the school of the real world. I think there's nothing better, be it working as a waitress or a waiter in a restaurant or working in a service business or wo…”

“Well, I think having operated dozens, if not hundreds of digital products deeply, Will serve you better than having seen as many or even more on a shallow level. Had we only worked on one product, then I think it would be better to have seen hundreds at a shal…”

“But they're going to want to grow that base, and oftentimes there's pressure to scale and diversify the revenue streams, which can be a big distraction for folks if they have to manage a smaller fund, lower middle market buyout pool when they've only been doin…”

“All of my billion dollar exits as an investor have come to PE firms.”

“Most private equity firms now are targeting what they'd like is two to three years. So from the time we buy something till the time we sell it is two or three years. Again, maybe four or five. If you get past five, it's really distressed at that point.”

“And the scale of it also, I mean, it's, it has to be a multi-party deal, like many private equity firms plus Saudi, I don't even know, like the scale of it is enormous.”

“The fifth generation, his fifth generation just sold the company to a private equity firm for a rumored three billion dollars.”

“A substantial percentage of the public deals have been private equity. I've seen numbers like 60, 70, 80, Maybe even 90% in recent years of public companies have been bought by private equity firms.”

“And now they're getting much more imaginative about the prices that they're willing to pay, but they won't pay you know, 20 times revenue or 30 times revenue or 40 times revenue like a strategic will.”

“I think there's 72 private equity firms now headed by people that work with me.”

“I own now, 65 of the largest private equity firms. I own a piece of them as a partner in every fund that they have.”

“I always ask the question when we're talking about value creation of who did what to who to actually get it done, because there's really one thing to say our value creation plan is X, but it's a huge gulf from that to achieving the value creation plan”

“The reason the private equity firms can't get the financing is because they're still trying to buy deals at valuations that are too high relative to what lenders are willing to lend.”

“Private equity firms will buy any SaaS company with high NRR that are break even north of twenty million.”

“According to Prequin, 645 firms have not raised a new vehicle since 2015.”

“What they did, so they basically forgave two million dollars worth of debt that was owed to the, to them from the brewery to set the valuation, and then that's how we kind of got things started. So they didn't put any new money into it for this particular roun…”

“Lawyers like me have created a series of rules and regulations that have changed the incentives for investors that often works for the private equity firms, but may not necessarily work for workers, for customers, even for other investors.”

“And then the third, and this is the part that interests me the most as a lawyer, is that private equity firms Typically are able to insulate themselves from liability. So if something goes wrong at a portfolio company, the private equity firm is rarely held le…”

“The industry has changed from institutional investors going into funds with perhaps less involvement to now co-investing alongside funds at more attractive terms. To some very large institutional investors having their own invest direct investment teams, often…”

“The challenge that we've got is if these insurance companies fail, the responsibility for paying the continuing obligations will essentially default to the state guarantee corporations in which the insurance companies are incorporated. So if you have an Iowa i…”

“The private equity firms today actually do have a longer horizon than the ones did in the eighties, the seventies and eighties. And they're willing to stick with the business longer.”

“I mean, just like in other periods of dislocation in the market, I do think you'll see a consolidation of the brand extensions that we've seen to Mario's point.”

“It's primarily done by private equity firms in the context of their portfolio companies, and it runs the gamut of industries from the likes of Bumble to GoDaddy all the way to Shake Shack, my personal favorite.”

“What is the aggregate opinion, public opinion of hedge funds and managers and private equity firms over the last 50 years? Nothing but down. What is the aggregate opinion of Berkshire? Nothing but up.”

“Over my time of time, one of the things that I noticed is that because we were more over special situations, there were times in the cycle that we were very missing. There were some really interesting opportunities, but there were other times in the economic c…”

“To this day, there are LP segments of the LP world that don't love that idea, right? Don't love the idea. They look at it and they think, well, we think that that may misalign incentives some ways, and there's still some elements of the LP base out there that …”

“One thing that just happens in businesses as your business gets bigger, investors pay a higher multiple. It's more stable. It's demonstrated more sort of staying power. And so what a lot of these private equity firms do, and we were sort of a part of this arbi…”

“The firms that looked at insurance, banks, ahead of everybody else have found that most folks at the similar scale have copied them since. And that tells you something. They had an edge. They had an advantage. It was proprietary. They had an idea. At the time …”

“And then I think at the end of the book, there's a chapter where the private equity firm actually looks to buy out assets from another firm that's in trouble. I think we're going to actually start to see a little bit of that.”