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In this video we delve into the world of private equity investment with Robert, the CEO of an investment group actively acquiring small businesses. Robert's first acquisition was a Mexican Meat Distributor bundled with a real estate purchase. Learn how and why Robert created his unique Floors & Ceilings Contract, which was designed to address hidden liabilities, and his strategies for mitigating such risks.
Learn about the importance of the balance sheet, Robert's criteria for selecting businesses over a decade old, and his core competencies in B2B Wholesale Companies. Robert talks about what he looks for in sellers, his approach to asset valuation, and the dynamics of PE funds.
Robert talks about on-market versus off-market deals, his rational approach to creating offers, and the intricacies of LOIs and partnership dynamics.
00:45 His 1st Acquisition Mexican Meat Distributor came with a Real Estate Buy
05:29 Targeting Specific Industries - with low multiples
07:01 What is he doing now
07:22 Process of learning, creating the contract, and never using SBA
08:27 Hidden liabilities - Why he created the Floors & Ceilings Contract
13:00 The LOI and Due Diligence time line
14:58 Click close clarification
15:38 How he mitigated the hidden liabilities: R&W and Owner Financing
18:30 The cap stack & skeletons are in the building
19:35 Seller Financing Tax benefits & Stock Purchase vs Asset
22:44 Why the Balance Sheet is more important
28:03 B2B Wholesale Companies - Core Competencies
29:38 The 1st thing he looks for in a seller...
32:11 What about mfg. - what about FF&E - why he does not pay twice
33:57 Why he only buys 10+ year old companies
37:25 The PE Fund - High Net Worth Individuals
40:40 ON market or OFF market deals?
41:30 Robert's Deal Criteria Financial Numbers?
42:29 Creating the "offer" from the "padded SDE" we win because its Rational
48:21 The LOI and What happens next & How to Subtract Inventory from Price
52:44 What to expect as 60/40 partner
54:20 What is the "Absenteeism Scale"
55:20 What he really needs: people that can manage people
56:27 Buy and Hold or turn it in 5 years?