Can someone explain Chenmark to me?

by a searcher

9 months ago

I must just not have the details right (because they seem to be thoughtful people who are doing well), but I don't quite understand how Chenmark's (or any holding company with EtA sized investments) model works economically. 

To have a holding company with numerous different investments, you need to hire someone to be the CEO of each individual company.  And you have to pay that person.  But An EtA deal might only have $1M of EBITDA, and after taxes, interest, debt principal repayments, and capex, there might only be a few hundred thousand left.  So how is there enough money to pay that CEO and also provide decent cash to the holdco?

Also, it seems weird to have someone else be the CEO.  If you're the entrepreneur, isn't that your job. It seems like if you do a holdco, you're just an investor and not really an operator?

Anyone have thoughts on this?

2 likes
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9 comments

searcher from Tufts University

They're going to underwrite deals with the cost of a CEO/GM baked in

8 months ago | like reply | 0 likes

searcher from Claremont Graduate University - The Peter F. Drucker and Masatoshi Ito Graduate School of Management

I think you can direct message Chenmark's family, finding their profiles at https://www.searchfunder.com > Directory. I'm not sure if they are actively monitoring feeds, messages and posts. But it may be worth a shot, to get details on their economics. Cheers.

8 months ago | like reply | 0 likes

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