In this conversation, Tim shares his unique journey to Permanent Equity, detailing how a chance phone call led him to a career in private equity. He explains the innovative approach of Permanent Equity, which focuses on acquiring small businesses without leveraging debt, allowing for long-term growth and stability. Tim discusses the transition from public to private markets, highlighting the challenges and opportunities in each. He emphasizes the importance of assessing quality of earnings through cash flow analysis and shares insights into investment strategies, team culture, and the role of storytelling in building a successful business. Throughout the conversation, Tim's philosophy of optimizing for fun and meaningful work shines through, making for an engaging and insightful discussion.
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Chapters
00:00 The Journey to Permanent Equity
05:06 Understanding Permanent Equity's Unique Approach
08:22 Transitioning from Public to Private Markets
12:40 Investing Strategies: Public vs. Private Markets
15:08 Why Columbia, Missouri?
18:24 The Concept of Beer Money
21:04 Quality of Earnings in Small Businesses
24:24 Debt Levels in Private Equity
29:49 Assessing Performance in Private Equity
31:40 Understanding Fees and Returns in Private Equity
34:49 Strategic Distribution Decisions
37:13 Case Study: The Airplane Parts Business
41:43 Risk Management and Investment Philosophy
43:09 First Year Post-Acquisition Strategies
47:53 The Importance of Storytelling in Business
52:17 Optimizing for Fun and Asymmetry
55:43 Attracting Talent to Missouri
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