Nikonomics - The Economics of Small Business

91 - 3 Rollup Mistakes That Will Cost You Millions with Steve Wiesner

13 snips
Dec 2, 2024
Guest
Steve Wiesner
In this conversation, Steve Wiesner, an entrepreneur with a 20-year background in investment banking and private equity, shares his transition to business ownership. He emphasizes the risks associated with private equity roll-ups and the necessity of smart acquisitions for growth. Steve discusses key mindset shifts required for success in entrepreneurship and highlights the importance of operational execution in managing acquisitions. His experiences shed light on navigating the complexities of business investments and the evolution of corporate finance.
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INSIGHT

Deal Sizes in the Mid-90s

  • In the mid-90s, investment banking often involved companies doing $10-25 million in EBITDA.
  • These companies, while substantial, weren't always multi-billion dollar giants as some might assume.
INSIGHT

Private Equity Structure and Returns

  • Private equity structure involves raising funds from LPs, investing over a set period (e.g., 5-7 years), and aiming for high returns (e.g., 45% IRR historically).
  • Leverage and multiple arbitrage were key return drivers, particularly in less efficient markets.
INSIGHT

Shifting Focus to Growth

  • Private equity's reliance on leverage and multiple arbitrage is decreasing due to high valuations and rising interest rates.
  • Growth through investment and operational improvements is becoming crucial for returns.
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