#213: The Ultimate Guide on How Private Equity Works and Makes Money with Sunny Vanderbeck

September 02, 2020 01:08:10
#213: The Ultimate Guide on How Private Equity Works and Makes Money with Sunny Vanderbeck
Intentional Growth
#213: The Ultimate Guide on How Private Equity Works and Makes Money with Sunny Vanderbeck
/

Hosted By

Ryan Tansom

Show Notes

In today’s episode, Sunny explains to us how the world of private equity operates, from the structure and lifecycle of the fund to considering a sale’s debt versus equity. We'll be delving into how private equity firms raise money, where the money comes from, what types of investors they work with, how the general partners of a private equity firm get paid, how they start the fund and what the fund structure looks like, and what the timeline means for the fund.

 

What You Will Learn In Today's Podcast Interview

 

Are You Growing The Value of Your Business

Sunny and I unpack the private equity industry and how it works in crazy detail.
 
Over the past four and a half years, I’ve hosted dozens of entrepreneurs that sold their companies to private equity firms, as well as PE firms that explain their models and approach. However, today’s episode is the necessary start to finish explanation of how private equity firms works, and it fills in any gaps in information and understanding you may have.
 
I reached out to Sunny to come on the show again because of his unique experience and perspective. Before starting Satori Capital, Sunny founded Data Return, a provider of managed services and utility computing, grow the company 40% every quarter for three years, sold it, bought it back and then sold it again. His decade at Data Return included a $3 billion market capitalization made him one of the youngest CEOs ever to lead a Nasdaq company.

His multiple exits, gives him unique expertise as a founder of Satori Capital, a private equity firm founded on the principles of conscious capitalism. By providing real-world insights from its experienced team and long-term funding with no fixed time constraints.
 
As many of you know if you are a long-time listener of the podcast, the principles of conscious capitalism are incredibly important to us and our work. Sunny’s investment thesis keeps conscious capitalism at the forefront, and that common approach makes today’s episode an exciting conversation to share with you.

 

About the Guest:

Sunny Vanderbeck is an investor, entrepreneur, best-selling author, and former military leader focused on accelerating the growth of mid-market companies and creating best-in-class, built-to-last businesses.

Sunny is co-founder of Satori Capital, a multi-strategy investment firm founded on the principles of conscious capitalism. By providing real-world insights from its experienced team and long-term funding with no fixed time constraints, Satori acts as a true partner for its portfolio companies as it challenges them to pursue extraordinary outcomes for all stakeholder groups.

 

Quotes:

14:31 – “If I can sell a stock tomorrow, it’s theoretically worth a little more than if I can’t sell it for years.” – Sunny Vanderbeck, on liquidity premium

16:28 – “To put some precise language on it, in our case: so we manage a billion dollars, we don’t have a billion dollars. They’re very different things, I promise you.” – Sunny Vanderbeck

32:11 – “By and large, as companies get larger, they are more valuable. The markets seem to play that out, not always but generally true.” – Sunny Vanderbeck

44:45 – “Deeply understanding how your business generates or consumes cash, understanding how variable your cost structures are. That can help you understand, ‘Is debt an appropriate tool for what I’m trying to solve for?’” – Sunny Vanderbeck

 

Links and Resources:

Intentional Growth #170: How One Week Killed the Perfect Billion Dollar Deal with Sunny Vanderbeck

Sunny Vanderbeck, website

Satori Capital

“Selling Without Selling Out” by Sunny Vanderbeck, Amazon

Mastering Your Cash Flow Digital Course

ARKONA Boot Camp

Reach out to me if you have questions about the boot camp!

You can also reach out to me via email at [email protected], on my LinkedIn.

Other Episodes

Episode

June 16, 2021 01:11:01
Episode Cover

#253: What Should I Do If I Get an Unsolicited Offer to Buy My Company?

Many entrepreneurs experience extreme anxiety whenever they think about selling their businesses—to the point where they won’t even pick up the phone or answer an email from a potential buyer. Have you ever stopped to think about why this is? On today’s show, my business partner here at Arkona, Pat Hobby, and I talk about ways to mitigate this anxiety through intelligent and intentional planning. We also discuss why you should be prepared for an out-of-the-blue offer—even when you’re not considering selling—since potential buyers are reaching out to business owners with increasing frequency. Do you want to miss your multimillion-dollar deal? Of course not. But if you have no plan, you’re not going to get what you want out of an unsolicited offer (or even a solicited one!). This isn’t an episode you want to miss if you’ve ever wondered what you need to know to be ready for any outcome, or even if you just want to give your future more choices.   What You Will Learn In Today's Podcast Interview Why private equity is raising so much money right now Where investors are looking to commit their capital and how you can capitalize on that What a prepared business owner can do with an out-of-the-blue offer The rise of platform companies becoming involved in M&A When it’s better to buy instead of building from the ground up The spread between intrinsic value and transaction value Why you need to layer in a buyer’s intention when thinking about selling What common risks you need to address to strengthen your valuation The value of understanding what really drives you, especially in terms of life planning Planning creates choices and decreases anxiety Why you do need to build a support network of trusted, knowledgeable advisors before ...

Listen

Episode

June 27, 2019 01:58:19
Episode Cover

#151: One Hell of a Story - Family Buyout, Acquisitions, ESOP, Leadership Issues, Sale to a PE and Finding a Life After.

Buckle up for a long episode this time. I promise though you will walk away from this one reflecting on your personal situation and maybe it will help you make some decisions. My guest is Steve Harlamert, at the age of 24, Steve’s father died suddenly, leaving the family business to both Steve and his sister. The business was a grocery supplier and there was no clear roadmap for the company. Steve decided to stick with the business but his sister wanted out. After she left, Steve set about learning everything he could and humbled himself to be mentored by the more experienced people in the business. Steve grew the business successfully and built something he could be proud of. That story is inspirational in itself, but then Steve sold his company to a private equity firm and changed the lives of many of his employees. We discuss the emotional fallout of leaving a company and how Steve has coped with that loss. He also has insight into what his experience has taught him about people, business, and life in general. What you will learn:   Inheriting a business at 24 and coping with unexpected death. How Steve moved on even without a roadmap from his father. The lessons he learned from the company’s more established leaders. Why Steve’s sister left the business and the buyout. The common problems within a family business. The employees become family. Steve’s advice about how to avoid building a dictatorship. How to better serve your customer. Why Steve made an acquisition to grow the company. So many executives rush to restructure, that’s a bad idea. How to have diversity in your feedback but still be respectful. Things that CEOs should do. Steve’s ...

Listen

Episode

May 17, 2017 00:49:53
Episode Cover

5 Bold Choices For You & Your Business

Jay Coughlan, former CEO of Lawson Software, took the company public at $200 million and grew the revenue to $430 million. Besides CEO of Lawson Software, he is also known for other titles including former CEO of XRS Corporation, a father, a son, and a convicted felon. After a devastating accident, Jay spent time in jail and completely redefined his life. If you listen, you will learn:  The five bold choices to help you rise above your circumstances and redefine who you are How not to live “comfortably numb” How eliminating negative self-talk will make you more confident A quick three question debrief exercise to help turn failure into a learning opportunity The importance of knowing and performing activities that give you energy How to apply the five bold choices to your business and take some action   The Accident Back in 1998, Jay and his father went out to a local hunt club and then a bar afterward. Jay drove drunk and ended up hitting at train at 60mph. Jay was devastated when he woke up in the hospital to find out that his father did not survive the accident. Before even leaving the hospital, Jay found faith. After receiving forgiveness from God and eventually from his entire family, he decided he wouldn’t let this low point in his life define who he was. He was a convicted felon and went on to serve a 6-month jail sentence but wasn’t going to be a victim of his circumstances. 5 Bold Choices “Life is going to throw all of us a bunch of opportunities and a bunch of challenges. Those opportunities and challenges are going to demand a response,” says Jay. Jay’s response to his circumstance was to rise above and ...

Listen