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

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

How private equity firms raise the money
Where the money comes from and the types of investors
How the general partners of the PE firm get paid
How they start the fund and the structure of the fund
How that fund structure buys platform companies and bolt-on companies
What the timeline means for the fund and the partners
What the lifecycle looks like from start to finish
How this information relates to the Intentional Growth course

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.