The Private Equity Playbook by Adam Coffey

Author:Adam Coffey
Language: eng
Format: epub
Publisher: BookBaby
Published: 2019-01-25T20:03:55+00:00

Now, on the second sale, let’s call it five years later, the thirty-four cents you rolled forward—if it’s a 3x MOIC—yields you $1.02. After this sale, roll thirty-five cents forward and take sixty-seven cents out. Do this repeatedly, incrementally nudging up what you roll forward and take out. As long as you can get 3x MOIC, every next payday will be larger than the last.

Why sell your company once when you can sell it twice? Or three times? Results of course can vary; your returns might not be 3x MOIC in each instance. They may be lower or higher. In my personal case, I have never lost money when investing alongside private equity.

I’ve spent almost twenty years running three different, national private equity-backed companies. These companies are bought and sold on average every three to seven years. I invest money and write checks when I come to a company. I participate in those different stock structures. And when I sell a company, I roll money forward and take some out. It’s been a perfect way for me to diversify investments while at the same time staying invested for the future in the companies I run and can directly impact through my efforts.

And here’s the thing. You don’t have to be Josh. Rose can do this, too. Josh built a company. Josh spent decades, potentially, building a business. But Rose can also get multimillion-dollar paydays without having created anything. By coming out of the Fortune 500 world and engaging with private equity in a middle-market-type environment, you can build wealth through your own investment and through the receipt of incentive equity. All of this of course is predicated on the continued growth of the company. I know this because once upon a time, I was Rose and left the Fortune 500 world to join the private equity game.

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