Month: June 2018

A Deeper Look at Private Equity – EP.09

Summary

Today, we take a deeper dive into looking at private equity. Private equity is Grayson’s world — so we switch the script and I ask him all of the questions I have about private equity.

We discuss how private equity can help grow businesses, get debt to help your returns, the high risk/high return nature of private equity, precise strategies, what to look for when you’re investing, how to know how much to invest, and more!

Key Takeaways:

[:13] About today’s episode.

[:44] An overview about private equity, how Grayson defines it, and what sort of businesses he goes after.

[2:29] How do you grow the company with private equity?

[4:04] Are there any precise strategies that focus on particular markets in private equity firms?

[4:48] Who are the big private equity firms?

[5:30] Do smaller private equity firms do one-off deals in addition to funds (similarly to real estate)?

[6:28] Why does private equity have higher return (and in turn, a higher risk)?

[7:59] Can you get debt in private equity?

[9:12] High leverage, big buyout vs. the smaller deals.

[10:40] Multiple expansion and why it’s so great.

[12:41] What to look for when you’re investing in private equity.

[17:44] How do you know how much to invest?

[19:09] How do you pay a multiple on revenue?

[23:40] In an auction process on a deal, what would the variability between lowest bid and top bid be?

[24:50] A real world example of a private equity deal.

[29:06] What about exits? How do you make the most money in these deals?

Mentioned in this Episode:

KKR

Blackstone

Apollo

The Carlyle Group

Fortress

EBITDA 

A Peak Behind The Glass Curtain – EP.08

Behind-the-Scenes of a Real Estate Private Equity Firm

Today we’re going to talk about what goes on behind the glass curtain — what it actually looks like inside of a real estate private equity firm.

We go over the different types of teams within the firm, the importance of each of their roles, as well as their hierarchy; the two types of private equity funds; how these firms make money through the different types of fees they charge; and the general atmosphere and physical environment of the firms.

Tune in as we pull back the curtain on real estate private equity firms!

Key Takeaways:

[:13] About our topic for today: behind-the-scenes of the goings-on of a real estate private equity firm.

[1:09] The general atmosphere and physical environment of a real estate private equity firm.

[3:30] The teams that work inside the office and their roles. Firstly, the acquisition team and the hierarchy of the roles (the managing directors, directors, vice presidents, associates, and analysts.)

[11:59] The asset managing team’s role.

[12:58] The other teams in the office and the roles within them: the accounting team and the investor relations team.

[16:00] The difference between the two types of private equity funds.

[20:00] How these firms make money (through the acquisition fee, asset management fee, the disposition fee, and more).

[24:27] The biggest, most important fee of them all: ‘the promote.’