Jay Vas

Went to an event yesterday where Mark Leonard (founder/ceo of Constellation Software $csu) was the keynote speaker. The discussion was around general business/career advice. Sharing some of my notes:

@QBCares you are holding $50k worth of customer deposits from my business because my bank didn't allow you to take a tiny admin fee. It's been impossible to get a hold of support, 1hour+ wait times, and the support people have no idea how to actually fix the issue. Could you DM me to get this resolved asap?

@PrabSarkaria Well done. Excited for this expansion.

✈️This morning, our government announced the expansion of Billy Bishop Airport, delivering more affordable flights, new routes and convenience for the millions of people who rely on it every year. A modernized airport will strengthen Ontario’s position as a global hub, boost tourism and business travel, and create thousands of good paying jobs.

@azharaq love this

CHAINS OF HABIT Warren Buffett, University of Florida, 1998: “The chains of habit are too light to be felt until they are too heavy to be broken.” He told a room of MBA students that by a certain age, people with self-destructive behavior patterns become entrapped by them. But at a young age, you can adopt any habits and patterns of behavior you wish. The qualities that make people want to work with you — generosity, honesty, giving credit — are all achievable. None are forbidden to anyone. And the qualities that repel people? None are required. You can shed them. Buffett’s point: your habits compound just like your capital. Start early.

@DinoSawaya Great example

Believe it or not but the independent sponsor model (as we now describe it) originated in substance as early as the 80’s, if not earlier in the 60’s/70’s with the early pre-fund KKR and Bear Sterns deals… A classic “independent sponsor” deal (and possibly the first ever large scale acquisition by an “independent sponsor”) was Reginald’s Lewis’ acquisition of Beatrice International in the 80’s… Drexel took a large equity stake in the company in exchange for raising the bulk of the required financing through junk bonds… Sound familiar??? A precursor to “one stop shop” financing today…

@kylehtucker nice writeup

@kylehtucker good stuff Kyle!

@DinoSawaya Truth!

AI is going to enable small nimble teams with high IQs and exceptional EQs to do very well investing in the LMM in future years... The value will shift towards those with strong "soft skills" and great "judgment"... ...Which is (somewhat surprisingly) uncommon in much of finance...and especially in the LMM... Iykyk

@DinoSawaya Truth.

As an independent sponsor, the best deals are the hardest to finance… Few…

@DinoSawaya One of my favourite lines.

There is a great quote from the movie Margin Call that is relevant to this debate “There are three ways to make a living in this business: be first, be smarter, or cheat" Cheating is obviously out of the question… And it’s hard to consistently be smarter than your competition (I wouldn’t hang your hat on this…) That leaves with you being first… It does not take a lot of imagination to envisage a scenario where you may in fact be early in investing into an attractive niche sector that has not yet garnered the attention of the broader PE market… But this gets harder at scale… So a robust sourcing engine alone isn’t an advantage, it’s the sectors that engine is directed to that makes all the difference…

@DinoSawaya Well said Dino!

There’s been a ton of talk about the increasing competition in LMM PE… Stuff like: “5 years ago I could buy XYZ for 4x, now it’s 7x” I hate to break it to you but that is the normal course of markets…it’s been the same forever…this is not new… Believe it or not, even PE investors in the 80’s used to complain of too much capital chasing too few assets… So yes, you’re going to have to get smarter and work harder to make those returns… Nothing worth doing is easy…so if you’re looking to make an easy buck, perhaps ETA / PE isn’t for you… Toughen up baby cakes !!!

THE TORONTO @BLUEJAYS ARE HEADING TO THEIR FIRST WORLD SERIES IN 32 YEARS 😤 #CLINCHED

WE'RE GOING TO THE WORLD SERIES!!!!! #WANTITALL

@StockTalk416 @compoundpapi Summer 16 was truly insane. Peak Toronto for sure.

@madnssxo insane.

@BigJohn043 John, in your experience, what are typically the biggest reasons why a founder isn't fit to manage a PE-backed company?

A lot of the businesses we buy have a founder that wants to retire. So I don't have a great data set. Of those that don't want to retire, probably more than half have the ability to manage a PE backed company. The biggest issue is their willingness to change and evolve based on the differences in PE ownership. This number also goes down as the business grows. Lots of founder can manage growing from $5M to $15M of EBITDA. That goes down a lot as you grow to $50M of EBITDA.

@moseskagan I once heard a divorce lawyer say that people might be surprised at how many repeat clients he had.

Sound advice for anyone in the service business

@nfr_podcast imagine betting against Drake

@TidefallCapital great reminder of why to generally avoid consumer/retail

Chip Wilson’s new book calls out $LULU management as a classic principal-agent problem. And I agree with him. There is a very real Nike like margin collapse potential. Their current CMO is even from there.

@BigJohn043 @PEoperator Agree with John, seller acted in their best interest, why fault them for it? They weren't deliberately messing with you. Can't get emotional over deals.

@PEoperator You gave them an exploding offer. That is fine but I am not sure why you were offended they didn't take it. If you thought it was worth $10M then that is the value...

About 6 or so months ago, I was looking at a deal in my home state. I knew the lead banker (family friend) and felt like I had an in and a real angle on the business. The business was about $12M revenue and $1.7M of EBITDA. My partner and I tried an exploding offer. We said we’d do the deal for $10M but they had to sign this week. If they didn’t sign this week, our offer was $7M (market). The bankers hemmed and hawed. They hated it. But we were offering a premium valuation. They had some customer concentration issues and it was a carve out with a bit of complexity. Their main concern with us (just two guys but one (not me) was well known) was that we wouldn’t close. We showed proof of funds, track record, etc. We had the capital and had closed dozens if not a hundred of these deals between us. Anyway, they did not take the $10M offer. We proceeded in the process. We took a management call. They were so cocksure… “we want to get paid for synergies” “our ideal buyer is a strategic” basically telling us they already had a buyer they wanted. At one point on the call, the seller’s lieutenant told me he was surprised I was from the area (he did not live there) because I didn’t have a twang (rural state). We took it all in stride, and submitted our LOI… $7M. The bankers freaked out… acted like we had bait and switched them. They tried to push us up but we held fast. Turns out the banker tried to use us as stalking horse threat to the target strategic buyer. I guess he was successful because the sellers took their offer. But about 4 months later, the banker calls me… you guessed it… deal didn’t close. Would like to know if you have any interest. After all their concerns about us not closing, turned out they should’ve been concerned about the strategic. Pride comes before the fall. Anyways I told him to pound sand, no way we’re doing a deal with people who act like that.