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    The Private Equity Playbook: Management’s Guide to Working With Private Equity
    The Private Equity Playbook: Management’s Guide to Working With Private Equity
    The Private Equity Playbook: Management’s Guide to Working With Private Equity
    Ebook155 pages2 hours

    The Private Equity Playbook: Management’s Guide to Working With Private Equity

    By Adam Coffey

    3.5/5

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    About this ebook

    Private equity firms are on the rise and rapidly changing the game. Today more than 5,500 P.E. firms own tens of thousands of companies, so it is essential for CEOs and senior management executives to understand exactly how private equity firms operate. This invaluable resource can help you devise a winning P.E. game plan for your own company that offers you greater freedom and financial success.

    CEO Adam Coffey has almost twenty years of experience building businesses for
    private equity companies. In this authoritative yet approachable handbook, he covers:

    · The history and landscape of private equity
    · Ground rules for finding the right firm to partner with
    · Techniques for navigating the new governance
    · Strategies for continued growth in the private equity space
    · And more.

    The Private Equity Playbook provides all the coaching you'll need to compete and win on this new playing field.
    LanguageEnglish
    PublisherBookBaby
    Release dateFeb 7, 2019
    ISBN9781544513256
    The Private Equity Playbook: Management’s Guide to Working With Private Equity

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    Reviews for The Private Equity Playbook

    3.5/5

    12 ratings2 reviews

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    • 5/5
      i personally recommend this book to newbie, just in case you are interested to join PE firms
    • 4/5
      I have read this book and I learned a lot regarding the private equity company. It is well written and I believe I could do my own. Thanks Adam Coffey

      1 person found this helpful

    Book preview

    The Private Equity Playbook - Adam Coffey

    ]>

    ]>

    Copyright © 2019 Adam Coffey

    All rights reserved.

    ISBN: 978-1-5445-1325-6

    ]>

    To my wife, Alicia, and daughter, Rose,

    for keeping me well grounded and for serving as my magnetic north.

    To my elder children, Joshua and Amanda,

    for all the times I wasn’t there while climbing the corporate ladder.

    For my big sister, Bridget,

    who passed away recently after a long battle with leukemia

    but taught me so much about living.

    To my mom, dad, and siblings,

    for tolerating my rebellious ways.

    ]>

    Contents

    Introduction

    Part One: What Is Private Equity?

    1. The Field

    2. The Rules

    3. The Players

    Part Two: Finding the Right Team

    4. Evaluating Private Equity Firms

    5. Equity Structure, Shareholder Agreement, and Employee Contracts

    6. Generating Wealth

    Part Three: The Game Begins

    7. The Early Days

    8. Welcome to the Big Leagues

    9. EBITDA: It’s a Different Ball Game

    Part Four: Game Day Strategies

    10. Organic Growth

    11. Margin Expansion

    12. Buy and Build

    13. The Role of Consultants

    Conclusion

    Acknowledgments

    About the Author

    ]>

    Introduction

    The private equity industry is expanding at a rapid pace. Whether you’re a business owner considering selling your business to a private equity firm, or you’re a mid-career executive being recruited by private equity for a new position, this industry is most likely an entirely different game than what you’re used to.

    Private equity in the context of this book refers to firms or funds that use private money to purchase companies. The funds are set up to acquire businesses, expand them, and/or strengthen the firm’s balance sheet. The field of private equity involves a new set of rules and players, and you may not be prepared.

    It’s like a professional athlete deciding to shift from one sport to another; the playing field and dynamics of the game are very different. Don’t worry. I’m here to be your coach and help you learn the rules so that when you enter the arena, you’ll be prepared to play and win.

    The Locker Room Speech

    As your coach, it’s important that you know my background. I’ve been working within the private equity industry for almost twenty years, having run three different national companies that each were owned multiple times by private equity firms. I learned through the school of hard knocks and by trial and error, but these experiences have seasoned me and led me to teach others about the process. My goal is to share the lessons I’ve learned so that you—or you and your management team—can quickly adapt and thrive in this new world.

    A Quick Note on Professional Advisors

    This book is not intended to provide financial advice, legal advice, steer you in a particular direction, or answer all your questions. Rather, it will equip you to ask more educated questions to make your decisions. It’s an introductory primer that will provide a basic understanding of the private equity game.

    However, please note: this book is in no way a substitute for having expertise on your team—attorneys, accountants, investment bankers, and more—because the legal, financial, tax, accounting, and other business issues that you will face are very fact based. The outcome of your transaction will be impacted by laws, rules, and regulations—federal, state, and/or local—the interpretation of which will be very dependent on those facts. Therefore, the advice that you need can be provided only by experts who are fully conversant with the details of your life (especially your personal goals), your business, and the proposed transaction. Now is not the time to save by scrimping on assembling your A-team.

    Life Goals and Business Lessons

    I call myself a blue-collar CEO. I started at the bottom, having left home at seventeen, right after graduating high school. As I moved into the workforce, I had two goals and objectives in mind: (1) establish financial security before starting a family and (2) retire early. I also knew that eventually I wanted to enjoy life rather than be a slave to an office and desk every day.

    I decided to enlist in the United States Army. The army taught me discipline and leadership and was a valuable foundation from which I established and built my career. I worked as an engineer for a number of years, and it made me a meticulous planner. Eventually, I crossed over from engineering into business during a ten-year stint at General Electric. There, I worked my way up to mid-level management and learned how to run a company. Private equity recruiters came knocking on my door, and I didn’t turn them away. Those decisions launched me into a twenty-year career serving as the president of three different companies.

    Each business was different. One was a medical company that serviced imaging and biomedical equipment, such as CAT scanners, MRIs, infusion pumps, and bed monitors in a hospital setting. Another was a commercial laundry firm that serviced 550,000 washers and dryers located in 70,000 apartment complexes and laundromats across North America. I’m currently with a third business that is America’s largest refrigeration and HVAC service company touching 33,000 different customer locations. All three were national private equity-backed service companies.

    As a result of these positions, I have billions of dollars in sell side, merger and acquisition, and financing experience. I know how to run processes and how to buy and sell companies. I’ve become an investor in private equity funds and an advisor to others. I am frequently asked to look at businesses and offer opinions from an operational perspective. I also have served on several boards of directors.

    I think one of the keys to my success is that I recognize that service isn’t tangible. Service isn’t a product that can be stored in a box and put on a shelf. It’s more about relationships and interactions, doing right by customers, and conducting business at the human level. The commonality between the three companies where I’ve been president is that they’re service driven. My focus has always been on people and building company culture. A strong, people-oriented culture inspires an engaged workforce. Staff do their best work when they like what they’re doing, enjoy their workplace, and feel supported. That’s the kind of company culture that takes care of its customers.

    The Growth of Private Equity

    Along with my own professional growth, there’s also been growth in the field of private equity. At the end of 1990, there were 312 private equity firms in existence. By the end of 2017, that number had grown to 5,391 firms with current assets under management totaling $2.83 trillion.

    With all those firms chasing deals, it’s no surprise that since 2006, there have been more than 43,000 private equity-backed company buyouts with an aggregate deal value of $4.249 trillion globally—more than half of those occurring in North America.*

    The Athletes

    This book is for two types of players in the business arena.

    The CEO

    Josh is the CEO of a middle-market company and is contemplating selling his business to private equity. He started out as a plumber and drove his own truck. His empire grew over a twenty-year period, and now he has 500 trucks crisscrossing multiple states. Josh is wealthy and is looking to his future. He’s received phone calls from private equity firms looking for potential platform companies to buy. He doesn’t know a lot about private equity but wonders if it’s a viable future and exit strategy. He’s asking: What’s next? Do I sell this company and cash out my chips? Do I keep on going? How does my future play out? Do my children take over the business? How do I get my wealth out?

    The Executive

    Rose is a Fortune 500 mid-level career executive. She has had a good run so far, and she’s starting to get calls from recruiters looking for a CEO or COO in a private equity-backed middle-market company. They want to know if she’s interested in applying. Rose is struggling because she doesn’t know if this is a good career decision. She wants to rise in her career, but she’s asking: Is private equity the right way to go? How do I evaluate private equity-backed companies? What are the factors to consider? Is it just about money?

    The Promise

    Whether you’re a CEO, an executive, a business leader, or entrepreneur, this book will give you an overview of private equity. I’ll show you how private equity is structured, how it operates, and what the opportunities look like. I want to demystify the private equity experience so that you have a good understanding as you contemplate your future.

    On these pages, you’ll learn how to play the game more effectively and avoid some of the mistakes I’ve made. I promise that you’ll be able to leverage what I’ve learned across multiple decades and companies, multiple industries, and private equity firms.

    This playbook will equip you to step confidently onto the field of private equity and play your best game.

    Let’s get started.

    * 2018 Preqin Global Private Equity & Venture Capital Report, pp. 22, 52, 97 (www.preqin.com).

    ]>

    Part One

    Part One: What Is Private Equity?

    In part one, you’re going to learn the basics of private equity and follow the history of its growth. You’ll learn how private equity firms are measured, the rules they play by, and how they attract limited partners, which is their

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