Adam Coffey - The Private Equity Playbook

The private equity industry is expanding at a rapid pace. Whether youre a business owner considering selling your business to a private equity firm, or youre a mid - career executive being recruited by private equity for a new position, this industry is most likely an entirely different game than what youre 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 firms balance sheet. The field of private equity involves a new set of rules and players, and you may not be prepared.

Its like a professional athlete deciding to shift from one sport to another; the playing field and dynamics of the game are very different. Dont worry. Im here to be your coach and help you learn the rules so that when you enter the arena, youll be prepared to play and win.

As your coach, its important that you know my background. Ive 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 Ive learned so that youor you and your management teamcan 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. Its 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 teamattorneys, accountants, investment bankers, and morebecause 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 regulationsfederal, state, and/or localthe 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 .

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 didnt 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. Im currently with a third business that is Americas 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. Ive 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 isnt tangible. Service isnt a product that can be stored in a box and put on a shelf. Its more about relationships and interactions, doing right by customers, and conducting business at the human level. The commonality between the three companies where Ive been president is that theyre 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 theyre doing, enjoy their workplace, and feel supported. Thats the kind of company culture that takes care of its customers.

Along with my own professional growth, theres 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, its 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 globallymore than half of those occurring in North America.

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

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. Hes received phone calls from private equity firms looking for potential platform companies to buy. He doesnt know a lot about private equity but wonders if its a viable future and exit strategy. Hes asking: Whats 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?

Rose is a Fortune 500 mid - level career executive. She has had a good run so far, and shes 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 shes interested in applying. Rose is struggling because she doesnt know if this is a good career decision. She wants to rise in her career, but shes 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?