Private Equity Experience

Raising Capital 101: Insights from Seasoned PE Pros

• Emily Sander • Season 1 • Episode 13

Share episode

Description:
In this episode, we explore the various types of funding rounds that a startup or business can undergo, ranging from angel investing to private equity buyouts. Our guests, Emily Sander and Rory Liebhart, are joined by Ed Barton, who shares his expertise on the private equity side.

Key Takeaways:
Angel investing: This refers to the initial round of funding, typically provided by high-net-worth individuals or family offices. It's a high-risk, high-reward investment, and the investor typically seeks a 10- to 20-fold return on investment.

Pre-Series A: This is the next round of funding, typically ranging from $0.5 million to $2 million, and involves a mix of high-net-worth individuals and institutional investors. Investors are seeking a 5- 10x return on their investment.

Series A: This is the first institutional round of funding, typically ranging from $5 million to $50 million. Investors are seeking a 5- 10x return on their investment.

Private equity buyout: This is a common exit strategy for businesses, where a private equity firm buys the company and takes it private.

IPO: This is another exit strategy, where the company goes public and is listed on a stock exchange.

Dilution and Cap Table Management:
Dilution occurs when the ownership percentage of existing shareholders is reduced due to the issuance of new shares.

Cap table management is the process of managing a company's capital structure, including the ownership percentages of various stakeholders.

Private Equity and Venture Capital:
Private equity firms invest in companies to acquire them and generate a profit through a sale or initial public offering (IPO).

Venture capital firms invest in early-stage companies with high growth potential.

Exit Strategies:
IPO
Private equity buyout
Strategic acquisition
Distressed sale


Lightning Round:

-Rory recommends the book "Barbarian Days" and the TV show "The Last of Us".

-Ed recommends the book "The Exit Strategy Playbook" by Adam Coffee and the novels by Amberlyn Murray.

-Emily recommends re-reading "The Martian" and "Project Hail Mary" on Audible.

The audiobook version of "On-Ramp to Exit" is available soon.

Who We Are

If we haven’t met before—Hi! We’re a team of professionals who’ve worked together at multiple companies, seen private equity from all sides, and are here to share what we’ve learned to help you succeed. Ed Barton brings decades of tax and financial strategy experience; Rory Liebhart is a finance and M&A pro with a track record of high-growth exits; and Emily Sander is a former Chief of Staff, multi-time author, podcast host, and founder of Next Level Coaching, helping leaders and organizations accelerate their growth.


Connect with Ed

Connect with Emily

Connect with Rory

emily-sander_1_05-21-2025_160238:

All right. Pex Boys. That's my new name for you.

rory-liebhart_1_05-21-2025_160236:

What's up, paxers?

emily-sander_1_05-21-2025_160238:

Boys. By the way, it's px. This is not like we're not talking the other kind, from the hip. Questions to get us started, Rory, you recently ran a marathon.

rory-liebhart_1_05-21-2025_160236:

Hmm.

emily-sander_1_05-21-2025_160238:

mile feels most like busting covenants as a CFO? And which mile? which mile is closest to a.

rory-liebhart_1_05-21-2025_160236:

Ooh, closest to a sale. Let's start with that first, you know, 26.1. So that last 10th of a a mile is, uh, where you're feeling like I'm ready to hit the closing dinner and have it toss a few back with Ed again after, after selling company. Where it feels like you're busting covenants is, is where they say you hit the wall at at mile 20. And, uh, you kinda have to have the wherewithal to negotiate through some of those deal terms. You might have to pay some fees to get outta your covenants that you've busted, uh, get back on track. But you know, you know, you, you gotta just do it because if you want to keep, keep rolling, you know, you have to push through it. So those are some strange analogies, but I, I did my best there.

emily-sander_1_05-21-2025_160238:

on your first marathon,

rory-liebhart_1_05-21-2025_160236:

Thanks. Yeah. Yeah.

emily-sander_1_05-21-2025_160238:

Edward. Let's talk about your car addiction

squadcaster-fhej_1_05-21-2025_160237:

My card.

emily-sander_1_05-21-2025_160238:

It's,

rory-liebhart_1_05-21-2025_160236:

Whoops. Yes.

emily-sander_1_05-21-2025_160238:

and

rory-liebhart_1_05-21-2025_160236:

Lets,

squadcaster-fhej_1_05-21-2025_160237:

Jeeps and Mercedes. Well, what do, what do you mean explain myself? They're Jeep is the iconic American brand and the Jeep four liter in line six is the iconic American Motors designed and built in line six that lasts forever and ever. So I have three of those. And then Mercedes, I, I, I've kind of lost count. I don't

rory-liebhart_1_05-21-2025_160236:

yeah.

squadcaster-fhej_1_05-21-2025_160237:

I have. Um, but they're, they're all old.

rory-liebhart_1_05-21-2025_160236:

Yeah.

squadcaster-fhej_1_05-21-2025_160237:

any real new ones. The newest one I have is 2000. Is

rory-liebhart_1_05-21-2025_160236:

Classics. Yeah.

squadcaster-fhej_1_05-21-2025_160237:

I've got, I've got a 76, A 79 A, uh

emily-sander_1_05-21-2025_160238:

you got a special license plate that says like antique or something

squadcaster-fhej_1_05-21-2025_160237:

oh. Yeah. Mostly actually a bunch of my, so one of the Jeeps has, uh, collector vehicle plates. Um, 93 Cherokee. Um. In line six five speed manual, four wheel drive. It's great of 90,000 miles. I mean, I I, and then the, all the Mercedes that are older, so the 86, the 87, the 76, the 79, they and the 1980 all have those, five of them all have collector plates.

emily-sander_1_05-21-2025_160238:

I now know that you know a lot of numbers, so

squadcaster-fhej_1_05-21-2025_160237:

I

rory-liebhart_1_05-21-2025_160236:

Oh, I, I already knew that. Yeah. Yeah. That's

emily-sander_1_05-21-2025_160238:

light. Lightning

rory-liebhart_1_05-21-2025_160236:

for 20 years. Yeah. Yeah.

emily-sander_1_05-21-2025_160238:

Lightning round. Questions for you

rory-liebhart_1_05-21-2025_160236:

Ooh,

emily-sander_1_05-21-2025_160238:

Best car for. New driver going off to college, away from home. Just keep him safe.

rory-liebhart_1_05-21-2025_160236:

Lambo, right?

squadcaster-fhej_1_05-21-2025_160237:

A used 2012 Lexus ES three 50.

rory-liebhart_1_05-21-2025_160236:

Safe. Yeah.

squadcaster-fhej_1_05-21-2025_160237:

Safe, heavy,

rory-liebhart_1_05-21-2025_160236:

Hmm.

squadcaster-fhej_1_05-21-2025_160237:

reliable, kind of nice, Relatively, you gotta pay the Toyota tax, so you're gonna pay a little bit more than you will for a bunch of other used vehicles. But I'll bet you, you get one with a hundred thousand miles on it. I'll bet you that kid is still driving that same car for their first job or two.

rory-liebhart_1_05-21-2025_160236:

Hmm.

squadcaster-fhej_1_05-21-2025_160237:

will last 400,000 miles with maintenance.

rory-liebhart_1_05-21-2025_160236:

Way cooler than the mercury topaz that I had to start with, uh, when I was young.

squadcaster-fhej_1_05-21-2025_160237:

Topaz not, not on my short list.

emily-sander_1_05-21-2025_160238:

I had a 1991 Mazda 6, 2 6 in college.

rory-liebhart_1_05-21-2025_160236:

Okay.

emily-sander_1_05-21-2025_160238:

and the, the, the seatbelt kept trying to choke me'cause it was one of those ones that glided on the door path

rory-liebhart_1_05-21-2025_160236:

Oh,

emily-sander_1_05-21-2025_160238:

and it malfunctioned and it kept trying to like suffocate me. So that was, that

rory-liebhart_1_05-21-2025_160236:

that is every time you get in the car. Wow. Yeah.

emily-sander_1_05-21-2025_160238:

okay, so that's the best for a new driver. College had last lightning round question. Best car. If you just wanna wash it, it and look at it.

rory-liebhart_1_05-21-2025_160236:

Hmm.

squadcaster-fhej_1_05-21-2025_160237:

wash it, wax it. What? What do you mean? Like, wash it wax and look at it like,

emily-sander_1_05-21-2025_160238:

not for utility, it's not for gas mileage. It's just to look at and

rory-liebhart_1_05-21-2025_160236:

Pure style.

squadcaster-fhej_1_05-21-2025_160237:

oh, well that's, that is so dependent upon. The, that's the eye of the beholder

rory-liebhart_1_05-21-2025_160236:

Yeah. Yeah.

squadcaster-fhej_1_05-21-2025_160237:

Now, if it's me, if it's me, it's gonna be a 64 and a half Mustang convertible bright red with a white top with 3 89 K code, four

rory-liebhart_1_05-21-2025_160236:

Specific.

squadcaster-fhej_1_05-21-2025_160237:

And, uh, it's gonna have, everything's gonna be original. It's gonna have the pony interior inside, and it's gonna just be cherried out. Now, I, I, I've owned a Mustangs, Mustang convertibles, older ones, they're not all that fun to drive. I mean, I, I was really disappointed candidly, by the 3, 9, 4 speed that I had. But to look at a bright red, 64 and a half Mustang K code convertible red with white top and, and red interior pony interior of the four speed in it, that's, that's,

rory-liebhart_1_05-21-2025_160236:

Nice.

squadcaster-fhej_1_05-21-2025_160237:

right there. That's America, that's Americana. A piece

rory-liebhart_1_05-21-2025_160236:

Yeah. Give me some italiano, I'll take a Lambo, uh, for my, for my pick right now on that. But

emily-sander_1_05-21-2025_160238:

Okay.

rory-liebhart_1_05-21-2025_160236:

impractical at this point.

emily-sander_1_05-21-2025_160238:

Yeah. you for sharing. That was really important. All right.

rory-liebhart_1_05-21-2025_160236:

Very private equity, uh, related. Yeah. Yeah.

emily-sander_1_05-21-2025_160238:

Um, can possibly buy what Ed just said, the type of car he just said, if we get in

rory-liebhart_1_05-21-2025_160236:

Mm-hmm.

emily-sander_1_05-21-2025_160238:

with like angel investors and we're being smart about like series A and series B and different rounds of funding and if we exit.

rory-liebhart_1_05-21-2025_160236:

That's the key.

emily-sander_1_05-21-2025_160238:

is, is, this is our segue

rory-liebhart_1_05-21-2025_160236:

Yeah.

emily-sander_1_05-21-2025_160238:

the conversation

rory-liebhart_1_05-21-2025_160236:

Sweet segue.

emily-sander_1_05-21-2025_160238:

types of, well, I guess let's, it's, it's not different types, it's different rounds, right.

rory-liebhart_1_05-21-2025_160236:

Yeah, yeah.

emily-sander_1_05-21-2025_160238:

Okay,

rory-liebhart_1_05-21-2025_160236:

Yeah.

emily-sander_1_05-21-2025_160238:

so angel investing, this is like the sexy one people have heard

squadcaster-fhej_1_05-21-2025_160237:

Oh, it's a, as a matter of fact, I would, I would argue angel investing is not the sexy one. It

emily-sander_1_05-21-2025_160238:

sexy.

squadcaster-fhej_1_05-21-2025_160237:

about think i Angel investing is like desperate one. is, this is a, A lot of companies don't ever have an angel round.

rory-liebhart_1_05-21-2025_160236:

Yeah.

squadcaster-fhej_1_05-21-2025_160237:

They're bootstrapped.

rory-liebhart_1_05-21-2025_160236:

Yeah.

squadcaster-fhej_1_05-21-2025_160237:

So Angel Round is really, this is, this is how I think of an angel round. You know, angel round is, you know, up to maybe a hundred thousand, quarter of a million dollars, maybe a million bucks tops. But it's small.

rory-liebhart_1_05-21-2025_160236:

Hmm.

squadcaster-fhej_1_05-21-2025_160237:

and it's really when you, when the founders don't have the ability to bootstrap this themselves, so they have to sell out a portion of their company, Eddie. At like the lowest, the lowest, lowest, lowest valuation, and they're paying at because there's such a high risk, there's such a massive risk premium on that investment

rory-liebhart_1_05-21-2025_160236:

There it is.

squadcaster-fhej_1_05-21-2025_160237:

that they are giving up a, a huge amount of control, a huge amount of equity for a relatively small amount of money.

rory-liebhart_1_05-21-2025_160236:

Yeah.

squadcaster-fhej_1_05-21-2025_160237:

angel round is a, is a risky round for the investor and it's incredibly costly to the, to the seller.

emily-sander_1_05-21-2025_160238:

But if you're a founder, this can like launch your dream.

rory-liebhart_1_05-21-2025_160236:

it, it might be your last hope to do that. Right. You know, and

squadcaster-fhej_1_05-21-2025_160237:

can.

emily-sander_1_05-21-2025_160238:

Ah.

rory-liebhart_1_05-21-2025_160236:

em, your, your business that you're building, you're bootstrapping it. You haven't taken on external investors. Maybe you don't need to. You're just a fricking badass business person, so you figured it out. You don't need that. You know, whereas some folks. Time can be a killer. I'll tell you. You know, especially if you've got employees and you're building an actual business that's selling a product. You know, a technology that's expensive stuff. So if you can't get that product market fit, validation to market quick on your own dime, bootstrapping it, then you, you're like, well shoot, this is existential. I need to find other investors or I gotta hang it up. But, you know, a lot of the time, um, you know, these angel investors, maybe what you're thinking about is like, it's kind of a friends and family around a lot of times, which is the case. Um, you know, I've been in businesses that are angel funded, um, and you know, that typically is like, I believe in you as the founder. So I'll inve and, and I believe vaguely in your idea, maybe you have no idea how you're gonna execute that or bring that to market, but let's give it a go. You know, it's definitely a high risk investment, so Ed's point, you're usually giving up more of your company, uh, than you'd want to in exchange for an investment. So, um, and as we talked about in previous and in our book, equity capital is the most expensive out there. So, and you usually can't get de debt financing on a business like that. You know, at that stage.

emily-sander_1_05-21-2025_160238:

I don't take angel investors'cause I like control. I have a control problem and I wanna be my

rory-liebhart_1_05-21-2025_160236:

Don't ever change, just be you, dude. Just keep doing that. Yeah.

emily-sander_1_05-21-2025_160238:

I got out of corporate because I was like, you're not in charge of me. As my nephew used to say when he was little, very cutely, you're not the boss of me. It's like

rory-liebhart_1_05-21-2025_160236:

Yeah. You know, once you do get out of that

emily-sander_1_05-21-2025_160238:

case,

rory-liebhart_1_05-21-2025_160236:

corporate culture, it is hard to, hard to go back for sure.

squadcaster-fhej_1_05-21-2025_160237:

Uh huh.

emily-sander_1_05-21-2025_160238:

my

rory-liebhart_1_05-21-2025_160236:

Because of those very things.

emily-sander_1_05-21-2025_160238:

offered to be a sponsor for my other podcast, leveraging Leadership wherever podcasts are

rory-liebhart_1_05-21-2025_160236:

Listen, watch, enjoy.

emily-sander_1_05-21-2025_160238:

and he was like, why not? And I was like, because then you're gonna tell me what to do and I I don't want you to do that. I wanna do what I wanna do.

rory-liebhart_1_05-21-2025_160236:

Yeah. Yeah.

emily-sander_1_05-21-2025_160238:

okay. but that's, that's my

rory-liebhart_1_05-21-2025_160236:

Yeah.

emily-sander_1_05-21-2025_160238:

Um, alright, so we have angel investors, which can be like the catalyst and like Jumpstart and Ignition, but can also be like, this is my parachute man. This is my last. Kind of hail Mary attempt

rory-liebhart_1_05-21-2025_160236:

Yeah.

emily-sander_1_05-21-2025_160238:

give you like half the farm

squadcaster-fhej_1_05-21-2025_160237:

You're giving up a, you're giving up a lot of the back 40, to stretch your farm analogy at the angel round, but as. It's a little bit sexy. It's sexier for the investor

rory-liebhart_1_05-21-2025_160236:

totally.

squadcaster-fhej_1_05-21-2025_160237:

than it is for the, for the founder.

rory-liebhart_1_05-21-2025_160236:

To get in early on a deal like that, that actually hits, and by I say hit means, is that one in 10 that's gonna be successful, that that's like the time to be in, I mean,

squadcaster-fhej_1_05-21-2025_160237:

But they,

rory-liebhart_1_05-21-2025_160236:

Yeah.

squadcaster-fhej_1_05-21-2025_160237:

there's that one that, there's a guy that had the apple. Stock that sold out early

rory-liebhart_1_05-21-2025_160236:

Yeah.

squadcaster-fhej_1_05-21-2025_160237:

like it was, he got like$20,000. It would've been like$2 billion today if he had held onto it, you know, for, because he was an angel. So, and he got, he basically was like, you guys are going nowhere. Cash me out. And he got 20 grand, 25 grand, something like that. I can't remember the guy's name,

rory-liebhart_1_05-21-2025_160236:

Yeah.

squadcaster-fhej_1_05-21-2025_160237:

it did not, that was, that did not go well for him as an investor. Um, he didn't, he didn't quite maximize his investment. But that's, that's

rory-liebhart_1_05-21-2025_160236:

Yeah. He wasn't on the efficient frontier of risk in return. Yeah.

squadcaster-fhej_1_05-21-2025_160237:

no. Where we, where we tend to look at it. If you're on the investor side of the equation, you're like, yeah, if I, it, it, it's like, it's almost like a lottery ticket, but you should be a lot more sophisticated than that. Now you, you're gonna have diligence and you're gonna have documentation. You're gonna have, it's gonna have all the con the, the of an, of a full service PE deal from a, you gotta have diligence, documentation. You're gonna have kind of the, the. Process goes. But if the process is gonna be limited, it's gonna be fast. It's gonna be low cost.'cause you can't spend$2 million dealing diligencing, a 10 million, a$10,000 investment. So you're gonna have to, a lot of it, like Rory said, it's gonna be like the friends and family. They know you, they trust you. Okay, here's a, here's a check. I, I don't have time to really, you know, review your financial statements and check for UCC filings and all the other garbage.

rory-liebhart_1_05-21-2025_160236:

Yeah.

squadcaster-fhej_1_05-21-2025_160237:

And then at the end of it, you know, you'll go into another round of funding and likely they either get cashed out

rory-liebhart_1_05-21-2025_160236:

Yeah,

squadcaster-fhej_1_05-21-2025_160237:

crammed down,

rory-liebhart_1_05-21-2025_160236:

that's.

squadcaster-fhej_1_05-21-2025_160237:

you know, or, or they're, uh, or they're kinda riding along, uh,

rory-liebhart_1_05-21-2025_160236:

Yeah,

squadcaster-fhej_1_05-21-2025_160237:

the next round.

rory-liebhart_1_05-21-2025_160236:

so that is where that starts to get interesting. And I've used quotes in a lot of ways with the interesting when you're going from angel round even to seed round. So that's when you start to get some more professional investors involved. To some degree people that want to get in before an institutional round, but they don't wanna, they weren't in the early friends and family around. It's what you generally call a seed round. Um, I work for a business today that's kind of in that realm and seed round's kind of subjective. So is Series A, but you know, there's a lot of different ways to look at these things. But, you know, series A is generally considered your first institutional round. So if you're, if you're not an angel round and you're pre presti institutional, you're generally a seed round. And that can be a wide range of things. It means you're generally generating some revenue. You're basically proving out your product in the market. You've got a strategy, um. You know, it's a matter of like taking it to the next level of scale and maybe even, maybe break even profitability. Right? So, um, this is where I say it gets interesting at this round is the different types of financings to bring people in. Sometimes there's, I. Convertible notes. Sometimes it's a, you know, a safe is, sometimes it's some sort of a just pure equity offering, blah, blah, blah, blah, blah. Uh, but this is generally where you start to see like a legit board of directors, and that's where things kind of kinda get. Fun or not for founders and management teams and things like that, if things, you know, start to not work as you're expecting or you know, you need to make some critical decisions and stuff. Whole point is like when you talk about having bootstrapped your business up to as far as you can, that means you're not, you're answering to no one, but you're Dan's self.

squadcaster-fhej_1_05-21-2025_160237:

Mm-hmm.

rory-liebhart_1_05-21-2025_160236:

Like you do every day. Emily, uh, ed and I, we answered to other people sadly, but you know, you are on your own as a badass, so, um, so, so keep doing that. Um, but anyway, uh, seed round, you know, generally, you know, up to a couple million dollars of proven revenue is when you really start to get the institutional folks sniffing around. And generally with a, a lot of businesses, you know, it's, it's good to. Build a business that's got revenue, but everyone wants to really throw gasoline on that fire and really take it big. Um, and a lot of times you need to have new capital in to, because you're operating revenue's not gonna give you enough at that point in time to do the kind of thing you need to do to grow the business. And so another thing about, you know, seed round investors and even going into series A is typically these are like. Um, either VCs or other, you know, high net worth individuals that have a venture allocation to their investment strategy. But they're also not control investors either. So they're, again, they're betting on the Emily Sanders of the world to like, take this thing to the moon, you know, they're betting on you. Um, and they're not necessarily in it to be controlled. So we'll get later on to, you know, the exit options where it's all about people buying the company for control and stuff. But yeah, um, seed round is really prepping you for your first institutional round. Um. And you know, when you hit the institution round is when people start talking about Series A and then it goes B, C, D, N, whatever. So

emily-sander_1_05-21-2025_160238:

So institutional ra, so just to, for your example there, institutional money means what, in your example, like pe,

rory-liebhart_1_05-21-2025_160236:

I

emily-sander_1_05-21-2025_160238:

vc?

rory-liebhart_1_05-21-2025_160236:

it's a, is a very semantic thing. I, I kind of look at it as when you're taking on investors that. They exist for the purpose of making investments, right? Like, you know, I have in a lot of different businesses, I've been in high net worth individuals that make investments, but they're just rich people that make investments. It's not their livelihood. Whereas a venture capital firm is definitely a institutional investor. A you know, multi-family office can be an institutional investor. A private equity firm for sure is an institutional investor.

squadcaster-fhej_1_05-21-2025_160237:

Yeah, I, I distinguish it as an institutional investor is someone who's paid.

rory-liebhart_1_05-21-2025_160236:

Yeah, that's a great way to put it.

squadcaster-fhej_1_05-21-2025_160237:

else's money.

rory-liebhart_1_05-21-2025_160236:

Yeah.

squadcaster-fhej_1_05-21-2025_160237:

you know, so

rory-liebhart_1_05-21-2025_160236:

Good call.

squadcaster-fhej_1_05-21-2025_160237:

you could be worth a billion dollars.

rory-liebhart_1_05-21-2025_160236:

Mm-hmm.

squadcaster-fhej_1_05-21-2025_160237:

uh, you know, and, and you go, okay, if Warren Buffet is making an individual,

rory-liebhart_1_05-21-2025_160236:

Yeah. Yeah.

squadcaster-fhej_1_05-21-2025_160237:

individual investment in a company that's Warren Buffet being an investor.

rory-liebhart_1_05-21-2025_160236:

Yeah.

squadcaster-fhej_1_05-21-2025_160237:

Berkshire Hathaway, if Warren, if Warren Buffett on behalf of Berkshire Hathaway is making an investment in a business that's an institutional investor,

rory-liebhart_1_05-21-2025_160236:

Mm-hmm.

squadcaster-fhej_1_05-21-2025_160237:

Owes an explanation and has an accountability to a, what is normally a limited partner in that. that structure. So it's, could be,

rory-liebhart_1_05-21-2025_160236:

Yeah.

squadcaster-fhej_1_05-21-2025_160237:

be, could be angels. But the angels, it's a managed angel fund. So it's an early, early stage angel

emily-sander_1_05-21-2025_160238:

Oh,

squadcaster-fhej_1_05-21-2025_160237:

fund. Managed angel fund. Um, it could be, you know, venture capital, private equity, um, could be, you know, various pension funds would be, if they do direct investing, would be institutional investors. If they don't go kind of through a, a, or vc.

rory-liebhart_1_05-21-2025_160236:

Yeah, that's a really good way to put it. I like that,

emily-sander_1_05-21-2025_160238:

is there like a little space in between angel investing and then seed rounds? Or is it, is it

rory-liebhart_1_05-21-2025_160236:

eh. I sort of, I think people just call it pre-series A, you know?'cause you could do multiple, multiple rounds of funding before you take on institutional investors. You maybe go back to the same, well, a couple times for, you know, uh, a new convertible note. You roll over the previous one, raise some new capital, stuff like that.

squadcaster-fhej_1_05-21-2025_160237:

No,

rory-liebhart_1_05-21-2025_160236:

Well, you know, a lot of it has to do with just like managing the cap table. That's, you know what I'll say. We could literally and probably will spend a whole entire episode talking about, you know, dilution and cap table management, which is a new thing for me. I, I really never spent a lot of time doing it until this most recent gig.'cause I've just, you know, it's just more, it's more prevalent of a thing with a big widely held company that's like pre, you know, like that's not owned by a private equity group basically. So.

emily-sander_1_05-21-2025_160238:

Yeah.

squadcaster-fhej_1_05-21-2025_160237:

I was gonna, I was gonna say one of the, one of the challenges in, you know, your angel and seed rounds, your pre-series A rounds, is you're really going to attract either friends and family. they're not gonna be kind of anxious around. I don't wanna say they're not gonna be anxious around performance. They want, they wanna return, but they're gonna be more patient. Or your business plan, what you're selling had better be showing like. 50 x 100 x 1000 x return. Otherwise, you, you're not a candidate for that level of, um, that level of investment because the risk is so high.

rory-liebhart_1_05-21-2025_160236:

Right.

squadcaster-fhej_1_05-21-2025_160237:

I, we gotta have the risk, the risk premium drinking

rory-liebhart_1_05-21-2025_160236:

Mm-hmm.

squadcaster-fhej_1_05-21-2025_160237:

but the risk premium is so high that you, you're, it just does not make sense to participate. You know, in those type of things, unless it's someone you know, like Emily, your business is a successful business, but would have trouble attracting angel investors because they'd go, okay, I give you 50 grand. And you go, okay, well how am I gonna get your money back? gonna be, you know, the business I run is, is not one that's gonna attract a bunch of angel investors where they're looking for 20 x 30 x returns. It's gonna, it may attract some. You know, friends and family type investors where they're going, yeah, I, I like a, you know, 12 to 15% return on my money. It's better than the stock market. These guys, angels and seed level, they're looking for, you know, if they've got a five year investment time horizon, they're looking for 100% to 200%. I. returns, this is, or at least 50 to 60, they're not looking for, you know, gimme a good solid 10, 10, 12%

emily-sander_1_05-21-2025_160238:

rocket ship, the

squadcaster-fhej_1_05-21-2025_160237:

and that's it. And that's, it's more like lottery tickets with some diligence. So it's lottery tickets where you know that it's gonna fall in a certain number range,

rory-liebhart_1_05-21-2025_160236:

Yeah.

squadcaster-fhej_1_05-21-2025_160237:

than it is, than it is, you know, real investing per se.

emily-sander_1_05-21-2025_160238:

You mentioned this earlier, how many, like one out of 10, one out of a hundred

squadcaster-fhej_1_05-21-2025_160237:

Oh

emily-sander_1_05-21-2025_160238:

make it

squadcaster-fhej_1_05-21-2025_160237:

yeah, I, I think one out of a hundred is probably a 1%. A 1% is probably generous.

rory-liebhart_1_05-21-2025_160236:

Yeah. Prob probably right? Yeah.

squadcaster-fhej_1_05-21-2025_160237:

at that angel level.

rory-liebhart_1_05-21-2025_160236:

Yeah.

squadcaster-fhej_1_05-21-2025_160237:

and I mean, we, we could think of folks that, you know, the three of us

rory-liebhart_1_05-21-2025_160236:

Mm-hmm.

squadcaster-fhej_1_05-21-2025_160237:

that came, that went out of, that, went out of, uh, you know, some of the companies that we worked at, they set up their own companies, they got angel rounds,

rory-liebhart_1_05-21-2025_160236:

Totally.

squadcaster-fhej_1_05-21-2025_160237:

and they ended up having to, you know, they shut down.

rory-liebhart_1_05-21-2025_160236:

Yep.

squadcaster-fhej_1_05-21-2025_160237:

that's typical.

emily-sander_1_05-21-2025_160238:

so we've got angel investing. Then we've mentioned Prese, but let's just define that real

squadcaster-fhej_1_05-21-2025_160237:

Well, pre, pre, well not pre-seed, but pre-series A. so pre-series A is basically gonna be anything up to around$2 million or so, and you're gonna have a mix of high net worth individuals, some institutional investors. Um, it tends to start looking more formal. Your diligence looks more formal. You're probably gonna have to have some of the investors on your board. There's gonna be a little bit more. Uh,

rory-liebhart_1_05-21-2025_160236:

Yeah.

squadcaster-fhej_1_05-21-2025_160237:

by the investor group and the strategy development operations of the business. Um, and again, they're gonna be looking for returns that are in the x. like, so multiples of investment

rory-liebhart_1_05-21-2025_160236:

Yeah.

squadcaster-fhej_1_05-21-2025_160237:

than percentage

rory-liebhart_1_05-21-2025_160236:

Right,

squadcaster-fhej_1_05-21-2025_160237:

investment.

rory-liebhart_1_05-21-2025_160236:

right.

squadcaster-fhej_1_05-21-2025_160237:

and, and, you know, but you're, you're, you've gotten to in your pre-series A is you're probably still, you're still around minimally viable product. You're probably at the point where you're, you may even be pre-revenue, um, as a matter of fact, you may be pre-revenue in series A and B even, um,

rory-liebhart_1_05-21-2025_160236:

depending on the sector. Yeah. Yeah.

squadcaster-fhej_1_05-21-2025_160237:

got yourself, you've got yourself in a position where you really have formulated, you're past the, this is a good idea stage, and you've got enough information both from the market and from, you know, in a lot of cases are technology companies

rory-liebhart_1_05-21-2025_160236:

Yeah, exactly.

squadcaster-fhej_1_05-21-2025_160237:

engineering slash technology perspective to be able to go, look, this is viable. We, we need additional funding to get it to market, or we need additional funding to be able to market it. Um. to complete prototypes or whatever, but this

rory-liebhart_1_05-21-2025_160236:

Yeah.

squadcaster-fhej_1_05-21-2025_160237:

product.

rory-liebhart_1_05-21-2025_160236:

Yeah, technology, pharmaceutical kind of are a couple examples of like, what you're saying is, could be very much pre-revenue, but you have engagement, you have, you have attachment to your market in some way that's tangible. You know, whether it's eyeballs or whether it's subscriptions or, or trials or something like that.

squadcaster-fhej_1_05-21-2025_160237:

And I'll, and I'll give an example, and you led off with car stuff. So I'll start, I'll go with a car thing. Um, so there's a, a startup, new startup car company that's out there called Slate Automotive. It's backed by Jeff Bezos, but as he's one of

rory-liebhart_1_05-21-2025_160236:

Oh, I've heard of this. Yeah, yeah, yeah,

squadcaster-fhej_1_05-21-2025_160237:

the investors. But it's not, it's through like one of his like family office type type things. It's

rory-liebhart_1_05-21-2025_160236:

yeah. Kind of like

squadcaster-fhej_1_05-21-2025_160237:

he's put in. It's, you know, smaller than

rory-liebhart_1_05-21-2025_160236:

somewhere between Blue Origin and Amazon.

squadcaster-fhej_1_05-21-2025_160237:

Yeah, they've, they've raised, actually, it's probably smaller Blue Origin

rory-liebhart_1_05-21-2025_160236:

Yeah, for sure. For sure.

squadcaster-fhej_1_05-21-2025_160237:

and they've raised about a

rory-liebhart_1_05-21-2025_160236:

I.

squadcaster-fhej_1_05-21-2025_160237:

million dollars. They have zero revenue. They've got a few prototypes. They've got, you know, they've kind of, they're kind of putting stuff together. They've got, they've done a, a launch thing, but they're not, they're not gonna have revenue until 2027.

rory-liebhart_1_05-21-2025_160236:

Yeah.

squadcaster-fhej_1_05-21-2025_160237:

They're, you know, putting a plant together in Indiana somewhere. Um, an old RR Donnelly printing plant. They're converting into a car manufacturing facility.

rory-liebhart_1_05-21-2025_160236:

Hmm.

squadcaster-fhej_1_05-21-2025_160237:

And, uh, very, it's a, it's really cool,

rory-liebhart_1_05-21-2025_160236:

Yeah.

squadcaster-fhej_1_05-21-2025_160237:

for, for the car guy. I mean, I'm like, this is a really cool concept. Um, but the, the.

rory-liebhart_1_05-21-2025_160236:

These electric cars or like,

squadcaster-fhej_1_05-21-2025_160237:

They're electric.

rory-liebhart_1_05-21-2025_160236:

okay.

squadcaster-fhej_1_05-21-2025_160237:

pickups. Electric pickup trucks that are about the size of those old, uh, Toyotas. Like when we were kids where they're really small. They're only two, you know, the two seat

rory-liebhart_1_05-21-2025_160236:

Yeah.

squadcaster-fhej_1_05-21-2025_160237:

windows. Um, and they're theoretically under$20,000 new. but the, that's where you get a, a lot of investment and that's still kind of. Pre-series A type money that's,

rory-liebhart_1_05-21-2025_160236:

Yeah.

squadcaster-fhej_1_05-21-2025_160237:

high net worth individuals that have invested in this thing.

rory-liebhart_1_05-21-2025_160236:

Hmm.

squadcaster-fhej_1_05-21-2025_160237:

they will probably go back out for another funding round, a series A round where they're gonna be pulling in your, you know, kind of, now we have prototypes, we have a go to market. They've taken reservations, so they've got a hundred thousand reservations that people have put 50 bucks down for their deposits they've got. So now they go out to the, it's got a segueing, but that, that. Angel and seed round tend to be high net worth individuals, family offices,

rory-liebhart_1_05-21-2025_160236:

Yeah.

squadcaster-fhej_1_05-21-2025_160237:

you know, that kind of stuff. The, the next round is your series A, which is really saying, and Rory said it's like an alphabet soup, A, B, C, D, E, F, G. Those just designate like sequentially what the kind of, how many

rory-liebhart_1_05-21-2025_160236:

Yeah.

squadcaster-fhej_1_05-21-2025_160237:

you've raised funds. So if

rory-liebhart_1_05-21-2025_160236:

Yeah.

squadcaster-fhej_1_05-21-2025_160237:

series C, you've raised institutional, basically institutional money three times. That's your third time.

rory-liebhart_1_05-21-2025_160236:

Yep.

squadcaster-fhej_1_05-21-2025_160237:

Each time you do that, it's dilutive to

rory-liebhart_1_05-21-2025_160236:

Slicing that pie, slicing that cap table.

squadcaster-fhej_1_05-21-2025_160237:

But normally

rory-liebhart_1_05-21-2025_160236:

Yeah.

squadcaster-fhej_1_05-21-2025_160237:

into your series A, B, C, so the, the big differentiator for most of these companies, and this is mostly on a venture side, PE is a

rory-liebhart_1_05-21-2025_160236:

Hmm

squadcaster-fhej_1_05-21-2025_160237:

world. It's on a venture side. The, the A is when. The boys come to play

rory-liebhart_1_05-21-2025_160236:

Yeah.

squadcaster-fhej_1_05-21-2025_160237:

when the funds come to play. So you now have the funds, I shouldn't say the boys'cause it's a, there's a lot of women in the industry too. But this is when the, this is when the funds come in and you start seeing real institutional money making stroking checks in the, you know, 5 million to$50 million range. And that series A could be quarter of a mil, quarter of a million, or quarter of a billion. It

rory-liebhart_1_05-21-2025_160236:

Yeah.

squadcaster-fhej_1_05-21-2025_160237:

be anywhere, kind of anywhere in that,

rory-liebhart_1_05-21-2025_160236:

Mm-hmm.

squadcaster-fhej_1_05-21-2025_160237:

depending on what it is. Series A really just resonates. Its. The first round of,

rory-liebhart_1_05-21-2025_160236:

Yeah,

squadcaster-fhej_1_05-21-2025_160237:

of big institutional money.

rory-liebhart_1_05-21-2025_160236:

I, yeah, exactly. I, and you know, what I'm seeing actually today in my own experience is I. There's institutional interest in even the seed round, but with the eye towards the series A. Like, I, you know, I wanna dip my toe in here, but I also want to potentially lead your next round. That's, that's where you actually, if you have leverage as a founder and a business, you know, uh, a management team, so to speak, and you're out there raising capital is like you, you kind of wanna find the ideal partner that's. Wants to be part of your, you know, journey and maybe they can help you get to the, to the close out the seed round, say, but then, you know, maybe lead the next round and so forth. So, and you know, since they're already part of the cap table, then maybe that kind of works in their favor in some ways too. But yeah, it's a, it's, um, it's, it's interesting at that series A stage because that's where you start to see more probably sophisticated. Capital stack management, where a lot of times maybe instead of raising all of your capital requirements via equity, you bring in some venture debt as well, so it's not as dilutive, and that's where it can kind of get interesting. And you, you can, you have more options at your disposal to finance your business basically.

emily-sander_1_05-21-2025_160238:

And I've seen some VC firms who specialize in pre-series

rory-liebhart_1_05-21-2025_160236:

For sure. Yeah. Yeah,

emily-sander_1_05-21-2025_160238:

at

rory-liebhart_1_05-21-2025_160236:

absolutely.

emily-sander_1_05-21-2025_160238:

And then there's a whole bunch, like, you know, series A, series

rory-liebhart_1_05-21-2025_160236:

Yeah,

emily-sander_1_05-21-2025_160238:

but they and, and they,

rory-liebhart_1_05-21-2025_160236:

there's a flavor for everybody. It's, yeah, I invest in pre-series A, but not on Saturdays. And you know, it must be in the sector of, you know, paper airplanes and stuff. I mean, it's like the most random investment mandates people, and that's why there's so many firms out there is'cause like you want to carve out your little niche.

emily-sander_1_05-21-2025_160238:

Yeah. And some of them have like requirements on we, like this is our, um. Kind of investment profile, but also we require this type of board seat with this type of

rory-liebhart_1_05-21-2025_160236:

Yeah.

emily-sander_1_05-21-2025_160238:

type of whatever. So it has to fit a perfect, kinda like a Tetris piece. Like it has to fit perfectly for their

rory-liebhart_1_05-21-2025_160236:

That's why finding the right capital partner out there is so difficult, especially if you're, you know, a founder or a management team running a business and you're like trying to operate the business. But also raise capital is like I. And that's where working in, you know, we talk about it in our book too, working with advisors on this stuff, that this is their job to form these partnerships, whether it's an investment bank or just people out there that are really deeply connected and know the space. Like, you know, that's where you can get some leverage out of your own efforts is if you have other people working to find the right partner for you.'cause I tell you what, you know, if you know have experienced and also heard horror stories that you get the wrong partner in, that could be a just killer man.

squadcaster-fhej_1_05-21-2025_160237:

I, I've tended to live those. That's, that's my entire career has been built off of that.

rory-liebhart_1_05-21-2025_160236:

Yeah, yeah. I've had a little bit of a, a more balanced, you know, I've had some greats and some, some other challenges, but, but yeah, it's like, you know, you get somebody on your board where you get a anchor investor, it's very, very difficult to get them out of it. And that could be just. You know, you war games just terrible, you know? So be very, very cognizant. There's much more to it than just who's got the capital.'cause there's a ton of capital out there. It's just finding the right fit, you know?

emily-sander_1_05-21-2025_160238:

Yeah. Um. A, B, C, D, E, F, like how far does this thing go? Like as far as you need it to

rory-liebhart_1_05-21-2025_160236:

Most recently I saw an FF, but I, I don't know. There's probably more, uh, than that. I mean, I, I'm just, you know, I, but, but big companies out there, you know, a lot of the technology companies today that have been sitting on the sidelines because of the ip, the public markets have been, you know, nascent. Like that's where you start to see him because these, these. Companies that develop technology and they, you know, just, it, it's very, very costly and you're just burning cash. So you've gotta keep your thing going, uh, until you have an exit strategy. Right. Or, you know, you're executing an exit strategy. So like, yeah, that's why you say every couple years you might be out raising more capital and maybe the IPO capital markets is shit. And so you have to like, you know, wait it out and, you know, take on more private investment and eventually go one of. Yeah.

emily-sander_1_05-21-2025_160238:

again.

rory-liebhart_1_05-21-2025_160236:

You know, generally, you know, basically everyone's trying to ultimately someday get to an IPOA private equity buyout or be acquired by a strategic, so all of this work and stages and fundraising to keep your business going and growing and scaling is, is with that in mind, you know, ultimately

emily-sander_1_05-21-2025_160238:

you mentioned three options for exit. Can you like go into other, those are the three

rory-liebhart_1_05-21-2025_160236:

those are the main ones. Yeah. Yeah. There's also your business, you know. Ends up tanking and, you know, you, you file bankruptcy and

emily-sander_1_05-21-2025_160238:

That's always an option for

rory-liebhart_1_05-21-2025_160236:

become a distressed vulture, you know, uh, target. But anyway, like Happy Path. Is IPO or acquisition or PE buyout really? Um, I, I don't personally have a lot of experience on the IPO standpoint, so I know Ed's worked for public companies and stuff, but mine's mostly on the PE side and, you know, strategic buyouts. So.

emily-sander_1_05-21-2025_160238:

Okay, so Ed break, break down the three. We have IPO, initial public offering. We're going public and as all the requirements and regulations, blah, blah, blah.

rory-liebhart_1_05-21-2025_160236:

Hmm.

emily-sander_1_05-21-2025_160238:

now it's open to the world. Everyone can buy in.

squadcaster-fhej_1_05-21-2025_160237:

Yeah, so, so we'll talk, we'll talk a little bit about IPO because IPO is a sexy one.

rory-liebhart_1_05-21-2025_160236:

That's what I was gonna say earlier is that's the sexiest.

squadcaster-fhej_1_05-21-2025_160237:

about, only about five or 10% of

rory-liebhart_1_05-21-2025_160236:

It's true.

squadcaster-fhej_1_05-21-2025_160237:

see

rory-liebhart_1_05-21-2025_160236:

Yeah.

squadcaster-fhej_1_05-21-2025_160237:

the bulk of the, the bulk of companies, regardless of kind of how they were funded and how they grew up, and they, their bulk of the companies exit through acquisition. that acquisition may be distressed acquisition, or it may be a, you know, very, very, very, you know, robust process at high valuation. But it's rare that you're gonna see a company go through an IPO. The IPOs used to be used to be able to do an IPO at about 25 to 30 million of revenue,

rory-liebhart_1_05-21-2025_160236:

Mm-hmm.

squadcaster-fhej_1_05-21-2025_160237:

kind of pre, and I'm old enough to remember the pre sarbanes Oxley days.

rory-liebhart_1_05-21-2025_160236:

Oh, even I'm old enough for that.

squadcaster-fhej_1_05-21-2025_160237:

was a free Starbucks pre, you know, you used to be able to go public, um, relatively easily.

rory-liebhart_1_05-21-2025_160236:

Yeah.

squadcaster-fhej_1_05-21-2025_160237:

That tightened up really after the 2000 financial crisis and then really tightened up after two, uh, you know, which was, which was you had Enron plus, so Enron and then Stir in all the internet startups that really were. There is

rory-liebhart_1_05-21-2025_160236:

Yeah.

squadcaster-fhej_1_05-21-2025_160237:

of vapor and crap. And so they put Sarbanes oxley in to essentially tighten up the process. You had additional disclosures, uh, regulations became much more expensive to to bear. Um, however, if you're a big enough company, the the public offering is, I mean, it's a, it's a great way to go because normally what happens when you go public. You continue to control your own destiny.

rory-liebhart_1_05-21-2025_160236:

Permanent gap. Mm-hmm.

squadcaster-fhej_1_05-21-2025_160237:

IPO and that becomes your bang. Now I got a bunch more capital comes in the door, and then over the next year or two, the lockups release and the other folks can get liquid. But you're liquid. So as a, as a founder, you're liquid. You still get to ride up the, the value, if there's up, you've got options. Likely you tend to have nice, big fat. Um, you, you tend to have fatter, uh uh. Comp packages, cash comp packages. You and, and again, I, I was at, at, uh, a private equity firm where we took a public company private. And one of the reasons we did that was because I. The public company has, let's say, 140,000 shareholders. So really there's not a lot of accountability. Like we're private equity. You're looking at this thing going, you know, this is, we're gonna run this thing lean and mean, and we're gonna extract all the value. Public company is kind of fat, dumb, and happy. I mean, the, the, the

rory-liebhart_1_05-21-2025_160236:

Yes.

squadcaster-fhej_1_05-21-2025_160237:

The classic like. Holy crap moment is these companies start as like little babies. They go through their seed and pre angel and and angel rounds and pre and and seed rounds. And then they go A, B, C, and then they go public, and then they get fat, dumb and happy like a baby sumo wrestler. And then bang comes private equity, takes him private, leans the crap out of it and gets another, and then they get another, so they get another. Here's a bite of the apple, and then they lean the crap out of it, and the private equity sells it off. As a strategic, you could end up going through a private a, a go private transaction to private equity after you've gone public.

rory-liebhart_1_05-21-2025_160236:

Absolutely

emily-sander_1_05-21-2025_160238:

like a sumo wrestler to like a boxing athlete. You have to

rory-liebhart_1_05-21-2025_160236:

lean, mean, so Yeah.

squadcaster-fhej_1_05-21-2025_160237:

that doesn't mean, that doesn't mean that you're not, you're not big and powerful, but

rory-liebhart_1_05-21-2025_160236:

Yeah.

squadcaster-fhej_1_05-21-2025_160237:

mean that you're not moving lean and fast. And so that's, that is, but I mean, I, we, part of a team that when we took a company at Lone Star, we took it from public to private and leaned the crap out of it. I mean, I was

rory-liebhart_1_05-21-2025_160236:

It's selling planes. Yeah.

squadcaster-fhej_1_05-21-2025_160237:

I mean, this was a classic, the comp, the. You know, I'm a, I'm a Mercedes guy, right? The, the company's the

rory-liebhart_1_05-21-2025_160236:

Acura, you had an Acura.

squadcaster-fhej_1_05-21-2025_160237:

the Acura's, were the, were the base company car and the CFO's company car was a Mercedes S 50 5:00 AM G sedan that they paid$140,000 for public company. I.

rory-liebhart_1_05-21-2025_160236:

Yeah.

emily-sander_1_05-21-2025_160238:

Geez,

rory-liebhart_1_05-21-2025_160236:

was at G two as a CFO, I was driving a Subaru, so, you know, there's, there's differentials.

squadcaster-fhej_1_05-21-2025_160237:

And you didn't have a company car. We didn't give you crap. You're lucky you gotta work.

rory-liebhart_1_05-21-2025_160236:

I,

squadcaster-fhej_1_05-21-2025_160237:

We wouldn't, I wouldn't, I wouldn't even let you pay for bus tickets. not doing any transportation subsidies. Those are, what's the ROI on that?

rory-liebhart_1_05-21-2025_160236:

yeah. Right. Exactly. Exactly.

emily-sander_1_05-21-2025_160238:

We kept our people fit by making them

rory-liebhart_1_05-21-2025_160236:

Yeah,

emily-sander_1_05-21-2025_160238:

to

squadcaster-fhej_1_05-21-2025_160237:

Yes.

emily-sander_1_05-21-2025_160238:

every

rory-liebhart_1_05-21-2025_160236:

but you know, it, it can be a, it can be a viable option for some, you know, um, you know, the private equity buyout and the strategic acquisitions, those are, those are much more common. And, you know, natural life cycle for a business, you know, big, big companies need to get bigger. Um, and a lot of times they do that through m and a and that's where, you know, you, you have, you have a. You know, growth, growth stage business that can basically be accretive, which means incrementally beneficial to a business buying you. And that's why, you know, so much of that transpires in the private market rather than the public is like, Hey, this makes a lot of sense. Let me, let me bolt you on and like try to integrate you and, you know, increase my overall enterprise value that way. And, you know, uh,

emily-sander_1_05-21-2025_160238:

And that's the most common exit. Yeah.

rory-liebhart_1_05-21-2025_160236:

yep. Exactly.

emily-sander_1_05-21-2025_160238:

Okay.

rory-liebhart_1_05-21-2025_160236:

Yeah.

squadcaster-fhej_1_05-21-2025_160237:

By, by far and away,

rory-liebhart_1_05-21-2025_160236:

Yeah.

squadcaster-fhej_1_05-21-2025_160237:

like 10, 10 times more likely.

emily-sander_1_05-21-2025_160238:

for

squadcaster-fhej_1_05-21-2025_160237:

Yeah.

emily-sander_1_05-21-2025_160238:

and then like what would you say for,

squadcaster-fhej_1_05-21-2025_160237:

That's gonna be the balance. I mean, almost everything, once you get to that size m almost everything is gonna sell. It's gonna just be whether it's distressed or, or through a normal process, but it's gonna sell. Um, it's rare that a bigger company ends up just disappearing.

rory-liebhart_1_05-21-2025_160236:

Yeah.

emily-sander_1_05-21-2025_160238:

I don't like the visual of a distress vulture that Rory said. I'm like, you always have the option of being a distress, like you're just can crash and burn your

squadcaster-fhej_1_05-21-2025_160237:

Yeah. And then the, and then the vulture. Then the Vulture funds come and pick off the

rory-liebhart_1_05-21-2025_160236:

Yeah. Yeah.

squadcaster-fhej_1_05-21-2025_160237:

take the parts that are useful and repurpose'em just like, you know, protein, you know, it's, it's a whole,

rory-liebhart_1_05-21-2025_160236:

Everything's valuable at a price.

squadcaster-fhej_1_05-21-2025_160237:

life symbol. I

rory-liebhart_1_05-21-2025_160236:

Yeah.

squadcaster-fhej_1_05-21-2025_160237:

that's, that's the way it works.

rory-liebhart_1_05-21-2025_160236:

Yeah.

emily-sander_1_05-21-2025_160238:

Do they sell? Is it, is it like a used, is it like a car? You're selling it for parts and you're

squadcaster-fhej_1_05-21-2025_160237:

Yeah, basically, as a matter of fact, uh, in a couple cases, and I'll, and I can use that, uh, I can use one example that I, where I was part of it, sold off basically chunks of the company those chunks of the company were no longer strategic to us. Um, and then used the proceeds from that to retire debt.

rory-liebhart_1_05-21-2025_160236:

Mm-hmm.

squadcaster-fhej_1_05-21-2025_160237:

Um, and then we sold off real estate. And use the proceeds from that to retire debt. then, you know, so we spun off a, spun off a division, and then we, and we weren't, you know, this was financial crisis time. We sold off a division, we sell lease, backed a bunch of property and got out of the real estate business, got out of the fancy car business and got out of the, uh, got out of, uh. A couple of ancillary businesses that we were related businesses, but not

rory-liebhart_1_05-21-2025_160236:

Yeah.

squadcaster-fhej_1_05-21-2025_160237:

to us, and it allowed the company to survive. And we retired a bunch of the debt doing it. So when you're in trouble, that's one of the things you do

rory-liebhart_1_05-21-2025_160236:

That's restructuring. Yeah.

squadcaster-fhej_1_05-21-2025_160237:

here? Let's restructure

rory-liebhart_1_05-21-2025_160236:

Hmm.

squadcaster-fhej_1_05-21-2025_160237:

off. And then PE buys those, buys those pieces. Distress firms or

rory-liebhart_1_05-21-2025_160236:

Yeah. Yeah. I think, uh,

emily-sander_1_05-21-2025_160238:

can

rory-liebhart_1_05-21-2025_160236:

the last, uh, kind of career stops that I was in prior to where I'm at now, basically, I had taken a circuitous journey of running a company that was acquired by a much larger public company and as part of a financial services division, which then as things happen, you know, for all the points I just said, you're restructuring, you're, you're trying to. You've gotten too bloated, you're gonna refocus your energy, grow, you know, kind of, uh, increase your share value, all that stuff. Yeah. I was then part of a spin out, which is to say, you know, Hey, you're an appendage that no longer fits with the strategy. We're gonna carve you out, sell you to private equity. And so yeah, I've, I've actually rode the same company through multiple stages like that. And, uh, yeah, it's, it's, there's always a rationale. You can always sort of, there's always. Value to a business, to someone else based on what their specific, you know, kind of

squadcaster-fhej_1_05-21-2025_160237:

Mm-hmm.

rory-liebhart_1_05-21-2025_160236:

reason for existence is. Right. Like, so, you know, private equity is like, Hey, yeah, we, we like this business services business, all this, that, and the other thing, uh, you know, prior owner was like, eh, we don't really need financial services. We're an insurance conglomerate, so, you know. Yeah,

emily-sander_1_05-21-2025_160238:

One man's trash is another man's

rory-liebhart_1_05-21-2025_160236:

exactly.

emily-sander_1_05-21-2025_160238:

of

rory-liebhart_1_05-21-2025_160236:

Yeah. Yeah.

emily-sander_1_05-21-2025_160238:

Alright, exit

rory-liebhart_1_05-21-2025_160236:

Hmm.

emily-sander_1_05-21-2025_160238:

Lightning round. What is the best thing you've read or watched in the last 30 days that you would recommend a book? An article, TV show,

rory-liebhart_1_05-21-2025_160236:

Well, I just, I just reread on-Ramp to Exit and watched our last podcast, so not No kidding. No kidding. Um. I'll go quickly. Uh, my wife and I have been watching, uh, the last of us. It's a cool series on HBO max based on a comic book, I believe, but zombies, but some depth to it. So that's, that's watching. It's fun to, to share that with my wife and then reading wise, um. I am reading a book called Barbarian Days. It's about, you know, basically a surf lifestyle from back in the day based in Hawaii, which just is, takes me away from the, the daily grind and, you know, makes me think island vibes. And it's, it's a cool story too. So, yeah, I recommend it Barbarian days.

squadcaster-fhej_1_05-21-2025_160237:

I will, uh, I'll give a couple. Um, on the reading side, I don't, I don't watch a lot. Um, and

emily-sander_1_05-21-2025_160238:

You make up for it. By

rory-liebhart_1_05-21-2025_160236:

Oh yeah. You out. Read the hell out of us. Yeah.

squadcaster-fhej_1_05-21-2025_160237:

yeah, I do. So I, I read a, uh, book by someone who basically I would, I. Yeah, I would say would be a competitor to On-Ramp to Exit. I read the Exit Strategy Playbook, um, by Adam

rory-liebhart_1_05-21-2025_160236:

How dare you. I'm kidding.

squadcaster-fhej_1_05-21-2025_160237:

it was extremely well done. It was funny though, because I read it and I'm like, oh, well this, it's almost like it's a plagiarized copy of our book, but it's, there's some different nuances, different experience.

rory-liebhart_1_05-21-2025_160236:

Obviously.

squadcaster-fhej_1_05-21-2025_160237:

but I thought it was, I thought it was, you know, I, I think anyone, um. Anyone would be well served to not only look at our book and read it, but also at Adam's book and read it. I think the combination of the two will give a, think they reinforce each other and, and they were done. Like I'd never read that before. So it was funny to kind of pick it up and go, oh, this is, this is interesting. Um,

emily-sander_1_05-21-2025_160238:

Did we have more real life pithy, witty stories though? Come on.

squadcaster-fhej_1_05-21-2025_160237:

no, no, no. There was nothing as pithy. There was nothing as.

rory-liebhart_1_05-21-2025_160236:

Was there as much Mirth? No, I'm kidding.

squadcaster-fhej_1_05-21-2025_160237:

Not as much more. Um, the other, the other piece is, uh, other thing that I've been, I've been reading is there's a, uh, an up and coming author by the name of Amberly Murray, and she's redone. A bunch of, um, the hi, a bunch of novels, um, like Pride and Prejudice and,

rory-liebhart_1_05-21-2025_160236:

Why are you cracking up?

squadcaster-fhej_1_05-21-2025_160237:

that, and she's, she's rewritten them in modern American English, so you could actually understand what's being said. And so I've, I've, uh, kinda gone back and reread Pride and Prejudice and,

rory-liebhart_1_05-21-2025_160236:

Okay.

squadcaster-fhej_1_05-21-2025_160237:

and, uh, Moby Dick and, and, uh, other one. And. And the Blue Castle. Um, the other one that I've, I've actually kind of gotten into now is the, um, Aubrey mat, uh, matchin series by Patrick O'Brien. So he wrote 21 novels, um, that was really around the, uh, the Napoleonic War. Yeah, the Napoleonic Wars sailing.

rory-liebhart_1_05-21-2025_160236:

Wow.

squadcaster-fhej_1_05-21-2025_160237:

uh, I've got them on audio book. So I actually listen to those in the car. Um, and that's been, and I'm up to, I'm actually up to, um, far side of the world, which is. Which is the, uh, the one that they actually turned into a movie with Russell Crowe? Uh, well, it's Far Side of the World is actually the book. Um, master Commander is a different book. Yeah, it is Master Commander Colon. Far side of the world. And so Master Commander was one book, far Side of the World, was another book I'm at. I'm at far side of the world now, and it's, it, it's extraordinarily well-written. It's very funny, um, in, you know, kind of English humor way. Um, so that's the, that's the reading. So you know Patrick O'Brien, a and Murray and then, uh, Adam Coffee. So there you go.

rory-liebhart_1_05-21-2025_160236:

Awesome.

emily-sander_1_05-21-2025_160238:

We'll have the links in the show notes for

rory-liebhart_1_05-21-2025_160236:

Yeah.

emily-sander_1_05-21-2025_160238:

My, listen, I am rereading the Martian and Project Hail

rory-liebhart_1_05-21-2025_160236:

Oh, nice.

emily-sander_1_05-21-2025_160238:

Andy

rory-liebhart_1_05-21-2025_160236:

Yeah.

emily-sander_1_05-21-2025_160238:

And more precisely, I'm re-listening to them on Audible because one, uh, will Wheaton has now narrated The Martian. So I'm listening to that

rory-liebhart_1_05-21-2025_160236:

Oh, cool.

emily-sander_1_05-21-2025_160238:

and then. Your head cock? Well, wheat Wheaton is a well-known narrator. He played Wesley Crusher on Star Trek Next Generation, and he has like a very, memorable, uh, uh, like you can, you know, it's him when he is narrating. And then Project Hail Mary has a key character who is not a human. at first this character speaks in musical notes and they can actually do it on Audible. So they have a cool way of like doing his voice. Um, so

rory-liebhart_1_05-21-2025_160236:

Well, speaking of awesome narrators too, we've got Ed Barton finishing up his piece on our audio book, so stay tuned listeners.

squadcaster-fhej_1_05-21-2025_160237:

soon.

rory-liebhart_1_05-21-2025_160236:

Yeah. So.

squadcaster-fhej_1_05-21-2025_160237:

The

emily-sander_1_05-21-2025_160238:

if you want

squadcaster-fhej_1_05-21-2025_160237:

Dul,

rory-liebhart_1_05-21-2025_160236:

Be ready.

emily-sander_1_05-21-2025_160238:

tones,

rory-liebhart_1_05-21-2025_160236:

You think James Earl Jones has got a sick voice? Wait till you hear Ed Barton.

squadcaster-fhej_1_05-21-2025_160237:

the dulce tones.

emily-sander_1_05-21-2025_160238:

Morgan Freeman, watch

rory-liebhart_1_05-21-2025_160236:

Yeah, let's go.

emily-sander_1_05-21-2025_160238:

is coming for

rory-liebhart_1_05-21-2025_160236:

Yes.

emily-sander_1_05-21-2025_160238:

It's coming for you? Yes. All right. We've given like really good car information, how to run marathons and what the miles feel

rory-liebhart_1_05-21-2025_160236:

Yeah. A little bit of business talk. Not that much though, you know.

emily-sander_1_05-21-2025_160238:

yeah, I feel like this is a good place to

rory-liebhart_1_05-21-2025_160236:

Let's wrap it.

emily-sander_1_05-21-2025_160238:

Here we go. All right, we'll catch you next time on the Private Equity Experience Podcast.

rory-liebhart_1_05-21-2025_160236:

Be good. Be profitable.