Private Equity Experience

Why Small Business Owners Are Saying No to Private Equity

• Emily Sander • Season 1 • Episode 32

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In this episode, the hosts unpack a growing trend of small business owners rejecting private equity offers, highlighted by a plumber who repeatedly turned down buyout opportunities. They explore how PE firms identify and target fragmented industries, and why roll-up strategies remain a core playbook. The conversation dives into the real reasons behind founder resistance, from preserving legacy and culture to concerns about control and financial risk. Listeners will gain a balanced perspective on whether private equity is misunderstood or simply not the right fit for every business owner.

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Three insiders. One mic. All things private equity — explained. Hi 👋 We’re Ed, Rory, and Emily — a CEO, a CFO, and a Chief of Staff — here to demystify the world of private equity. Between us, we’ve sat in the founder’s chair, run PE‑backed companies, and worked on the deal side, so we know the wins, the pitfalls, and the jargon (and we’ll explain it).

Through the Private Equity Experience Podcast, our book On‑Ramp to Exit, and a library of free tools and templates, we share real‑world stories, practical strategies, and insider insights to help you navigate every stage of the PE journey — whether you’re leading a portfolio company, joining a deal team, considering PE, or just PE‑curious.

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Podcast Kickoff

Welcome to the Private Equity Experience Podcast. Your backstage pass to the strategies, stories, and secrets that drive value in the PE universe. No filters, no fluff, just straight talk and expert insights to help you navigate the private equity world with confidence. And now your hosts, ed Barton, Rory Leaphart, and Emily Sander.

emily-sander_1_03-19-2026_131604

So, last time we talked about fishing,

rory-randall-liebhart_1_03-19-2026_131604

If

emily-sander_1_03-19-2026_131604

and this time we're going into plumbing. Is this, is this where we're going, Rory?

rory-randall-liebhart_1_03-19-2026_131604

plumbing and beyond. Yeah.

emily-sander_1_03-19-2026_131604

And it's kind of like the opposite. Like last time we talked about Sims, which is a fishing company brand, and they partnered with private equity and kind of diluted their brand and they're not as bespoke and luxury and high quality.

rory-randall-liebhart_1_03-19-2026_131604

Yeah.

emily-sander_1_03-19-2026_131604

And then Rory came across another article that's almost inverse in a way where a plumbing company, or like this one guy who does plumbing gets approached by PE and he's like, no, no, no, no, no.

rory-randall-liebhart_1_03-19-2026_131604

Right. Yeah, it was, um, maybe my algorithm's serving me up information. Now that's very consistent. But, um, yeah. This week Bloomberg published an article. It said small businesses are pushing back against private equity. So of course I click in on that. And what's it about? It's about, you know, a rundown of how small businesses are vocally resisting private equity partnership and, you know, some of the reasons for that. And, you know, some of those are interesting worth talking about. You know, whether we debunk those and, and kinda lend some, um, perspective on, on sort of this fear mongering around private equity. But, you know, it, the, the article centered around a small business owner, 64 years old, has run a family owned plumbing business for years and years and years, and is, has been approached by private equity many times. And as we talked about a lot, you know, as a, as a founder, as a business owner. If you have an interesting business and it's, you know, in a fragmented market and it's a cash flowing business, but could be optimized, you're gonna get those phone calls, you're gonna get those inbounds. And so, you know what, what this story centered around was he and other businesses like that. you know, vocally resisting private equity for a variety of reasons. And, uh, you know, some of those things are, you know, what you would think are kind of tropes and some of those things may have some merit to them.

How PE Finds Targets

emily-sander_1_03-19-2026_131604

Yeah. My first question is how did the PE folks find like a plumber, if it's just a mom? Shop is there like some, you know, thing you have to register with the state and they kind of scan lists or how does that work?

rory-randall-liebhart_1_03-19-2026_131604

Or there's a will, there's a way, uh, you know, finding businesses in, in is. It's easy. Obviously there's a lot of information out there and there's a lot of people at the very bottom level of an organization that's charged with, you know, serving up

twinkle-toes--it-_1_03-19-2026_131604

Yep.

rory-randall-liebhart_1_03-19-2026_131604

analysts and the like,

emily-sander_1_03-19-2026_131604

Well, I know I registered my company like I have to pay, you know, Washington State, you know, every year I have to re-up that thing and that's on public record. So I'm assuming lists, lists like that. Some something similar.

rory-randall-liebhart_1_03-19-2026_131604

Well, I mean, Ed's got, you know, ed, ed himself is kind of representative of this. I mean, he's, he's been doing this from rolling up, you know, kind of fragmented businesses in an industry, and I think a lot of it comes down to you, you. focus on a sector that is ripe for, uh, rollup or optimization, and then you basically say, find me all of the businesses that kind of qualify in this, and then let me have a look at each of these businesses in some way and evaluate'em and see if they're actually right for the portfolio.

twinkle-toes--it-_1_03-19-2026_131604

the classic,

rory-randall-liebhart_1_03-19-2026_131604

what do you think, man?

twinkle-toes--it-_1_03-19-2026_131604

the, the classic, uh, beginning to this was back in the sixties. With Service Corp of America rolling up homes

emily-sander_1_03-19-2026_131604

Oh.

twinkle-toes--it-_1_03-19-2026_131604

it was a classic like, you know, family owned business. You sometimes were having trouble getting the kids to wanna become, you know,

rory-randall-liebhart_1_03-19-2026_131604

Yep. Yep.

twinkle-toes--it-_1_03-19-2026_131604

type of thing and, and funeral directors. And so the Service Corp essentially said, look, we're gonna start rolling up. These, these funeral homes and we're gonna put the corporate shell over it. We're a public company and they were basically, you know, they, they focused on that one industry and, and revolutionized it. It the way to do it.'cause they did not change. The local branding, they didn't change the local feel. And a lot of times they retained the family members that were in the business to run the business. But you had the corporate over overhang of, you know, we've got buying power, we've got the financial acumen. We can, you know, it was kind of all the, it wasn't always perfect, but the, it was the right approach. But the, as Rory said, the, the folks that are going, okay, look, we're in, we're in plumbing, or we're looking at a plumbing company. Um. The analysts, the most junior analysts at a, at a private equity firm do two things. They, they make Excel spreadsheets of PowerPoint decks, and the Excel spreadsheets and PowerPoint decks that they make are generally gonna be augmented by two things. They're gonna be augmented by portfolio company information and market based information that they have to go out and research. So you're not getting like managing director type guys going out and going, okay, let me go find. You know, whatever they go. We've decided that an area that's ripe for, for consolidation is certified public accountants. Because now you can have non accounting owners and there's a lot of mom and pop shops that are out there that are, you know, small regionals to, to locals that have retiring, baby boomer aged partners. And so we're gonna start calling around and the way they can generally start looking is, like Rory said, they're, most of these businesses that you're, that you're talking about, you know, aren't ones that are gonna be hidden somewhere. And they're not, you know, public doesn't know about'em. It's basically these are service businesses, public facing information's available. They can, you could do some basic analysis to kind of figure out, okay, what areas do they just using Google? What areas are they serving? Are they in multiple locations? Does that give it enough? to be large enough, you go to the public records and go, okay. When I look at the governing people are, is it all family members? Is it all, you know? Is it, does it look family owned? Does it? You can look at UCC filings that are public record at this, at Secretary of State for each of the states and go, okay, what UCC filings are on file for this, where they've got bank debt, where they've got investors, where they've got, you know, where, where something's been filed so that you could get it. An idea of the magnitude. Mm-hmm. All that's publicly available information and you can buy it or you can research it yourself and then you spin that into a database and go, okay, I'm gonna start making calls and I, I am now Center Bridge is large enough that I am now probably. Once a month getting an inbound from somebody

emily-sander_1_03-19-2026_131604

Oh.

twinkle-toes--it-_1_03-19-2026_131604

you know, we're looking for, for firms like yours. And I'm like, no, I'm not ready yet. Oh, every I go minimum th throws of tax season right now. So I'm more ready today than I am most of the rest of the course of the year. But, you know, I, I'm like, no, I got a plan and I'm, you know, I've got another couple years of execution. But the, that's how these, these companies get

emily-sander_1_03-19-2026_131604

You're on their radar though.

twinkle-toes--it-_1_03-19-2026_131604

Well, yeah. And because we're, we're, you know, seven figure plus revenue business, and that's starts to get to the point where they're going, okay, that's interesting. We get this up to two and a half and we're, we're right in the sweet spot for, for,

emily-sander_1_03-19-2026_131604

You're, you're

twinkle-toes--it-_1_03-19-2026_131604

consolidation.

Rollups and Value Creation

emily-sander_1_03-19-2026_131604

cooking with gas. So it's like, it's like they're looking for certain characteristics and models and setups, and then they kind of back into it from there and go, okay, what, what lists or what databases can I pinpoint exactly what I'm looking for? Not like, here's the yellow Pages. Who's a local plumber that I can randomly call?

twinkle-toes--it-_1_03-19-2026_131604

with the, with the, the key strategy being what are we rolling up? you're, you can't just go, well, I'm gonna go find businesses that fit these characteristics without going, the strategy is really a roll up strategy. And so it's like, okay, I, I'm doing plumbers or I'm doing home services, or I'm doing, you know, construction or I'm doing, you know, so like, home services is a, is a classic. Where folks are going. Look, if I can take a home services model, which would be cleaning, painting, electrical. Glass roofing, you know, so basically not business to business, but business to consumer in a lot of cases. And go, if I can roll that, those up, those are a lot of small mom and pop businesses. But I can get, I can get effectiveness for advertising. I can get effectiveness in, in purchasing the raw materials because of our size. We could bring some additional resources to bear and generally these things are trading at. x ebitda, four x ebitda. You roll'em up, you put the efficiencies in. Now you're selling'em at 12 x ebitda. That's classic private equity stuff. That is, that is like playbook right there.

rory-randall-liebhart_1_03-19-2026_131604

Yeah,

emily-sander_1_03-19-2026_131604

So, I mean,

rory-randall-liebhart_1_03-19-2026_131604

where the money is too, right? Like an interesting stat in this article too, which kind of blew my mind, which, but, but it doesn't make sense. I mean, you talk about the boomer generation, so you know right now, like, uh, 25% of the small businesses out there are. Run or owned by somebody that's 65 years of age or older. So Ed's below that by a long shot, you know, so he's, he's he's way outside of that statistical

emily-sander_1_03-19-2026_131604

spring chicken.

rory-randall-liebhart_1_03-19-2026_131604

what what it is, is like to say, you know, by 2030, over a million businesses due to retirement should be coming up for sale, representing possible.$5 trillion of enterprise value. I mean, this is a, this is a McKinsey study, so somebody, some PE group commissioned this probably.

twinkle-toes--it-_1_03-19-2026_131604

Yeah.

rory-randall-liebhart_1_03-19-2026_131604

um, so there you go. Where the money's at, you go, where you can aggregate. And to Ed's point, you know, it's like these industries, the point of a roll up isn't to necessarily, take in every single individual business and like. Turn the levers and tweak the knobs to make it right, but like it's to take all of them that you acquire for your portfolio and sort of homogenize them to the greatest significant point without damaging the brand. So, you know, what does that mean? It means putting it on a central operating system for logistics. Digitizing a business when it might be like file drawers and paper and shit still. And you know, by doing those things, you cut costs, you, you open up your growth opportunities, you schedule things better, you give yourself more capacity. And there you go. You basically could, you know, increase your EBITDA significantly and you attach multiples to that and boom, there you go.

emily-sander_1_03-19-2026_131604

Yeah, this.

rory-randall-liebhart_1_03-19-2026_131604

the business and sell it.

emily-sander_1_03-19-2026_131604

And this kind of hearkens back to our previous episodes, which talk about like p PE firms have a strategy, rollup strategy is one of them. So you're feel like, Hey, I'm going to go after B2C companies and do a rollup strategy, um, in this industry. And we also talked about. Laws and regulations can change. And so as you mentioned, hey, like now non-accountants or non-certified people can own CPA firm, that changes the dynamic. So you put all those things together and then you go look for people that fit that bill, is what it sounds like.

rory-randall-liebhart_1_03-19-2026_131604

Yeah.

emily-sander_1_03-19-2026_131604

Um,

rory-randall-liebhart_1_03-19-2026_131604

certainly not all of'em qualify. Some of'em are

emily-sander_1_03-19-2026_131604

no. You gotta sift through like

rory-randall-liebhart_1_03-19-2026_131604

that where the market, it's that in which they serve is just that weak that you just don't, but I mean, you turn over enough rocks, you're gonna find some gems and you roll those up, you

emily-sander_1_03-19-2026_131604

yeah. Part of me goes, uh, I know you said the, sometimes the, like, funeral home directors have trouble passing that on to their children. And I'm like, yeah, Julia, your daughter Julia, you mentioned last time, uh, probably wouldn't wanna be a funeral director, but we'll see if she, if she takes a liking to the CPA work.'cause, uh, if the PE folks are sniffing you now, they're gonna, they're gonna see another Barton on there and be like, oh, what's this going on?

twinkle-toes--it-_1_03-19-2026_131604

sure she quite fits her, uh, profile of the, of but she, she did a, she did a fine job doing the, uh, client facing stuff today.

rory-randall-liebhart_1_03-19-2026_131604

Yeah.

emily-sander_1_03-19-2026_131604

Good for her.

twinkle-toes--it-_1_03-19-2026_131604

might be her jam.

Why Founders Resist PE

emily-sander_1_03-19-2026_131604

There we go. Okay, so Rory, this plumber, 65-year-old plumber is getting pings from pe from, they found him, it fits their profile, whatever, and he's saying no, like, no, no, no. Why is he saying no?

rory-randall-liebhart_1_03-19-2026_131604

Again, you feed into a lot of tropes, but some of'em are legitimate. Right? So, you know, there is this, there's the notion of all PE cares about as a bottom line. Someone like me, a capitalist. Sees a statement. I like that. It makes me chuckle because I'm like, of course I do. I'm in this to make money. I want to generate profitability. But for some, if you own a business that's been in your family, it's more than just a business. So you make decisions beyond. the bottom line as they say. in, you know, in cases like this, you know, you, you worry about the employees. How will they be treated? Will they be let go? Uh, you know, my experience having worked for small businesses, um, startups, founder run businesses is like, sometimes there's some fun, funny stuff happening in these businesses that, you know, if somebody were, were from the outside looking in, they'd be like. Why do you need to do this? Why are you doing this? You know, let's not do this. And so that creates some tension and strife that human beings don't want to deal with sometimes. And maybe their business is good enough and they have a lot of flexibility and taking on a majority partner, uh, would. Disrupt that. So you know that, that I can't begrudge people for thinking that way. If it's more like, Hey, I have this little business. I don't really care if I'm maximizing how much money I make, I just like my business. Okay. That's a fair argument. But the argument of just like, you know, they, they PE just wants to come in and make a lot of money. Yeah. Of course, that's the point, right? So, um, so I, I bristle at stuff like that, but that is something that, you know, an article like this talks about. You know, the other things too are, you know, again, we've talked about it in our book, we've talked about it on this podcast, is that the toolbox that is used by private equity groups includes use of debt, use of other. of leverage to IE juice returns, but also to, um, minimize the amount of capital that they put into the business themselves. Which then if it goes other than great to plan, then you have to make adjustments to reduce costs or, you know, grow your way out of it. So all that, all that to say is that. It increases volatility. And for a founder that's a family run guy, maybe even not the best business person in the world, they just know what they do really well, like hanging siding or you know, doing landscaping or something like that. Maybe they're not the best business people, but adding a dynamic like that could be problematic. So. those things, you know, those are valid, but just like demonizing PE is this big bad suit that comes in and, you know, just doesn't understand how the world works from a human standpoint, I think that's a little, little much, and

twinkle-toes--it-_1_03-19-2026_131604

Perfect.

rory-randall-liebhart_1_03-19-2026_131604

this article kind of touches on things like that. I'm like, are also human beings as well. It's like, you know, it's just business is the way I see it. But, uh. it, it's some, it's things like that, that are, that come up in the article and just you, you talk to an, you know, a regular person out there that doesn't really know this, this industry, this world very much that is kind of a perception is just like private equity, hedge funds, anything that, you know, you, you hear about when, when you, you know, um, watch financial news and things like that. People just don't get it. So they kind of like demonize what they don't understand in

emily-sander_1_03-19-2026_131604

You dismiss it out of hat.

twinkle-toes--it-_1_03-19-2026_131604

Well, yeah.

rory-randall-liebhart_1_03-19-2026_131604

clickbait, you know?

twinkle-toes--it-_1_03-19-2026_131604

Yeah. There's enough. There's, and there's been enough bad actors.

rory-randall-liebhart_1_03-19-2026_131604

Sure.

twinkle-toes--it-_1_03-19-2026_131604

the, in the space and that have made enough headlines and news and layoffs and, you know, these companies, these, you know, went bankrupt and they've been around for a hundred years and they, you know, got bought by private equity or by, or by a, did a leverage buyout. Then they ended up out of business. And, know, so there's, and, and some folks, and again, I'm, I'm finding this more and more in some of the, the clients that I work with the maximizing profitability and maximizing. The exit value isn't necessarily their number one priority.

rory-randall-liebhart_1_03-19-2026_131604

Correct.

twinkle-toes--it-_1_03-19-2026_131604

of fact, it may not even be in the top five. And so they're like, look, I, I just don't wanna go through the process of, know, taking something I've built and kind of, I'd rather I had one person tell me I'd rather just shut it down. Like I'd rather run it off and shut it down. One person gave the business to their partner'cause they were ready to retire and they gave, and a business was probably worth grand.

rory-randall-liebhart_1_03-19-2026_131604

Mm-hmm.

twinkle-toes--it-_1_03-19-2026_131604

they gave, they gave their, their 50% to their partner and just said, okay, I'm out. And I got to prepare their final return this year, the partnership return. I mean, it was, and I was like, well, the business has value. You didn't wanna sell. And, and she was like, you know, basically, no, that's not, you know, that's not the. That's not what I was looking to do. I, I got my fun out of it. I, I had the lifestyle I wanted. I'm ready to retire, I'm fine. I've got plenty of cash. And, you know, he's eight years younger, 10 years younger. Still wants to stay active in the business. So I gave him the business. Okay.

rory-randall-liebhart_1_03-19-2026_131604

Nice.

twinkle-toes--it-_1_03-19-2026_131604

I've seen that where folks have given, you know, to other, to employees, they've given him a chunk, they've given them.

rory-randall-liebhart_1_03-19-2026_131604

from his, uh, former partner for the rest of his life though. Yeah.

emily-sander_1_03-19-2026_131604

Hmm.

Choosing Not to Sell

twinkle-toes--it-_1_03-19-2026_131604

but they, I mean, so in, in some of these cases, I think the, so you have the demonization, you know, which is, which is not, and we've talked about it a lot, that if you know what you're getting into, it's generally. It's generally the same and, and you know, most private equity folks run a similar playbook and it's not a demon. They shouldn't be demonized. It's, you didn't understand what you were getting yourself into. And you know, it's a shock. On the flip side of that, there are folks who do know what they're getting themselves into and are just like, look, that's not what I want. I don't wanna, you know, I don't wanna keep working, I don't wanna work for those folks. I don't want to have that kind of scrutiny on my expense report. I don't, you know, I've got the lifestyle I want. I'm fine.

rory-randall-liebhart_1_03-19-2026_131604

Yeah.

twinkle-toes--it-_1_03-19-2026_131604

And again, that may create a different type of transition down the road when, know, if they pass away and they haven't kind of planned for that. So there's estate planning, estate taxes, all the other kind of things that need to be dealt with at that point. Um, and you, if that happens, you can call me and I'll help you. Um, but the, the other, the other element of that, so it's not a planned exit, it's an unplanned exit. Um, but. a lot of cases, that's, I think that's where some of these folks are getting to is it's been a family business. They run it a certain way. They don't want to maximize, they're, they're comfortable, they're happy, and why bother And, and they may know enough that it's not just the tropes and the, the, the stereotypes. It's really a, that's not the business lifestyle I wanna lead for the last eight or 10 years of my career and forget it.

rory-randall-liebhart_1_03-19-2026_131604

Yeah.

emily-sander_1_03-19-2026_131604

And it, it also is what stage of your career you're at, because I have a client right now who, it's a family run business. I, I know the second generation and third generation, and. if they entertain taking on pe and I'm like, oh, you're at a very different place in your. Career than your kids, and that's probably gonna impact them more. So it's a little bit of a

rory-randall-liebhart_1_03-19-2026_131604

Yeah,

emily-sander_1_03-19-2026_131604

generational, um, generational thing and also like where you're at with your career life and all of those decisions.

rory-randall-liebhart_1_03-19-2026_131604

1,

Anti PE Marketing Play

emily-sander_1_03-19-2026_131604

interesting.

rory-randall-liebhart_1_03-19-2026_131604

that was interesting about this article is it was, it was citing examples and the, and the plumber, the plumbing business was one of these that used the private equity angle as a way to. Promote itself in the community as we are family owned. We are, we are anti pe and using that as a lever to sort of, you know, promote themselves. We're not like the competition out there that is owned by private equity. You know, we are, we are normal people just like you and all this, that, and the other

emily-sander_1_03-19-2026_131604

Normal people.

rory-randall-liebhart_1_03-19-2026_131604

you know? Right, exactly. You know, we're, we're just, you know, we're, we're part of the community. You're, I think the. it was like, you know, we're boots on the ground, not spreadsheets or something like that. Some something kind of

emily-sander_1_03-19-2026_131604

That's catchy. That is catchy though. Yeah.

The Friendly PE Investor

rory-randall-liebhart_1_03-19-2026_131604

that, that's an interesting thing. But another element that I find interesting is it gives rise to the pe p investor. What does that mean? It, a, it's a basically a private, like, call it like an ED comes in, you know, is, is by, by definition you're buying equity in a private transaction. So it's a private equity transaction. Um, you're buying businesses or you're taking a minority position in businesses and you're saying, Hey, I'm not like the other ones out there. I'm here. You know, I'm, I'm part of the community. I want to, I want to help you grow. You know, I'm going to be letting you do your thing. You understand the business, that sort of thing. So these people are out to make money too, just as much as any, as Blackstone is, right? So, um, but it is, it is interesting. Gives rise to. You know, an investor type that certain types of founders and bus small business owners can maybe get more comfortable with because they don't perceive it's the same thing as somebody coming from, you know, wall Street or wherever, you know, or, um, you know, Greenwich, Connecticut, something like that. So, um. It's all private equity. If you're buying stock of a private company, it's a private equity transaction. You know, so, uh, so I find that interesting. There's like, you know, there's private equity as most people think about it, which is large firms. So there's private equity with like people like me and Ed and you know, anyone that invests in private companies with their own money, you know, so.

emily-sander_1_03-19-2026_131604

You said the plumber was vocal about his?

rory-randall-liebhart_1_03-19-2026_131604

Yeah,

emily-sander_1_03-19-2026_131604

No, not going. Oh, wow.

rory-randall-liebhart_1_03-19-2026_131604

that says, we are, we are family owned, we're not, you know, PE owned, that sort of thing. And actually, and if you click through in the article, there's actually a video that their company made that effectively was like, you know, an advertising video, um, proclaiming that they're, they're, you know, they're independent and they'll never be

emily-sander_1_03-19-2026_131604

Has this

rory-randall-liebhart_1_03-19-2026_131604

owned.

emily-sander_1_03-19-2026_131604

worked for him?

rory-randall-liebhart_1_03-19-2026_131604

Uh, I haven't seen their, you know, financial results, so it's hard to say, but, um,

twinkle-toes--it-_1_03-19-2026_131604

I.

rory-randall-liebhart_1_03-19-2026_131604

it seems, it seems like, it seems like they think the marketing strategy's pretty good. Yes. So, yeah, exactly. So hard to say. But, um, you know, somehow they, they showed it to Bloomberg. So Bloomberg, uh, you know, picked it up and put it in their

emily-sander_1_03-19-2026_131604

I wonder, I wonder if there's like other

rory-randall-liebhart_1_03-19-2026_131604

comment.

emily-sander_1_03-19-2026_131604

that are like, okay, like, which way do I wanna go? Or maybe like, it seems like he's actually. Created like little niche for himself. Little like advertising like Oh yeah, like you are like kinda the local person who didn't take that PE money.

rory-randall-liebhart_1_03-19-2026_131604

Yeah.

emily-sander_1_03-19-2026_131604

I mean, good for him. That's smart. I mean, smart advertising.

rory-randall-liebhart_1_03-19-2026_131604

of like, um, even here in Seattle area, like there's, there's private equity funds out here that, you know, have kind of rolled up pavement paving businesses and, and plumbing businesses and stuff like that. So it's, you know, um, there's a equity in every single industry in a big way. So there aren't really many industries where there isn't private equity ownership. And so I think it really just comes down to the founder owner situation on what they're. is on the matter and, and whether they even have a worthy business to sell.'cause it's one thing to say, I don't want private equity money. Well, if you're running a shitty business that's making no money and burning cash, then you're not gonna get it anyway. So don't worry about it. You know? So, I mean, uh, that's oversimplifying it.'cause they do buy distress businesses. Two, that being said, point is like. You know, um, there's so many flavors to businesses, even within the same industry that, you know, you're gonna find private equity coverage anywhere you go. So

emily-sander_1_03-19-2026_131604

Why do you think Bloomberg picked the story up?

rory-randall-liebhart_1_03-19-2026_131604

it's been a slow business week or two. I feel like you take away the Iran

emily-sander_1_03-19-2026_131604

Nothing's happening in the world geopolitically.

rory-randall-liebhart_1_03-19-2026_131604

You Yeah. Aside from that, no. I don't know. Um, like I said, they, they probably churn out stories and my algorithm picked it up'cause. It knows I I'm involved with private

emily-sander_1_03-19-2026_131604

it's, but it's interesting that this is a story, right? Like someone like rejected pe, like, okay, like, okay, I mean I'm sure that's not happens every day, but this, this seemed to have a little different spin to, I guess.

rory-randall-liebhart_1_03-19-2026_131604

it, it just seems like it's kind of just a counter coverage to the growth of PE and growth of private credit in particular. Um, I've seen a lot of stories like that, you know, basically on the private credit side recently, that's sort of. You know, poking holes in that model as well. There's been some really big blowups recently, and so now there's like a whole, you know, slew of news that's coming out. I had one of the investors in my fund today send me a message saying, I'm reading all this stuff about debt funds blowing up, so does that create opportunity for you guys to go buy up assets? And I'm like, well. Sure. You know, any, anytime type of tumultuous, um, economic things lead to opportunity. But, but the point is, it's like these things go in cycles. So, you know, um, I feel like we're kind of, we've been talking about it for a long time, but it's maybe starting to enter more of a bearish cycle of, of sorts. And so you're gonna see a hell of a lot more stories like this of like, you know,

emily-sander_1_03-19-2026_131604

Hmm.

rory-randall-liebhart_1_03-19-2026_131604

your fist at the man and like that kind of thing, populist type of shit. So, yeah.

emily-sander_1_03-19-2026_131604

Populous type shit. We should add this to our long list of like, let's track this and see how it is in like a year or two. I think,

rory-randall-liebhart_1_03-19-2026_131604

No,

emily-sander_1_03-19-2026_131604

know, counterpoint to this story is like the story we talked about in a previous podcast episode about EA sports doing one of the

rory-randall-liebhart_1_03-19-2026_131604

I'd

emily-sander_1_03-19-2026_131604

largest.

rory-randall-liebhart_1_03-19-2026_131604

and check that out. I haven't, I haven't followed that so

emily-sander_1_03-19-2026_131604

But that's like the polar opposite. Like, let's go big or go home. Let's go bigger or go home. I mean that's, that was the biggest one in the.

rory-randall-liebhart_1_03-19-2026_131604

You know, the one thing that has stayed very consistent is the fact that there's just tons and tons and tons and tons of capital on the sidelines. So that, that is, that's consistent. Whether it's being invested in certain ways and some of that capital is because, you know, funds have had to liquidate and, and sort of, um, you know, move on from their current investments and say, okay, I'm trying to go raise more.'cause the, as we've talked about in our previous episodes, like. Some of these, given the economy, the ability to sell businesses at a profit has been challenged. So, you know, these, these funds sort of ended up liquidating and investors got their capital back. And then investors are like, well, what do I do with this now? You know, I guess buy a TBI or something. I don't know. You know, so, um, buy up some sovereign debt. Um, buy, yeah, buy, buy up some Iranian bonds, I guess. I don't know.

emily-sander_1_03-19-2026_131604

Oh my gosh.

twinkle-toes--it-_1_03-19-2026_131604

Yeah, I mean, I, I would say, just kind of tie tying into what Rory said, I had one of my clients reach out to me. Um, and basically go, could you, could you get a, a sense for what's, because they were looking to maybe do a transaction this summer. Could you get a, could you get a sense of what's kind of inbox right now? And, and I, so I made a couple calls. Um, the folks that were, that I was close with and got the, essentially we're in a wait and see, um, given the Middle East stuff, um, because. Oil price shocks are gonna impact discretionary spending. And they're not looking at deals right now, much smaller than 250 million, which is a big deal. Uh, I mean, in the world I come from, that's a big deal.

rory-randall-liebhart_1_03-19-2026_131604

world, yes.

twinkle-toes--it-_1_03-19-2026_131604

Uh, um, but they're, they're basically going, look, we're, we're looking at larger deals. We're looking at, um, the, the types of businesses that are, I'm trying to see the quote that the one guy gave me. Um, but it was essentially we're, oh, defensible essential services.

rory-randall-liebhart_1_03-19-2026_131604

Yeah.

twinkle-toes--it-_1_03-19-2026_131604

so essentially, you know, those, those items that folks are gonna have to buy regardless of whether the economy's up or down, that's where they're at. Demand is high in the AI space, energy and defensible essential services. And that's the, that's the areas that are hot, hotter right now. Large cap deals over small cap deals. Um, they're looking for goldilock size. Um. risk. So I mean, right now I, there's a lot of capital on the, on the, on the sidelines, but I also think there is a little bit of a, you know, analysis of that risk premium going, you know, is there gonna be enough there? And if there isn't, then we're gonna continue to hold cash and, and, you know, we're only gonna invest in areas where we think we're gonna be able to make it. And I think that's these two spots we, we've been hitting on it in this one. There's the small mom and pops where you can get the five x go to 13 x. That's a, that's gonna be a win all day long. Um, as long as you can execute the operational strategy on that. And then you've got these large, larger, larger deals where the, the economic risk is lower. But even on these smaller deals, we're talking about plumbers. a defensible, that's a defensible essential service

rory-randall-liebhart_1_03-19-2026_131604

Yeah.

emily-sander_1_03-19-2026_131604

If your toilet doesn't work, yeah.

twinkle-toes--it-_1_03-19-2026_131604

mean, you may, you may not put in the new, the new shower or do the bathroom renovation, but you know when that toilet's clogged, you're not gonna go, well, I gotta wait for the economy to get better.

rory-randall-liebhart_1_03-19-2026_131604

You know what's funny though is like this concept of what is essential, I feel like what's essential is just changed over years. I feel like what's. Considered essentials at one time. Discretionary. Like I, I would think some people would argue like, you know, you look at one of these other small business industries, landscaping, you know, people would consider that to be essential in their, in their lives, seemingly. But I look at that, I'm like, that's discretionary, right? So, I don't know. I, it is just like a consumer society. You know, has made what's in, in truth, discretionary seem essential, you know, I

twinkle-toes--it-_1_03-19-2026_131604

Yeah.

rory-randall-liebhart_1_03-19-2026_131604

So,

twinkle-toes--it-_1_03-19-2026_131604

Yeah.

rory-randall-liebhart_1_03-19-2026_131604

and I guess like for now, it's like the up the economy is what I understand to be the case more than, more than anything. So it's like, what are, what's the, you know, they're never gonna run outta money. The ultra wealthy. So, know, services and sort of luxury goods may still be. uh, pretty valuable. I don't know, but

emily-sander_1_03-19-2026_131604

might be essential if you have an anal retentive, HOA, who is like all over you for your grass in a certain way.

rory-randall-liebhart_1_03-19-2026_131604

Yeah, yeah. You do, you have all these commercial buildings and, you know, everything needs, uh, needs maintenance and stuff, so,

emily-sander_1_03-19-2026_131604

First world problems are real.

rory-randall-liebhart_1_03-19-2026_131604

it's, I, I agree with the point Ed's making, which is to say growth, yes. in concentrated areas, not necessarily scattershot across everything,

twinkle-toes--it-_1_03-19-2026_131604

Yeah.

rory-randall-liebhart_1_03-19-2026_131604

so

emily-sander_1_03-19-2026_131604

Yeah.

Glossary and Wrap Up

rory-randall-liebhart_1_03-19-2026_131604

definitely.

emily-sander_1_03-19-2026_131604

So I wouldn't be doing my job if I didn't have us define some of our terms. So, ed, like lightning round glossary thing here, we've, we've talked about rollup strategy, uh, leverage buyout, debt, credit, and, uh, oh, there was one more that you, uh. And risk premium. If you could just like do like a snapshot for people who haven't listened to our previous podcasts on those reminder, just do a quick like

twinkle-toes--it-_1_03-19-2026_131604

so, so roll up strategy is taking small companies in a similar industry and putting them together under one umbrella to take advantage of financial and operational efficiencies.

emily-sander_1_03-19-2026_131604

leverage buyout

twinkle-toes--it-_1_03-19-2026_131604

credit is.

emily-sander_1_03-19-2026_131604

one.

twinkle-toes--it-_1_03-19-2026_131604

Private credit is, um, when you go, instead of going to a bank to get a loan, you actually kind of do a bond issuance to private investors and they become the lenders to your business. And there may be some other elements in there like equity kickers or warrants or other things. In the private credit, what's the, what are the other two?

emily-sander_1_03-19-2026_131604

Buy.

twinkle-toes--it-_1_03-19-2026_131604

Leverage buyout is when you use a significant portion of the purchase. Price is borrowed money.

emily-sander_1_03-19-2026_131604

Oh yes. And risk premium. Your favorite one.

twinkle-toes--it-_1_03-19-2026_131604

premium is the, there's a concept of the risk-free rate, which is essentially tied to a treasury bond or bill of equivalent duration. And then the risk premium is the amount over, that treasury bill or bond, because you're guaranteed to get that money back that you're, that you have to take, that you have to receive in order to make that investment worthwhile, given the risk that it might not pay off.

emily-sander_1_03-19-2026_131604

So wait, you're pinning it to something that's as near safe as possible, which is a treasury note.

twinkle-toes--it-_1_03-19-2026_131604

bill or bond?

emily-sander_1_03-19-2026_131604

Okay.

twinkle-toes--it-_1_03-19-2026_131604

Treasury bills, bond or note, depending on the duration, uh,

emily-sander_1_03-19-2026_131604

And then you're saying, is this like over under, like how much?

twinkle-toes--it-_1_03-19-2026_131604

four times as risky as

emily-sander_1_03-19-2026_131604

Okay,

twinkle-toes--it-_1_03-19-2026_131604

I'm gonna need more. If it's four times as risky, I'm gonna need four times the return, and then that's the risk. Premium is the amount of return over the risk free rate. And we

emily-sander_1_03-19-2026_131604

great.

twinkle-toes--it-_1_03-19-2026_131604

into beta, and we won't get into

emily-sander_1_03-19-2026_131604

I can see you're restraining yourself. That was good. That was really good.

rory-randall-liebhart_1_03-19-2026_131604

that

twinkle-toes--it-_1_03-19-2026_131604

Yeah.

emily-sander_1_03-19-2026_131604

That was beautiful. There you go. Listener. You are smarter by the end of this episode than you were at the beginning. Congratulations.

rory-randall-liebhart_1_03-19-2026_131604

true, true.

emily-sander_1_03-19-2026_131604

Thanks, ed. Thanks Rory.

twinkle-toes--it-_1_03-19-2026_131604

Thanks.

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