Raising Capital 101: Insights from Seasoned PE Pros

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 "

==============================

🎙 Podcast – Strategies, PE 101 & witty banter

📚 Book – On‑Ramp to Exit, full deal life cycle

🛠 Resources – Free templates, guides, tools

🔗 LinkedIn – Follow us for fresh PE insights

================================

Who Are We?

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.

🔗Connect with Ed

🔗Connect with Emily

🔗Connect with Rory

...

Episode Transcript

emily-sander_1_05-21-2025_1 (00:34):
All right.
Pex Boys.
That's my new name for you.

rory-liebhart_1_05-21-20 (00:37):
What's up, paxers?

emily-sander_1_05-21-2025 (00:38):
Boys.
By the way, it's px.
This is not like we're nottalking the other kind, from the
hip.
Questions to get us started,Rory, you recently ran a
marathon.

rory-liebhart_1_05-21-2025 (00:49):
Hmm.

emily-sander_1_05-21-2025_ (00:50):
mile feels most like busting
covenants as a CFO?
And which mile?
which mile is closest to a.

rory-liebhart_1_05-21-2025 (00:57):
Ooh, closest to a sale.
Let's start with that first, youknow, 26.1.
So that last 10th of a a mileis, uh, where you're feeling
like I'm ready to hit theclosing dinner and have it toss
a few back with Ed again after,after selling company.
Where it feels like you'rebusting covenants is, is where
they say you hit the wall at atmile 20.

(01:19):
And, uh, you kinda have to havethe wherewithal to negotiate
through some of those dealterms.
You might have to pay some feesto get outta your covenants that
you've busted, uh, get back ontrack.
But you know, you know, you, yougotta just do it because if you
want to keep, keep rolling, youknow, you have to push through
it.
So those are some strangeanalogies, but I, I did my best
there.

emily-sander_1_05-21-2025_16 (01:38):
on your first marathon,

rory-liebhart_1_05-21-2 (01:38):
Thanks.
Yeah.
Yeah.

emily-sander_1_05-21-20 (01:41):
Edward.
Let's talk about your caraddiction

squadcaster-fhej_1_05-21-202 (01:43):
My card.

emily-sander_1_05-21-2025 (01:44):
It's,

rory-liebhart_1_05-21-2 (01:45):
Whoops.
Yes.

emily-sander_1_05-21-2025_1 (01:46):
and

rory-liebhart_1_05-21-202 (01:46):
Lets,

squadcaster-fhej_1_05-21- (01:47):
Jeeps and Mercedes.
Well, what do, what do you meanexplain myself?
They're Jeep is the iconicAmerican brand and the Jeep four
liter in line six is the iconicAmerican Motors designed and
built in line six that lastsforever and ever.
So I have three of those.
And then Mercedes, I, I, I'vekind of lost count.

(02:08):
I don't

rory-liebhart_1_05-21-202 (02:09):
yeah.

squadcaster-fhej_1_05-21-2025 (02:09):
I have.
Um, but they're, they're allold.

rory-liebhart_1_05-21-202 (02:12):
Yeah.

squadcaster-fhej_1_05-21-20 (02:12):
any real new ones.
The newest one I have is 2000.
Is

rory-liebhart_1_05-21 (02:15):
Classics.
Yeah.

squadcaster-fhej_1_05-21-2 (02:16):
I've got, I've got a 76, A 79 A, uh

emily-sander_1_05-21-2025_1 (02:21):
you got a special license plate that
says like antique or something

squadcaster-fhej_1_05-21-20 (02:24):
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, allthe Mercedes that are older, so
the 86, the 87, the 76, the 79,they and the 1980 all have

(02:48):
those, five of them all havecollector plates.

emily-sander_1_05-21-2025_160 (02:51):
I now know that you know a lot of
numbers, so

squadcaster-fhej_1_05-21-2025 (02:53):
I

rory-liebhart_1_05-21-2025_ (02:53):
Oh, I, I already knew that.
Yeah.
Yeah.
That's

emily-sander_1_05-21-202 (02:57):
light.
Lightning

rory-liebhart_1_05-21-2025_ (02:59):
for 20 years.
Yeah.
Yeah.

emily-sander_1_05-21- (03:00):
Lightning round.
Questions for you

rory-liebhart_1_05-21-2025 (03:02):
Ooh,

emily-sander_1_05-21-2025_ (03:03):
Best car for.
New driver going off to college,away from home.
Just keep him safe.

rory-liebhart_1_05-21-20 (03:11):
Lambo, right?

squadcaster-fhej_1_05-21-2025 (03:12):
A used 2012 Lexus ES three 50.

rory-liebhart_1_05-21-202 (03:19):
Safe.
Yeah.

squadcaster-fhej_1_05-21- (03:21):
Safe, heavy,

rory-liebhart_1_05-21-2025 (03:22):
Hmm.

squadcaster-fhej_1_05 (03:23):
reliable, kind of nice, Relatively, you
gotta pay the Toyota tax, soyou're gonna pay a little bit
more than you will for a bunchof other used vehicles.
But I'll bet you, you get onewith a hundred thousand miles on
it.
I'll bet you that kid is stilldriving that same car for their
first job or two.

rory-liebhart_1_05-21-2025 (03:42):
Hmm.

squadcaster-fhej_1_05-21-2 (03:42):
will last 400,000 miles with
maintenance.

rory-liebhart_1_05-21-2025_ (03:45):
Way cooler than the mercury topaz
that I had to start with, uh,when I was young.

squadcaster-fhej_1_05-21- (03:49):
Topaz not, not on my short list.

emily-sander_1_05-21-2025_160 (03:52):
I had a 1991 Mazda 6, 2 6 in
college.

rory-liebhart_1_05-21-202 (03:55):
Okay.

emily-sander_1_05-21-2025_1 (03:55):
and the, the, the seatbelt kept
trying to choke me'cause it wasone of those ones that glided on
the door path

rory-liebhart_1_05-21-2025_ (04:01):
Oh,

emily-sander_1_05-21-2025_1 (04:02):
and it malfunctioned and it kept
trying to like suffocate me.
So that was, that

rory-liebhart_1_05-21-2025 (04:05):
that is every time you get in the
car.
Wow.
Yeah.

emily-sander_1_05-21-2025 (04:09):
okay, so that's the best for a new
driver.
College had last lightning roundquestion.
Best car.
If you just wanna wash it, itand look at it.

rory-liebhart_1_05-21-2025 (04:18):
Hmm.

squadcaster-fhej_1_05-21-2 (04:19):
wash it, wax it.
What?
What do you mean?
Like, wash it wax and look at itlike,

emily-sander_1_05-21-2025_1 (04:22):
not for utility, it's not for gas
mileage.
It's just to look at and

rory-liebhart_1_05-21-2025 (04:25):
Pure style.

squadcaster-fhej_1_05-21-20 (04:26):
oh, well that's, that is so
dependent upon.
The, that's the eye of thebeholder

rory-liebhart_1_05-21-202 (04:33):
Yeah.
Yeah.

squadcaster-fhej_1_05-21-2 (04:34):
Now, if it's me, if it's me, it's
gonna be a 64 and a half Mustangconvertible bright red with a
white top with 3 89 K code, four

rory-liebhart_1_05-21 (04:42):
Specific.

squadcaster-fhej_1_05-21-2 (04:43):
And, uh, it's gonna have,
everything's gonna be original.
It's gonna have the ponyinterior inside, and it's gonna
just be cherried out.
Now, I, I, I've owned aMustangs, Mustang convertibles,
older ones, they're not all thatfun to drive.
I mean, I, I was reallydisappointed candidly, by the 3,
9, 4 speed that I had.
But to look at a bright red, 64and a half Mustang K code

(05:04):
convertible red with white topand, and red interior pony
interior of the four speed init, that's, that's,

rory-liebhart_1_05-21-202 (05:11):
Nice.

squadcaster-fhej_1_05-21- (05:12):
right there.
That's America, that'sAmericana.
A piece

rory-liebhart_1_05-21-202 (05:14):
Yeah.
Give me some italiano, I'll takea Lambo, uh, for my, for my pick
right now on that.
But

emily-sander_1_05-21-2025 (05:22):
Okay.

rory-liebhart_1_05- (05:22):
impractical at this point.

emily-sander_1_05-21-2025 (05:24):
Yeah.
you for sharing.
That was really important.
All right.

rory-liebhart_1_05-21-2025 (05:28):
Very private equity, uh, related.
Yeah.
Yeah.

emily-sander_1_05-21-2025_1 (05:32):
Um, can possibly buy what Ed just
said, the type of car he justsaid, if we get in

rory-liebhart_1_05-21-2 (05:39):
Mm-hmm.

emily-sander_1_05-21-2025_ (05:40):
with like angel investors and we're
being smart about like series Aand series B and different
rounds of funding and if weexit.

rory-liebhart_1_05-21-20 (05:47):
That's the key.

emily-sander_1_05-21-2025_1 (05:48):
is, is, this is our segue

rory-liebhart_1_05-21-202 (05:50):
Yeah.

emily-sander_1_05-21-2025_1 (05:51):
the conversation

rory-liebhart_1_05-21-202 (05:52):
Sweet segue.

emily-sander_1_05-21-2025 (05:53):
types of, well, I guess let's, it's,
it's not different types, it'sdifferent rounds, right.

rory-liebhart_1_05-21-202 (05:58):
Yeah, yeah.

emily-sander_1_05-21-2025 (05:59):
Okay,

rory-liebhart_1_05-21-202 (06:00):
Yeah.

emily-sander_1_05-21-2025_16 (06:00):
so angel investing, this is like
the sexy one people have heard

squadcaster-fhej_1_05-21-20 (06:04):
Oh, it's a, as a matter of fact, I
would, I would argue angelinvesting is not the sexy one.
It

emily-sander_1_05-21-2025 (06:09):
sexy.

squadcaster-fhej_1_05-21- (06:09):
about think i Angel investing is like
desperate one.
is, this is a, A lot ofcompanies don't ever have an
angel round.

rory-liebhart_1_05-21-202 (06:18):
Yeah.

squadcaster-fhej_1_05-2 (06:19):
They're bootstrapped.

rory-liebhart_1_05-21-202 (06:20):
Yeah.

squadcaster-fhej_1_05-21-202 (06:20):
So Angel Round is really, this is,
this is how I think of an angelround.
You know, angel round is, youknow, up to maybe a hundred
thousand, quarter of a milliondollars, maybe a million bucks
tops.
But it's small.

rory-liebhart_1_05-21-2025 (06:31):
Hmm.

squadcaster-fhej_1_05-21-20 (06:32):
and it's really when you, when the
founders don't have the abilityto bootstrap this themselves, so
they have to sell out a portionof their company, Eddie.
At like the lowest, the lowest,lowest, lowest valuation, and
they're paying at becausethere's such a high risk,
there's such a massive riskpremium on that investment

rory-liebhart_1_05-21-202 (06:53):
There it is.

squadcaster-fhej_1_05-21-2 (06:53):
that they are giving up a, a huge
amount of control, a huge amountof equity for a relatively small
amount of money.

rory-liebhart_1_05-21-202 (07:00):
Yeah.

squadcaster-fhej_1_05-21- (07:01):
angel round is a, is a risky round for
the investor and it's incrediblycostly to the, to the seller.

emily-sander_1_05-21-2025_1 (07:10):
But if you're a founder, this can
like launch your dream.

rory-liebhart_1_05-21-2025_ (07:13):
it, it might be your last hope to do
that.
Right.
You know, and

squadcaster-fhej_1_05-21-2 (07:16):
can.

emily-sander_1_05-21-2025_1 (07:17):
Ah.

rory-liebhart_1_05-21-2025_ (07:17):
em, your, your business that you're
building, you're bootstrappingit.
You haven't taken on externalinvestors.
Maybe you don't need to.
You're just a fricking badassbusiness 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'vegot employees and you're
building an actual businessthat's selling a product.
You know, a technology that'sexpensive stuff.

(07:39):
So if you can't get that productmarket fit, validation to market
quick on your own dime,bootstrapping it, then you,
you're like, well shoot, this isexistential.
I need to find other investorsor I gotta hang it up.
But, you know, a lot of thetime, um, you know, these angel
investors, maybe what you'rethinking about is like, it's
kind of a friends and familyaround a lot of times, which is

(08:00):
the case.
Um, you know, I've been inbusinesses that are angel
funded, um, and you know, thattypically is like, I believe in
you as the founder.
So I'll inve and, and I believevaguely in your idea, maybe you
have no idea how you're gonnaexecute that or bring that to
market, but let's give it a go.
You know, it's definitely a highrisk investment, so Ed's point,

(08:21):
you're usually giving up more ofyour company, uh, than you'd
want to in exchange for aninvestment.
So, um, and as we talked aboutin previous and in our book,
equity capital is the mostexpensive out there.
So, and you usually can't get dedebt financing on a business
like that.
You know, at that stage.

emily-sander_1_05-21-2025_160 (08:39):
I don't take angel investors'cause
I like control.
I have a control problem and Iwanna be my

rory-liebhart_1_05-21-202 (08:44):
Don't ever change, just be you, dude.
Just keep doing that.
Yeah.

emily-sander_1_05-21-2025_160 (08:47):
I got out of corporate because I
was like, you're not in chargeof me.
As my nephew used to say when hewas little, very cutely, you're
not the boss of me.
It's like

rory-liebhart_1_05-21-202 (08:53):
Yeah.
You know, once you do get out ofthat

emily-sander_1_05-21-2025 (08:55):
case,

rory-liebhart_1_05-21 (08:56):
corporate culture, it is hard to, hard to
go back for sure.

squadcaster-fhej_1_05-21-202 (08:59):
Uh huh.

emily-sander_1_05-21-2025_16 (08:59):
my

rory-liebhart_1_05-21-2 (08:59):
Because of those very things.

emily-sander_1_05-21-20 (09:01):
offered to be a sponsor for my other
podcast, leveraging Leadershipwherever podcasts are

rory-liebhart_1_05-21-2 (09:06):
Listen, watch, enjoy.

emily-sander_1_05-21-2025_1 (09:09):
and he was like, why not?
And I was like, because thenyou're gonna tell me what to do
and I I don't want you to dothat.
I wanna do what I wanna do.

rory-liebhart_1_05-21-202 (09:14):
Yeah.
Yeah.

emily-sander_1_05-21-2025 (09:14):
okay.
but that's, that's my

rory-liebhart_1_05-21-202 (09:17):
Yeah.

emily-sander_1_05-21-2025_1 (09:18):
Um, alright, so we have angel
investors, which can be like thecatalyst 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_05-21-202 (09:29):
Yeah.

emily-sander_1_05-21-2025_ (09:29):
give you like half the farm

squadcaster-fhej_1_05-21 (09:32):
You're giving up a, you're giving up a
lot of the back 40, to stretchyour 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- (09:47):
totally.

squadcaster-fhej_1_05-21-2 (09:47):
than it is for the, for the founder.

rory-liebhart_1_05-21-2025_1 (09:49):
To get in early on a deal like
that, that actually hits, and byI 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_05-21-20 (09:59):
But they,

rory-liebhart_1_05-21-202 (10:00):
Yeah.

squadcaster-fhej_1_05-2 (10:00):
there's that one that, there's a guy
that had the apple.
Stock that sold out early

rory-liebhart_1_05-21-202 (10:04):
Yeah.

squadcaster-fhej_1_05-21-2 (10:05):
like it was, he got like$20,000.
It would've been like$2 billiontoday if he had held onto it,
you know, for, because he was anangel.
So, and he got, he basically waslike, 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_05-21-202 (10:19):
Yeah.

squadcaster-fhej_1_05-21-202 (10:19):
it did not, that was, that did not
go well for him as an investor.
Um, he didn't, he didn't quitemaximize his investment.
But that's, that's

rory-liebhart_1_05-21-202 (10:27):
Yeah.
He wasn't on the efficientfrontier of risk in return.
Yeah.

squadcaster-fhej_1_05-21-20 (10:30):
no.
Where we, where we tend to lookat it.
If you're on the investor sideof 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 lotmore sophisticated than that.
Now you, you're gonna havediligence and you're gonna have
documentation.
You're gonna have, it's gonnahave all the con the, the of an,
of a full service PE deal froma, you gotta have diligence,

(10:52):
documentation.
You're gonna have kind of the,the.
Process goes.
But if the process is gonna belimited, it's gonna be fast.
It's gonna be low cost.
'cause you can't spend$2 milliondealing diligencing, a 10
million, a$10,000 investment.
So you're gonna have to, a lotof it, like Rory said, it's
gonna be like the friends andfamily.
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

(11:15):
statements and check for UCCfilings and all the other
garbage.

rory-liebhart_1_05-21-202 (11:18):
Yeah.

squadcaster-fhej_1_05-21-20 (11:18):
And then at the end of it, you know,
you'll go into another round offunding and likely they either
get cashed out

rory-liebhart_1_05-21-202 (11:26):
Yeah,

squadcaster-fhej_1_05-2 (11:26):
crammed down,

rory-liebhart_1_05-21-2 (11:27):
that's.

squadcaster-fhej_1_05-21-20 (11:29):
you know, or, or they're, uh, or
they're kinda riding along, uh,

rory-liebhart_1_05-21-202 (11:33):
Yeah,

squadcaster-fhej_1_05-21-20 (11:33):
the next round.

rory-liebhart_1_05-21-2025_1 (11:34):
so that is where that starts to get
interesting.
And I've used quotes in a lot ofways with the interesting when
you're going from angel roundeven to seed round.
So that's when you start to getsome more professional investors
involved.
To some degree people that wantto get in before an
institutional round, but theydon't wanna, they weren't in the
early friends and family around.
It's what you generally call aseed round.

(11:56):
Um, I work for a business todaythat'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 isgenerally considered your first
institutional round.
So if you're, if you're not anangel round and you're pre
presti institutional, you'regenerally a seed round.
And that can be a wide range ofthings.
It means you're generallygenerating some revenue.

(12:18):
You're basically proving outyour product in the market.
You've got a strategy, um.
You know, it's a matter of liketaking it to the next level of
scale and maybe even, maybebreak even profitability.
Right?
So, um, this is where I say itgets interesting at this round
is the different types offinancings to bring people in.

(12:41):
Sometimes there's, I.
Convertible notes.
Sometimes it's a, you know, asafe is, sometimes it's some
sort of a just pure equityoffering, blah, blah, blah,
blah, blah.
Uh, but this is generally whereyou start to see like a legit
board of directors, and that'swhere things kind of kinda get.
Fun or not for founders andmanagement teams and things like
that, if things, you know, startto not work as you're expecting

(13:03):
or you know, you need to makesome critical decisions and
stuff.
Whole point is like when youtalk about having bootstrapped
your business up to as far asyou can, that means you're not,
you're answering to no one, butyou're Dan's self.

squadcaster-fhej_1_05-2 (13:13):
Mm-hmm.

rory-liebhart_1_05-21-2025 (13:14):
Like you do every day.
Emily, uh, ed and I, we answeredto other people sadly, but you
know, you are on your own as abadass, so, um, so, so keep
doing that.
Um, but anyway, uh, seed round,you know, generally, you know,
up to a couple million dollarsof proven revenue is when you
really start to get theinstitutional folks sniffing
around.
And generally with a, a lot ofbusinesses, you know, it's, it's

(13:37):
good to.
Build a business that's gotrevenue, but everyone wants to
really throw gasoline on thatfire and really take it big.
Um, and a lot of times you needto have new capital in to,
because you're operatingrevenue's not gonna give you
enough at that point in time todo the kind of thing you need to
do to grow the business.

(13:57):
And so another thing about, youknow, seed round investors and
even going into series A istypically these are like.
Um, either VCs or other, youknow, high net worth individuals
that have a venture allocationto their investment strategy.
But they're also not controlinvestors either.
So they're, again, they'rebetting on the Emily Sanders of
the world to like, take thisthing to the moon, you know,

(14:19):
they're betting on you.
Um, and they're not necessarilyin it to be controlled.
So we'll get later on to, youknow, the exit options where
it's all about people buying thecompany for control and stuff.
But yeah, um, seed round isreally prepping you for your
first institutional round.
Um.
And you know, when you hit theinstitution round is when people

(14:39):
start talking about Series A andthen it goes B, C, D, N,
whatever.
So

emily-sander_1_05-21-2025_16 (14:46):
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_16 (14:53):
I

emily-sander_1_05-21-2025_1 (14:54):
vc?

rory-liebhart_1_05-21-2025 (14:55):
it's a, is a very semantic thing.
I, I kind of look at it as whenyou're taking on investors that.
They exist for the purpose ofmaking investments, right?
Like, you know, I have in a lotof different businesses, I've
been in high net worthindividuals that make
investments, but they're justrich people that make
investments.
It's not their livelihood.

(15:15):
Whereas a venture capital firmis definitely a institutional
investor.
A you know, multi-family officecan be an institutional
investor.
A private equity firm for sureis an institutional investor.

squadcaster-fhej_1_05-21- (15:29):
Yeah, I, I distinguish it as an
institutional investor issomeone who's paid.

rory-liebhart_1_05-21-202 (15:34):
Yeah, that's a great way to put it.

squadcaster-fhej_1_05-21 (15:36):
else's money.

rory-liebhart_1_05-21-202 (15:37):
Yeah.

squadcaster-fhej_1_05-21-20 (15:38):
you know, so

rory-liebhart_1_05-21-2025 (15:39):
Good call.

squadcaster-fhej_1_05-21-20 (15:40):
you could be worth a billion
dollars.

rory-liebhart_1_05-21-2 (15:42):
Mm-hmm.

squadcaster-fhej_1_05-21-20 (15:42):
uh, you know, and, and you go, okay,
if Warren Buffet is making anindividual,

rory-liebhart_1_05-21-202 (15:46):
Yeah.
Yeah.

squadcaster-fhej_1_0 (15:47):
individual investment in a company that's
Warren Buffet being an investor.

rory-liebhart_1_05-21-202 (15:53):
Yeah.

squadcaster-fhej_1_05 (15:53):
Berkshire Hathaway, if Warren, if Warren
Buffett on behalf of BerkshireHathaway is making an investment
in a business that's aninstitutional investor,

rory-liebhart_1_05-21-2 (16:01):
Mm-hmm.

squadcaster-fhej_1_05-21-2 (16:03):
Owes an explanation and has an
accountability to a, what isnormally a limited partner in
that.
that structure.
So it's, could be,

rory-liebhart_1_05-21-202 (16:15):
Yeah.

squadcaster-fhej_1_05-21-20 (16:16):
be, could be angels.
But the angels, it's a managedangel fund.
So it's an early, early stageangel

emily-sander_1_05-21-2025_1 (16:22):
Oh,

squadcaster-fhej_1_05-21- (16:22):
fund.
Managed angel fund.
Um, it could be, you know,venture capital, private equity,
um, could be, you know, variouspension funds would be, if they
do direct investing, would beinstitutional investors.
If they don't go kind of througha, a, or vc.

rory-liebhart_1_05-21-202 (16:38):
Yeah, that's a really good way to put
it.
I like that,

emily-sander_1_05-21-2025_16 (16:40):
is there like a little space in
between angel investing and thenseed rounds?
Or is it, is it

rory-liebhart_1_05-21-2025_ (16:45):
eh.
I sort of, I think people justcall it pre-series A, you know?
'cause you could do multiple,multiple rounds of funding
before you take on institutionalinvestors.
You maybe go back to the same,well, a couple times for, you
know, uh, a new convertiblenote.
You roll over the previous one,raise some new capital, stuff
like that.

squadcaster-fhej_1_05-21-20 (17:03):
No,

rory-liebhart_1_05-21-202 (17:03):
Well, you know, a lot of it has to do
with just like managing the captable.
That's, you know what I'll say.
We could literally and probablywill spend a whole entire
episode talking about, you know,dilution and cap table
management, which is a new thingfor me.
I, I really never spent a lot oftime doing it until this most
recent gig.
'cause I've just, you know, it'sjust more, it's more prevalent
of a thing with a big widelyheld company that's like pre,

(17:26):
you know, like that's not ownedby a private equity group
basically.
So.

emily-sander_1_05-21-2025 (17:30):
Yeah.

squadcaster-fhej_1_05-21-2025 (17:31):
I was gonna, I was gonna say one
of the, one of the challengesin, you know, your angel and
seed rounds, your pre-series Arounds, is you're really going
to attract either friends andfamily.
they're not gonna be kind ofanxious around.
I don't wanna say they're notgonna be anxious around
performance.
They want, they wanna return,but they're gonna be more
patient.
Or your business plan, whatyou're selling had better be

(17:54):
showing like.
50 x 100 x 1000 x return.
Otherwise, you, you're not acandidate for that level of, um,
that level of investment becausethe risk is so high.

rory-liebhart_1_05-21-20 (18:09):
Right.

squadcaster-fhej_1_05-21-202 (18:09):
I, we gotta have the risk, the risk
premium drinking

rory-liebhart_1_05-21-2 (18:12):
Mm-hmm.

squadcaster-fhej_1_05-21-20 (18:13):
but the risk premium is so high that
you, you're, it just does notmake sense to participate.
You know, in those type ofthings, unless it's someone you
know, like Emily, your businessis a successful business, but
would have trouble attractingangel investors because they'd
go, okay, I give you 50 grand.
And you go, okay, well how am Igonna get your money back?

(18:33):
gonna be, you know, the businessI run is, is not one that's
gonna attract a bunch of angelinvestors where they're looking
for 20 x 30 x returns.
It's gonna, it may attract some.
You know, friends and familytype investors where they're
going, yeah, I, I like a, youknow, 12 to 15% return on my
money.
It's better than the stockmarket.
These guys, angels and seedlevel, they're looking for, you

(18:53):
know, if they've got a five yearinvestment time horizon, they're
looking for 100% to 200%.
I.
returns, this is, or at least 50to 60, they're not looking for,
you know, gimme a good solid 10,10, 12%

emily-sander_1_05-21-202 (19:05):
rocket ship, the

squadcaster-fhej_1_05-21-20 (19:06):
and that's it.
And that's, it's more likelottery tickets with some
diligence.
So it's lottery tickets whereyou know that it's gonna fall in
a certain number range,

rory-liebhart_1_05-21-202 (19:14):
Yeah.

squadcaster-fhej_1_05-21-2 (19:14):
than it is, than it is, you know,
real investing per se.

emily-sander_1_05-21-2025_1 (19:19):
You mentioned this earlier, how
many, like one out of 10, oneout of a hundred

squadcaster-fhej_1_05-21-202 (19:23):
Oh

emily-sander_1_05-21-2025_ (19:24):
make it

squadcaster-fhej_1_05-21- (19:24):
yeah, I, I think one out of a hundred
is probably a 1%.
A 1% is probably generous.

rory-liebhart_1_05-21-202 (19:32):
Yeah.
Prob probably right?
Yeah.

squadcaster-fhej_1_05-21-202 (19:34):
at that angel level.

rory-liebhart_1_05-21-202 (19:35):
Yeah.

squadcaster-fhej_1_05-21-20 (19:36):
and I mean, we, we could think of
folks that, you know, the threeof us

rory-liebhart_1_05-21-2 (19:38):
Mm-hmm.

squadcaster-fhej_1_05-21-2 (19:39):
that came, that went out of, that,
went out of, uh, you know, someof the companies that we worked
at, they set up their owncompanies, they got angel
rounds,

rory-liebhart_1_05-21- (19:46):
Totally.

squadcaster-fhej_1_05-21-20 (19:47):
and they ended up having to, you
know, they shut down.

rory-liebhart_1_05-21-2025 (19:50):
Yep.

squadcaster-fhej_1_05-21 (19:50):
that's typical.

emily-sander_1_05-21-2025_16 (19:52):
so we've got angel investing.
Then we've mentioned Prese, butlet's just define that real

squadcaster-fhej_1_05-21- (19:56):
Well, pre, pre, well not pre-seed, but
pre-series A.
so pre-series A is basicallygonna be anything up to around$2
million or so, and you're gonnahave a mix of high net worth
individuals, some institutionalinvestors.
Um, it tends to start lookingmore formal.
Your diligence looks moreformal.
You're probably gonna have tohave some of the investors on

(20:16):
your board.
There's gonna be a little bitmore.
Uh,

rory-liebhart_1_05-21-202 (20:20):
Yeah.

squadcaster-fhej_1_05-21-202 (20:20):
by the investor group and the
strategy development operationsof the business.
Um, and again, they're gonna belooking for returns that are in
the x.
like, so multiples of investment

rory-liebhart_1_05-21-202 (20:34):
Yeah.

squadcaster-fhej_1_05-21-2 (20:34):
than percentage

rory-liebhart_1_05-21-20 (20:35):
Right,

squadcaster-fhej_1_ (20:36):
investment.

rory-liebhart_1_05-21-20 (20:36):
right.

squadcaster-fhej_1_05-21-2 (20:37):
and, and, you know, but you're,
you're, you've gotten to in yourpre-series A is you're probably
still, you're still aroundminimally viable product.
You're probably at the pointwhere you're, you may even be
pre-revenue, um, as a matter offact, you may be pre-revenue in
series A and B even, um,

rory-liebhart_1_05-21 (20:54):
depending on the sector.
Yeah.
Yeah.

squadcaster-fhej_1_05-21-20 (20:56):
got yourself, you've got yourself in
a position where you really haveformulated, you're past the,
this is a good idea stage, andyou've got enough information
both from the market and from,you know, in a lot of cases are
technology companies

rory-liebhart_1_05-21-202 (21:10):
Yeah, exactly.

squadcaster-fhej_1_ (21:11):
engineering slash technology perspective to
be able to go, look, this isviable.
We, we need additional fundingto get it to market, or we need
additional funding to be able tomarket it.
Um.
to complete prototypes orwhatever, but this

rory-liebhart_1_05-21-202 (21:23):
Yeah.

squadcaster-fhej_1_05- (21:24):
product.

rory-liebhart_1_05-21-202 (21:25):
Yeah, technology, pharmaceutical kind
of are a couple examples oflike, what you're saying is,
could be very much pre-revenue,but you have engagement, you
have, you have attachment toyour market in some way that's
tangible.
You know, whether it's eyeballsor whether it's subscriptions
or, or trials or something likethat.

squadcaster-fhej_1_05-21-20 (21:41):
And I'll, and I'll give an example,
and you led off with car stuff.
So I'll start, I'll go with acar thing.
Um, so there's a, a startup, newstartup car company that's out
there called Slate Automotive.
It's backed by Jeff Bezos, butas he's one of

rory-liebhart_1_05-21-2025_ (21:54):
Oh, I've heard of this.
Yeah, yeah, yeah,

squadcaster-fhej_1_05-21-20 (21:56):
the investors.
But it's not, it's through likeone of his like family office
type type things.
It's

rory-liebhart_1_05-21-202 (22:01):
yeah.
Kind of like

squadcaster-fhej_1_05-21-2 (22:02):
he's put in.
It's, you know, smaller than

rory-liebhart_1_05-21 (22:04):
somewhere between Blue Origin and Amazon.

squadcaster-fhej_1_05-21- (22:07):
Yeah, they've, they've raised,
actually, it's probably smallerBlue Origin

rory-liebhart_1_05-21-202 (22:10):
Yeah, for sure.
For sure.

squadcaster-fhej_1_05-21-20 (22:11):
and they've raised about a

rory-liebhart_1_05-21-2025_1 (22:12):
I.

squadcaster-fhej_1_05-2 (22:12):
million dollars.
They have zero revenue.
They've got a few prototypes.
They've got, you know, they'vekind of, they're kind of putting
stuff together.
They've got, they've done a, alaunch thing, but they're not,
they're not gonna have revenueuntil 2027.

rory-liebhart_1_05-21-202 (22:25):
Yeah.

squadcaster-fhej_1_05- (22:26):
They're, you know, putting a plant
together in Indiana somewhere.
Um, an old RR Donnelly printingplant.
They're converting into a carmanufacturing facility.

rory-liebhart_1_05-21-2025 (22:34):
Hmm.

squadcaster-fhej_1_05-21-2 (22:34):
And, uh, very, it's a, it's really
cool,

rory-liebhart_1_05-21-202 (22:37):
Yeah.

squadcaster-fhej_1_05-21-2 (22:37):
for, for the car guy.
I mean, I'm like, this is areally cool concept.
Um, but the, the.

rory-liebhart_1_05-21-202 (22:43):
These electric cars or like,

squadcaster-fhej_1_05-2 (22:44):
They're electric.

rory-liebhart_1_05-21-202 (22:45):
okay.

squadcaster-fhej_1_05- (22:45):
pickups.
Electric pickup trucks that areabout the size of those old, uh,
Toyotas.
Like when we were kids wherethey're really small.
They're only two, you know, thetwo seat

rory-liebhart_1_05-21-202 (22:53):
Yeah.

squadcaster-fhej_1_05- (22:54):
windows.
Um, and they're theoreticallyunder$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_05-21-202 (23:08):
Yeah.

squadcaster-fhej_1_05-21-2 (23:08):
high net worth individuals that have
invested in this thing.

rory-liebhart_1_05-21-2025 (23:11):
Hmm.

squadcaster-fhej_1_05-21-2 (23:12):
they will probably go back out for
another funding round, a seriesA round where they're gonna be
pulling in your, you know, kindof, now we have prototypes, we
have a go to market.
They've taken reservations, sothey've got a hundred thousand
reservations that people haveput 50 bucks down for their
deposits they've got.
So now they go out to the, it'sgot a segueing, but that, that.
Angel and seed round tend to behigh net worth individuals,

(23:34):
family offices,

rory-liebhart_1_05-21-202 (23:35):
Yeah.

squadcaster-fhej_1_05-21-20 (23:36):
you know, that kind of stuff.
The, the next round is yourseries A, which is really
saying, and Rory said it's likean alphabet soup, A, B, C, D, E,
F, G.
Those just designate likesequentially what the kind of,
how many

rory-liebhart_1_05-21-202 (23:47):
Yeah.

squadcaster-fhej_1_05-21 (23:47):
you've raised funds.
So if

rory-liebhart_1_05-21-202 (23:48):
Yeah.

squadcaster-fhej_1_05-21 (23:48):
series C, you've raised institutional,
basically institutional moneythree times.
That's your third time.

rory-liebhart_1_05-21-2025 (23:53):
Yep.

squadcaster-fhej_1_05-21-2 (23:54):
Each time you do that, it's dilutive
to

rory-liebhart_1_05-21-2 (23:57):
Slicing that pie, slicing that cap
table.

squadcaster-fhej_1_05-21-20 (24:00):
But normally

rory-liebhart_1_05-21-202 (24:01):
Yeah.

squadcaster-fhej_1_05-21-2 (24:02):
into your series A, B, C, so the, the
big differentiator for most ofthese companies, and this is
mostly on a venture side, PE isa

rory-liebhart_1_05-21-2025_ (24:09):
Hmm

squadcaster-fhej_1_05-21 (24:09):
world.
It's on a venture side.
The, the A is when.
The boys come to play

rory-liebhart_1_05-21-202 (24:17):
Yeah.

squadcaster-fhej_1_05-21-2 (24:18):
when the funds come to play.
So you now have the funds, Ishouldn't say the boys'cause
it's a, there's a lot of womenin the industry too.
But this is when the, this iswhen the funds come in and you
start seeing real institutionalmoney making stroking checks in
the, you know, 5 million to$50million range.
And that series A could bequarter of a mil, quarter of a
million, or quarter of abillion.
It

rory-liebhart_1_05-21-202 (24:37):
Yeah.

squadcaster-fhej_1_05-21-202 (24:37):
be anywhere, kind of anywhere in
that,

rory-liebhart_1_05-21-2 (24:39):
Mm-hmm.

squadcaster-fhej_1_05 (24:41):
depending on what it is.
Series A really just resonates.
Its.
The first round of,

rory-liebhart_1_05-21-202 (24:46):
Yeah,

squadcaster-fhej_1_05-21-202 (24:47):
of big institutional money.

rory-liebhart_1_05-21-2025_1 (24:48):
I, yeah, exactly.
I, and you know, what I'm seeingactually today in my own
experience is I.
There's institutional interestin even the seed round, but with
the eye towards the series A.
Like, I, you know, I wanna dipmy toe in here, but I also want
to potentially lead your nextround.
That's, that's where youactually, if you have leverage
as a founder and a business, youknow, uh, a management team, so

(25:12):
to speak, and you're out thereraising capital is like you, you
kind of wanna find the idealpartner that's.
Wants to be part of your, youknow, journey and maybe they can
help you get to the, to theclose out the seed round, say,
but then, you know, maybe leadthe next round and so forth.
So, and you know, since they'realready part of the cap table,
then maybe that kind of works intheir favor in some ways too.

(25:33):
But yeah, it's a, it's, um,it's, it's interesting at that
series A stage because that'swhere you start to see more
probably sophisticated.
Capital stack management, wherea lot of times maybe instead of
raising all of your capitalrequirements via equity, you
bring in some venture debt aswell, so it's not as dilutive,

(25:55):
and that's where it can kind ofget interesting.
And you, you can, you have moreoptions at your disposal to
finance your business basically.

emily-sander_1_05-21-2025_1 (26:03):
And I've seen some VC firms who
specialize in pre-series

rory-liebhart_1_05-21-2025_ (26:09):
For sure.
Yeah.
Yeah,

emily-sander_1_05-21-2025_16 (26:10):
at

rory-liebhart_1_05- (26:10):
absolutely.

emily-sander_1_05-21-2025_1 (26:11):
And then there's a whole bunch,
like, you know, series A, series

rory-liebhart_1_05-21-202 (26:13):
Yeah,

emily-sander_1_05-21-2025_1 (26:14):
but they and, and they,

rory-liebhart_1_05-21-2 (26:16):
there's a flavor for everybody.
It's, yeah, I invest inpre-series A, but not on
Saturdays.
And you know, it must be in thesector of, you know, paper
airplanes and stuff.
I mean, it's like the mostrandom investment mandates
people, and that's why there'sso many firms out there is'cause
like you want to carve out yourlittle niche.

emily-sander_1_05-21-2025 (26:32):
Yeah.
And some of them have likerequirements on we, like this is
our, um.
Kind of investment profile, butalso we require this type of
board seat with this type of

rory-liebhart_1_05-21-202 (26:42):
Yeah.

emily-sander_1_05-21-2025_ (26:42):
type of whatever.
So it has to fit a perfect,kinda like a Tetris piece.
Like it has to fit perfectly fortheir

rory-liebhart_1_05-21-20 (26:48):
That's why finding the right capital
partner out there is sodifficult, especially if you're,
you know, a founder or amanagement team running a
business and you're like tryingto operate the business.
But also raise capital is likeI.
And that's where working in, youknow, we talk about it in our
book too, working with advisorson this stuff, that this is
their job to form thesepartnerships, whether it's an
investment bank or just peopleout there that are really deeply

(27:09):
connected and know the space.
Like, you know, that's where youcan get some leverage out of
your own efforts is if you haveother people working to find the
right partner for you.
'cause I tell you what, youknow, if you know have
experienced and also heardhorror stories that you get the
wrong partner in, that could bea just killer man.

squadcaster-fhej_1_05-21-202 (27:26):
I, I've tended to live those.
That's, that's my entire careerhas been built off of that.

rory-liebhart_1_05-21-202 (27:34):
Yeah, yeah.
I've had a little bit of a, amore balanced, you know, I've
had some greats and some, someother challenges, but, but yeah,
it's like, you know, you getsomebody on your board where you
get a anchor investor, it'svery, very difficult to get them
out of it.
And that could be just.
You know, you war games justterrible, you know?
So be very, very cognizant.

(27:55):
There's much more to it thanjust who's got the capital.
'cause there's a ton of capitalout there.
It's just finding the right fit,you know?

emily-sander_1_05-21-2025 (28:01):
Yeah.
Um.
A, B, C, D, E, F, like how fardoes this thing go?
Like as far as you need it to

rory-liebhart_1_05-21-2025 (28:08):
Most recently I saw an FF, but I, I
don't know.
There's probably more, uh, thanthat.
I mean, I, I'm just, you know,I, but, but big companies out
there, you know, a lot of thetechnology companies today that
have been sitting on thesidelines because of the ip, the
public markets have been, youknow, nascent.
Like that's where you start tosee him because these, these.

(28:32):
Companies that developtechnology and they, you know,
just, it, it's very, very costlyand you're just burning cash.
So you've gotta keep your thinggoing, uh, until you have an
exit strategy.
Right.
Or, you know, you're executingan exit strategy.
So like, yeah, that's why yousay every couple years you might
be out raising more capital andmaybe the IPO capital markets is

(28:54):
shit.
And so you have to like, youknow, wait it out and, you know,
take on more private investmentand eventually go one of.
Yeah.

emily-sander_1_05-21-202 (29:03):
again.

rory-liebhart_1_05-21-2025_ (29:03):
You know, generally, you know,
basically everyone's trying toultimately someday get to an
IPOA private equity buyout or beacquired by a strategic, so all
of this work and stages andfundraising to keep your
business going and growing andscaling is, is with that in
mind, you know, ultimately

emily-sander_1_05-21-2025_1 (29:22):
you mentioned three options for
exit.
Can you like go into other,those are the three

rory-liebhart_1_05-21-202 (29:25):
those are the main ones.
Yeah.
Yeah.
There's also your business, youknow.
Ends up tanking and, you know,you, you file bankruptcy and

emily-sander_1_05-21-202 (29:34):
That's always an option for

rory-liebhart_1_05-21-20 (29:35):
become a distressed vulture, you know,
uh, target.
But anyway, like Happy Path.
Is IPO or acquisition or PEbuyout really?
Um, I, I don't personally have alot of experience on the IPO
standpoint, so I know Ed'sworked for public companies and
stuff, but mine's mostly on thePE side and, you know, strategic

(29:56):
buyouts.
So.

emily-sander_1_05-21-2025 (29:57):
Okay, so Ed break, break down the
three.
We have IPO, initial publicoffering.
We're going public and as allthe requirements and
regulations, blah, blah, blah.

rory-liebhart_1_05-21-2025 (30:05):
Hmm.

emily-sander_1_05-21-2025_1 (30:06):
now it's open to the world.
Everyone can buy in.

squadcaster-fhej_1_05-21- (30:10):
Yeah, so, so we'll talk, we'll talk a
little bit about IPO because IPOis a sexy one.

rory-liebhart_1_05-21-20 (30:15):
That's what I was gonna say earlier is
that's the sexiest.

squadcaster-fhej_1_05-21 (30:17):
about, only about five or 10% of

rory-liebhart_1_05-21-2025 (30:19):
It's true.

squadcaster-fhej_1_05-21-20 (30:19):
see

rory-liebhart_1_05-21-202 (30:20):
Yeah.

squadcaster-fhej_1_05-21-20 (30:20):
the bulk of the, the bulk of
companies, regardless of kind ofhow they were funded and how
they grew up, and they, theirbulk of the companies exit
through acquisition.
that acquisition may bedistressed 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 gonnasee a company go through an IPO.

(30:43):
The IPOs used to be used to beable to do an IPO at about 25 to
30 million of revenue,

rory-liebhart_1_05-21-2 (30:49):
Mm-hmm.

squadcaster-fhej_1_05-21-2 (30:50):
kind of pre, and I'm old enough to
remember the pre sarbanes Oxleydays.

rory-liebhart_1_05-21-2025_ (30:53):
Oh, even I'm old enough for that.

squadcaster-fhej_1_05-21-20 (30:56):
was a free Starbucks pre, you know,
you used to be able to gopublic, um, relatively easily.

rory-liebhart_1_05-21-202 (31:01):
Yeah.

squadcaster-fhej_1_05-21-2 (31:02):
That tightened up really after the
2000 financial crisis and thenreally tightened up after two,
uh, you know, which was, whichwas you had Enron plus, so Enron
and then Stir in all theinternet startups that really
were.
There is

rory-liebhart_1_05-21-202 (31:15):
Yeah.

squadcaster-fhej_1_05-21-202 (31:16):
of vapor and crap.
And so they put Sarbanes oxleyin 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 bigenough company, the the public
offering is, I mean, it's a,it's a great way to go because
normally what happens when yougo public.

(31:38):
You continue to control your owndestiny.

rory-liebhart_1_05-21 (31:40):
Permanent gap.
Mm-hmm.

squadcaster-fhej_1_05-21-20 (32:00):
IPO and that becomes your bang.
Now I got a bunch more capitalcomes in the door, and then over
the next year or two, thelockups release and the other
folks can get liquid.
But you're liquid.
So as a, as a founder, you'reliquid.
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.

(32:21):
Um, you, you tend to havefatter, uh uh.
Comp packages, cash comppackages.
You and, and again, I, I was at,at, uh, a private equity firm
where we took a public companyprivate.
And one of the reasons we didthat was because I.
The public company has, let'ssay, 140,000 shareholders.

(32:42):
So really there's not a lot ofaccountability.
Like we're private equity.
You're looking at this thinggoing, you know, this is, we're
gonna run this thing lean andmean, 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 (32:55):
Yes.

squadcaster-fhej_1_05-21-20 (32:57):
The classic like.
Holy crap moment is thesecompanies start as like little
babies.
They go through their seed andpre angel and and angel rounds
and pre and and seed rounds.
And then they go A, B, C, andthen they go public, and then
they get fat, dumb and happylike a baby sumo wrestler.
And then bang comes privateequity, takes him private, leans

(33:19):
the crap out of it and getsanother, and then they get
another, so they get another.
Here's a bite of the apple, andthen they lean the crap out of
it, and the private equity sellsit off.
As a strategic, you could end upgoing through a private a, a go
private transaction to privateequity after you've gone public.

rory-liebhart_1_05-2 (33:35):
Absolutely

emily-sander_1_05-21-2025_ (33:36):
like a sumo wrestler to like a boxing
athlete.
You have to

rory-liebhart_1_05-21-202 (33:41):
lean, mean, so Yeah.

squadcaster-fhej_1_05-21-2 (33:43):
that doesn't mean, that doesn't mean
that you're not, you're not bigand powerful, but

rory-liebhart_1_05-21-202 (33:46):
Yeah.

squadcaster-fhej_1_05-21-2 (33:46):
mean that you're not moving lean and
fast.
And so that's, that is, but Imean, I, we, part of a team that
when we took a company at LoneStar, we took it from public to
private and leaned the crap outof it.
I mean, I was

rory-liebhart_1_05-21-2025 (34:00):
It's selling planes.
Yeah.

squadcaster-fhej_1_05-21-2025 (34:03):
I mean, this was a classic, the
comp, the.
You know, I'm a, I'm a Mercedesguy, right?
The, the company's the

rory-liebhart_1_05-21-20 (34:07):
Acura, you had an Acura.

squadcaster-fhej_1_05-21-20 (34:09):
the Acura's, were the, were the base
company car and the CFO'scompany car was a Mercedes S 50
5:00 AM G sedan that they paid$140,000 for public company.
I.

rory-liebhart_1_05-21-202 (34:20):
Yeah.

emily-sander_1_05-21-2025 (34:21):
Geez,

rory-liebhart_1_05-21-2025_ (34:22):
was at G two as a CFO, I was driving
a Subaru, so, you know, there's,there's differentials.

squadcaster-fhej_1_05-21-20 (34:27):
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_1 (34:33):
I,

squadcaster-fhej_1_05-21-202 (34:34):
We wouldn't, I wouldn't, I wouldn't
even let you pay for bustickets.
not doing any transportationsubsidies.
Those are, what's the ROI onthat?

rory-liebhart_1_05-21-202 (34:41):
yeah.
Right.
Exactly.
Exactly.

emily-sander_1_05-21-2025_16 (34:43):
We kept our people fit by making
them

rory-liebhart_1_05-21-202 (34:45):
Yeah,

emily-sander_1_05-21-2025_16 (34:46):
to

squadcaster-fhej_1_05-21-2 (34:46):
Yes.

emily-sander_1_05-21-2025 (34:46):
every

rory-liebhart_1_05-21-2025_ (34:47):
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 thestrategic acquisitions, those
are, those are much more common.
And, you know, natural lifecycle for a business, you know,
big, big companies need to getbigger.
Um, and a lot of times they dothat through m and a and that's
where, you know, you, you have,you have a.

(35:08):
You know, growth, growth stagebusiness that can basically be
accretive, which meansincrementally beneficial to a
business buying you.
And that's why, you know, somuch of that transpires in the
private market rather than thepublic is like, Hey, this makes
a lot of sense.
Let me, let me bolt you on andlike try to integrate you and,
you know, increase my overallenterprise value that way.

(35:29):
And, you know, uh,

emily-sander_1_05-21-2025_1 (35:31):
And that's the most common exit.
Yeah.

rory-liebhart_1_05-21-2025 (35:34):
yep.
Exactly.

emily-sander_1_05-21-2025 (35:35):
Okay.

rory-liebhart_1_05-21-202 (35:36):
Yeah.

squadcaster-fhej_1_05-21-20 (35:36):
By, by far and away,

rory-liebhart_1_05-21-202 (35:38):
Yeah.

squadcaster-fhej_1_05-21-2 (35:39):
like 10, 10 times more likely.

emily-sander_1_05-21-2025_1 (35:41):
for

squadcaster-fhej_1_05-21- (35:41):
Yeah.

emily-sander_1_05-21-2025_1 (35:42):
and then like what would you say
for,

squadcaster-fhej_1_05-21 (35:44):
That's gonna be the balance.
I mean, almost everything, onceyou get to that size m almost
everything is gonna sell.
It's gonna just be whether it'sdistressed or, or through a
normal process, but it's gonnasell.
Um, it's rare that a biggercompany ends up just
disappearing.

rory-liebhart_1_05-21-202 (36:00):
Yeah.

emily-sander_1_05-21-2025_160 (36:01):
I don't like the visual of a
distress vulture that Rory said.
I'm like, you always have theoption of being a distress, like
you're just can crash and burnyour

squadcaster-fhej_1_05-21- (36:08):
Yeah.
And then the, and then thevulture.
Then the Vulture funds come andpick off the

rory-liebhart_1_05-21-202 (36:12):
Yeah.
Yeah.

squadcaster-fhej_1_05-21-2 (36:13):
take the parts that are useful and
repurpose'em just like, youknow, protein, you know, it's,
it's a whole,

rory-liebhart_1_05 (36:20):
Everything's valuable at a price.

squadcaster-fhej_1_05-21-2 (36:21):
life symbol.
I

rory-liebhart_1_05-21-202 (36:22):
Yeah.

squadcaster-fhej_1_05-2 (36:23):
that's, that's the way it works.

rory-liebhart_1_05-21-202 (36:25):
Yeah.

emily-sander_1_05-21-2025_16 (36:26):
Do they sell?
Is it, is it like a used, is itlike a car?
You're selling it for parts andyou're

squadcaster-fhej_1_05-21- (36:31):
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 Iwas part of it, sold off
basically chunks of the companythose chunks of the company were
no longer strategic to us.
Um, and then used the proceedsfrom that to retire debt.

rory-liebhart_1_05-21-2 (36:52):
Mm-hmm.

squadcaster-fhej_1_05-21-20 (36:53):
Um, and then we sold off real
estate.
And use the proceeds from thatto retire debt.
then, you know, so we spun offa, spun off a division, and then
we, and we weren't, you know,this was financial crisis time.
We sold off a division, we selllease, backed a bunch of
property and got out of the realestate business, got out of the

(37:14):
fancy car business and got outof the, uh, got out of, uh.
A couple of ancillary businessesthat we were related businesses,
but not

rory-liebhart_1_05-21-202 (37:23):
Yeah.

squadcaster-fhej_1_05-21-202 (37:24):
to us, and it allowed the company
to survive.
And we retired a bunch of thedebt doing it.
So when you're in trouble,that's one of the things you do

rory-liebhart_1_05-21-20 (37:31):
That's restructuring.
Yeah.

squadcaster-fhej_1_05-21- (37:32):
here?
Let's restructure

rory-liebhart_1_05-21-2025 (37:33):
Hmm.

squadcaster-fhej_1_05-21-2 (37:33):
off.
And then PE buys those, buysthose pieces.
Distress firms or

rory-liebhart_1_05-21-202 (37:38):
Yeah.
Yeah.
I think, uh,

emily-sander_1_05-21-2025_1 (37:40):
can

rory-liebhart_1_05-21-2025_ (37:40):
the last, uh, kind of career stops
that I was in prior to where I'mat now, basically, I had taken a
circuitous journey of running acompany that was acquired by a
much larger public company andas part of a financial services
division, which then as thingshappen, you know, for all the
points I just said, you'rerestructuring, you're, you're

(38:01):
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 nolonger fits with the strategy.
We're gonna carve you out, sellyou to private equity.
And so yeah, I've, I've actuallyrode the same company through

(38:25):
multiple stages like that.
And, uh, yeah, it's, it's,there's always a rationale.
You can always sort of, there'salways.
Value to a business, to someoneelse based on what their
specific, you know, kind of

squadcaster-fhej_1_05-2 (38:39):
Mm-hmm.

rory-liebhart_1_05-21-20 (38:40):
reason for existence is.
Right.
Like, so, you know, privateequity is like, Hey, yeah, we,
we like this business servicesbusiness, all this, that, and
the other thing, uh, you know,prior owner was like, eh, we
don't really need financialservices.
We're an insurance conglomerate,so, you know.
Yeah,

emily-sander_1_05-21-2025_1 (38:54):
One man's trash is another man's

rory-liebhart_1_05-21- (38:56):
exactly.

emily-sander_1_05-21-2025_16 (38:57):
of

rory-liebhart_1_05-21-202 (38:57):
Yeah.
Yeah.

emily-sander_1_05-21-2 (38:59):
Alright, exit

rory-liebhart_1_05-21-2025 (39:00):
Hmm.

emily-sander_1_05-21- (39:03):
Lightning round.
What is the best thing you'veread or watched in the last 30
days that you would recommend abook?
An article, TV show,

rory-liebhart_1_05-21-202 (39:13):
Well, I just, I just reread on-Ramp to
Exit and watched our lastpodcast, so not No kidding.
No kidding.
Um.
I'll go quickly.
Uh, my wife and I have beenwatching, uh, the last of us.
It's a cool series on HBO maxbased on a comic book, I
believe, but zombies, but somedepth to it.

(39:35):
So that's, that's watching.
It's fun to, to share that withmy wife and then reading wise,
um.
I am reading a book calledBarbarian Days.
It's about, you know, basicallya surf lifestyle from back in
the day based in Hawaii, whichjust is, takes me away from the,
the daily grind and, you know,makes me think island vibes.

(39:57):
And it's, it's a cool story too.
So, yeah, I recommend itBarbarian days.

squadcaster-fhej_1_05-21-2025 (40:03):
I will, uh, I'll give a couple.
Um, on the reading side, Idon't, I don't watch a lot.
Um, and

emily-sander_1_05-21-2025_1 (40:10):
You make up for it.
By

rory-liebhart_1_05-21-2025_1 (40:11):
Oh yeah.
You out.
Read the hell out of us.
Yeah.

squadcaster-fhej_1_05-21- (40:14):
yeah, I do.
So I, I read a, uh, book bysomeone who basically I would,
I.
Yeah, I would say would be acompetitor to On-Ramp to Exit.
I read the Exit StrategyPlaybook, um, by Adam

rory-liebhart_1_05-21-2025_ (40:26):
How dare you.
I'm kidding.

squadcaster-fhej_1_05-21-202 (40:28):
it was extremely well done.
It was funny though, because Iread it and I'm like, oh, well
this, it's almost like it's aplagiarized copy of our book,
but it's, there's some differentnuances, different experience.

rory-liebhart_1_05-2 (40:38):
Obviously.

squadcaster-fhej_1_05-21-20 (40:39):
but I thought it was, I thought it
was, you know, I, I thinkanyone, um.
Anyone would be well served tonot only look at our book and
read it, but also at Adam's bookand read it.
I think the combination of thetwo will give a, think they
reinforce each other and, andthey were done.
Like I'd never read that before.
So it was funny to kind of pickit up and go, oh, this is, this

(40:59):
is interesting.
Um,

emily-sander_1_05-21-2025_1 (41:00):
Did we have more real life pithy,
witty stories though?
Come on.

squadcaster-fhej_1_05-21-20 (41:04):
no, no, no.
There was nothing as pithy.
There was nothing as.

rory-liebhart_1_05-21-2025_ (41:09):
Was there as much Mirth?
No, I'm kidding.

squadcaster-fhej_1_05-21-20 (41:11):
Not as much more.
Um, the other, the other pieceis, uh, other thing that I've
been, I've been reading isthere's a, uh, an up and coming
author by the name of AmberlyMurray, and she's redone.
A bunch of, um, the hi, a bunchof novels, um, like Pride and
Prejudice and,

rory-liebhart_1_05-21-2025_ (41:28):
Why are you cracking up?

squadcaster-fhej_1_05-21- (41:30):
that, and she's, she's rewritten them
in modern American English, soyou could actually understand
what's being said.
And so I've, I've, uh, kindagone back and reread Pride and
Prejudice and,

rory-liebhart_1_05-21-202 (41:42):
Okay.

squadcaster-fhej_1_05-21-2 (41:42):
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, thatwas really around the, uh, the

(42:04):
Napoleonic War.
Yeah, the Napoleonic Warssailing.

rory-liebhart_1_05-21-2025 (42:07):
Wow.

squadcaster-fhej_1_05-21-20 (42:08):
uh, I've got them on audio book.
So I actually listen to those inthe car.
Um, and that's been, and I'm upto, I'm actually up to, um, far
side of the world, which is.
Which is the, uh, the one thatthey actually turned into a
movie with Russell Crowe?
Uh, well, it's Far Side of theWorld is actually the book.
Um, master Commander is adifferent book.
Yeah, it is Master CommanderColon.

(42:30):
Far side of the world.
And so Master Commander was onebook, far Side of the World, was
another book I'm at.
I'm at far side of the worldnow, and it's, it, it's
extraordinarily well-written.
It's very funny, um, in, youknow, kind of English humor way.
Um, so that's the, that's thereading.
So you know Patrick O'Brien, aand Murray and then, uh, Adam

(42:51):
Coffee.
So there you go.

rory-liebhart_1_05-21- (42:53):
Awesome.

emily-sander_1_05-21-2025 (42:53):
We'll have the links in the show notes
for

rory-liebhart_1_05-21-202 (42:55):
Yeah.

emily-sander_1_05-21-2025_1 (42:56):
My, listen, I am rereading the
Martian and Project Hail

rory-liebhart_1_05-21-2025_ (43:02):
Oh, nice.

emily-sander_1_05-21-2025_ (43:03):
Andy

rory-liebhart_1_05-21-202 (43:03):
Yeah.

emily-sander_1_05-21-2025_1 (43:04):
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_ (43:11):
Oh, cool.

emily-sander_1_05-21-2025_1 (43:12):
and then.
Your head cock?
Well, wheat Wheaton is awell-known narrator.
He played Wesley Crusher on StarTrek 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 akey character who is not a
human.

(43:32):
at first this character speaksin musical notes and they can
actually do it on Audible.
So they have a cool way of likedoing his voice.
Um, so

rory-liebhart_1_05-21-202 (43:41):
Well, speaking of awesome narrators
too, we've got Ed Bartonfinishing up his piece on our
audio book, so stay tunedlisteners.

squadcaster-fhej_1_05-21- (43:50):
soon.

rory-liebhart_1_05-21-202 (43:50):
Yeah.
So.

squadcaster-fhej_1_05-21-20 (43:52):
The

emily-sander_1_05-21-2025_16 (43:52):
if you want

squadcaster-fhej_1_05-21-2 (43:53):
Dul,

rory-liebhart_1_05-21-2025_1 (43:53):
Be ready.

emily-sander_1_05-21-202 (43:54):
tones,

rory-liebhart_1_05-21-2025_ (43:55):
You think James Earl Jones has got a
sick voice?
Wait till you hear Ed Barton.

squadcaster-fhej_1_05-21-20 (43:59):
the dulce tones.

emily-sander_1_05-21-202 (44:01):
Morgan Freeman, watch

rory-liebhart_1_05-21-202 (44:02):
Yeah, let's go.

emily-sander_1_05-21-2025_16 (44:04):
is coming for

rory-liebhart_1_05-21-2025 (44:05):
Yes.

emily-sander_1_05-21-2025_ (44:06):
It's coming for you?
Yes.
All right.
We've given like really good carinformation, how to run
marathons and what the milesfeel

rory-liebhart_1_05-21-202 (44:14):
Yeah.
A little bit of business talk.
Not that much though, you know.

emily-sander_1_05-21-2025 (44:18):
yeah, I feel like this is a good place
to

rory-liebhart_1_05-21-202 (44:21):
Let's wrap it.

emily-sander_1_05-21-2025_ (44:22):
Here we go.
All right, we'll catch you nexttime on the Private Equity
Experience Podcast.

rory-liebhart_1_05-21-2025_1 (44:27):
Be good.
Be profitable.