Spent 7 hours researching a true master of small cap private equity:

- 586 transactions

- Acquire $1 million to $10 million EBITDA companies

- Average deal $12 million

- 72% IRR

- 7x cash on cash returns

He had two rare public appearances on Patrick O’Shaughnessy’s and Harry Stebbings' 20VC podcast.

His name is Justin Ishbia and he is the founder of Shore Capital Partners.

00:00:00 - Intro

00:01:28 - Mentors

00:02:05 - Lessons from dad

00:04:05 - Early days of Shore Capital Partners

00:09:45 - Margin of safety

00:11:50 - Making mistakes

00:14:40 - 80% are the first time CEOs

00:17:19 - How Justin finds six to seven talented Board of Directors for each of his portfolio business

00:21:45 - How to build systems that works 8 times out of 10

00:23:25 - Which people succeed in Shore Capital Partners

Here's what I learned:

“Constellation Software, Mark Leonard is a friend and a mentor. I'm not smart. I know who to copy. And did I copy -- they did all in software. We've done it in operating businesses,”
Biggest lesson from dad: “Don’t do things you don’t understand. You do what you understand and you can execute on it well.”
Industry, industry, industry! “If you go into the publishing industry right now, he doesn't care if you are Jack Welsh’s at his prime, you'll probably not end up having a bunch of success.”
80% of our CEOs are first time CEOs. Big believer in early career energy. It takes a really smart person about 18 months to learn 90% of the industry.
Margin of safety. Most private equities commit $100 to a thesis, investing between $60 and $80 of that investment for the platform and reserving $20 to $40 for add-ons. Justin and Shore Capital have almost the exact inverse. They’re committing $100 to the thesis, and deploy $5 to $25 for the platform. It gives that great opportunity, he thinks, to increase your margin of safety, increase an opportunity for success.

The biggest take away was how Justin hires 6-7 board of directors for portfolio companies with almost zero $$$.

As the board of directors themselves say when they very first time show up:

“There's more people on the board than there's millions of revenue.”

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How This Private Equity Fund Achieved An IRR of 72% After Doing 586 Deals

Buyers and Builders