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Make 6-figures referring companies to Enduring Ventures

Have you heard of the Enduring Ventures Scout Program? If you refer a business that we buy, we will give you a "thank you" gift of $25,000 to $100,000 in cash and a free vacation of your choosing.

We prefer companies that generate meaningful profits (at least $2 Million per year) and have a good team in place to run the business. If you know an owner of a business like this please sign-up on the website, and reply to this email to let me know.

​Read more about the Scout Program here.​

In April we paid someone $50,000 for referring us to a company we invested in...

I'd like to tell you the story about one of the kings of private equity...

In the early days of Private Equity, Ron Perelman bought and sold some of the most famous brands in the world and made over $10 Billion personally. He is considered one of the founding fathers of the industry. But it wasn't all roses for Ron...

Here is his story...

In 1943, Ron Perelman, was born to Ruth and Raymond G Perleman.

Ron's father owned a successful steel company so he was exposed to the world of business from an early age. He worked for his Dad's business buying companies.

In 1978, at age 35 Ron acquired his first business: Cohen-Hatfield Industries, a jewelry company for $1.9 Million.

This was the early days of LBOs. This meant Ron could get a 90% of the purchase price as a loan to buy the business (LTV). A few years later Rob split up the business and sold each part off turning a profit of $15 million ($75 million in today's dollars).

In 1980, fresh off his recent success and profits with Cohen-Hatfield, Ron spotted his next target:

MacAndrews & Forbes Holdings Inc

Originally a licorice provider to the tobacco industry and chocolate manufacturing company from the 1850s, the business grew into a diversified holding company.

I had no idea licorice is used in Tobacco. Turns out they use it to sweeten the cigarette, help maintain moisture, and create a woody flavor.

Ron took control of the business for $45.7 million, of which $35 Million was high-yield debt from Michael Milken's firm Drexel.

You'll notice Milken's name comes up quite a bit. He also led the financing for Reggie Lewis' $1Bn acquisition of Beatrice International which I wrote about a few weeks ago.

Ron buys MacAndrews & Forbes with a plan to use the business's public market status as a way to access easy capital for his future acquisitions. In 1986 he sold the chocolate manufacturing part of the business for $45 million paying down all of his debt and then some.

He then went on a buying spree with his public company stock...

Some of which were a success, and others were a colossal failure. You can read about them here:

Successes:

1. McGraw-Hill: He acquired the publishing company in 1994 for $1.2 billion and sold it to Apollo Global Management in 2012 for $2.4 billion.
2. Scientific Games: Perelman invested in the company in 2003 and served as chairman until 2013. During his tenure, the company's revenue grew from $200 million to $2.3 billion.
3. AMC Entertainment: He acquired a majority stake in the movie theater chain in 2004 for $1.2 billion and sold it to Dalian Wanda Group in 2012 for $2.6 billion.

Failures:

1. Revlon's Decline: Under Perelman's ownership, the famous makeup company Revlon struggled with debt and declining sales, eventually filing for bankruptcy in 2020.
2. Panavision: He acquired the camera equipment company in 1998 for $600 million and gave up his stake to creditors.
3. New World Entertainment: Perelman acquired the film studio in 1994 for $250 million but sold it in 1997 at a loss.

Other data:

• Net Worth: Estimated to be around $4.6 billion (Forbes, 2022), down from $10 billion+
• Age: 79 (born January 1943)

Ron's track record is spotty at best. He had a few incredible outcomes on businesses he bought, and he's also had a few colossal failures. Of his acquisitions, at least 3 companies that he paid hundreds of millions for went into bankruptcy.

He claims his two best qualities are

1. he's more tenacious than anyone in the world
2. he's very impatient

If you've been reading for a while you'll know that I'm not a big fan of Ron's particular style of private equity. He plans to buy a business and flip it at a profit while maximizing value for himself. I prefer buying a business that I want to invest in long term, that will create value for me, my employees and my customers. But I'm also a believer that we can learn good lessons from just about anyone.

If you'd like to hear more from Ron, here is an interview he did at the University of Pennsylvania in 2019.

Have a great week,

Sieva

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🔑 Did you know?

The QWERTY keyboard layout was designed to slow down typing to prevent keys from jamming together on early mechanical typewriters. Today, it's still the standard layout despite no longer serving its original purpose.

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Disclaimer: nothing here is investment advice. Please do your own research. The information above is just for information and learning.

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