The Private Equity Playbook: Management’s Guide to Working with Private Equity

The Private Equity Playbook: Management’s Guide to Working with Private Equity

Posted by jack_miller | Published 7 months ago

With 82 ratings

By: Adam Coffey

Purchased At: $14.49 (11 used & new offers)

Private equity firms are on the rise and rapidly changing the game. Today more than 5,500 P.E. firms own tens of thousands of companies, so it is essential for CEOs and senior management executives to understand exactly how private equity firms operate. This invaluable resource can help you devise a winning P.E. game plan for your own company that offers you greater freedom and financial success.

CEO Adam Coffey has almost twenty years of experience building businesses for private equity companies. In this authoritative yet approachable handbook, he covers:

· The history and landscape of private equity
· Ground rules for finding the right firm to partner with
· Techniques for navigating the new governance
· Strategies for continued growth in the private equity space
· And more.

The Private Equity Playbook provides all the coaching you’ll need to compete and win on this new playing field.
I purchased "The Private Equity Playbook" by Adam Coffey and, frankly, I couldn't put it down. As a former owner of a nationally recognized middle-market service company. I wish that I had this book a few years ago. The author states that his book is a primer on the private equity business, but I believe that it is much more--I've read other books on the subject, but for brevity, de-mystification and just plain enjoyment this one beats them all--by a country mile.

Coffey is a maverick. He sees himself as a blue -collar CEO/ He left home at 17. After a stint in the Army, he worked as an engineer and then changed to the business side , rising to middle-management with General Electric. Private equity recruiters came calling and he listened. For the last 20 years, Coffey has been President/CEO of three different national private equity backed companies. Each company has grown exponentially under his watch. And, he tells you how.

The author likens the experience to building a winning team. He introduces two players , "Josh" and "Rose" ( a mirror of his former self ). Josh is the CEO of a middle-market service company. He has built the company into a recognized leader in it's field, and is thinking about selling out. He knows little about private equity and wonders if this is a viable exit strategy.--Rose is a " Fortune 500" middle-market executive who gets calls from private equity recruiters looking for a CEO/COO in a private equity backed middle-market company. She is doing well now, but wonders whether she should make a career change

The heart of the book is Coffey's recounting of his own journey in the problems that he faced and decisions that he made. Among the many points that the book covers: private equities growth from 312 firms in 1990 to over 5300 firms today with over $3 trillion in assets under management--over 50% of middle-management companies to have a private equity partner in the next few years-- various type of funds today--the "playing field", the players and how they fit into the decision making for Josh and Rose--the rules of the game and the specific questions that Josh and Rose must ask themselves as well as the private equity firms--why an investment banker is needed--why the acronyms IRR,MOIC and DPI are so important as measurement guidelines--how partnering with a private equity firm is an accounting game changer--how EBIDTA can be fluffed up to accelerate growth--growth strategies through organic growth , price, product or service, rebranding and blue ocean search--equity creation for management through the ABC waterfall--why IRR is mandatory in the game--buy and build strategy with mergers and acquisitions--how to beat a recession-- how outside consultants could actually be worth the cost--why a private equity partner can create generational wealth for both Josh and Rose for years to come, " The gift that keeps on giving".

Everything in the book is tied to Coffey's personal experiences in putting together a winning team. This is a fascinating read, down-to-earth and hands-on. Highly recommended

- anton_hughes

I read the paperback version - 177 pages. Well-written, read it in one day. Written as if it was a playbook for football, etc. Explains the field of private equity, the rules of the game and describes the players. It uses two examples - Josh who has a business to sell and Rose who has a very responsible job, but is being pursued by private equity companies to work for them. He explains how to evaluate the characteristics of private equity in each of these two scenarios. He carefully labels the approaches of private equity in various circumstances as "neither good or bad, just different."

The author has managed three different companies which have gone through the private equity process. He discusses shareholder agreements, employee contracts and generating wealth. He recognizes that an owner who wishes to sell the business may have different motives - such as, to retire, recognize wealth, continue to operate and grown the business. He encourages owners to recognize the wealth building opportunities from private equity's general need to purchase, grow and sell businesses in 3-7 years because of the structure of private equity.

The book explains the sale process, what to expect after the sale has closed, and how to work with the previous owner's new masters. The world is now different and the prior owner who plans to stay on would be wise to recognize the expectations and business demands of private equity. The new masters can bring new knowledge and experience to the business that can be valuable.

Ebitda - it's not the same as cash flow. It's now important and the book gives some practical examples of how ii differs from cash flow. The author encourages the seller of a business to get good accounting, tax and legal advice.

The name of the game is growth. How do you get bigger? Organic, margin expansion and bolt-on acquisitions are strategies employed by private equity to do this. Ultimately, unless the business grows and prospers, private equity doesn't make money. The principals at the private equity firm who authorized the purchase suffer financially and professionally as well. The private equity principals will resist these losses and you may lose as well.

If you are Rose, the book offers advice as well. However, deciding to work for private equity requires a careful analysis of where you are professionally now, what role you are being asked to play and the fit (chemistry) between you as Rose and the private equity principals who actively recruit you. One point the book does make is that it is almost universally accepted in private equity that if a senior executive is not performing at a high level, they should be terminated posthaste. Keep this in mind if you're being recruited.

If I have a criticism of the book and I didn't deduct for this, it's that it doesn't go into failure. I think that the book outlines what could happen that would lead to failure.

If the topic interests you, the book is well worth your time.

- colby_watson

This book is an easy, insightful read geared mainly for two types - 1) Fortune 500 leaders contemplating a switch to a private equity (PE)-owned middle market company, or 2) the business owner looking to sell to a PE firm. The content is very accessible to anyone with a basic business acumen; Coffey's plain speak breaks down the landscape, operating mindset and keys to maximizing outcomes with PE firms. The paradigm presented is the reader is an athlete preparing to play a different sport (similar to a baseball player learning cricket), and it is divided into sections supporting that paradigm. There are nuggets of insight on nearly every page, and you're left feeling mentored by a pro. Required reading for anyone climbing the corporate ladder or selling their business to private equity.

- averie_patel

Having recently purchased this book and as others have noted, I couldn’t put it down. Last year I was approached by two PE firms and I deflected their entreaties because I did not understand. This book helped me overcome my own ignorance. Not only is it an excellent primer on PE but it is also a good management guide to running a business for maximum shareholder value and increased efficiency. Even if I am the only shareholder, it behooves me to increase the value. From that standpoint, there were a lot of “ah ha” moments. Highly recommend.

- xavier_ruiz

This book provides a rare glimpse into the life and operations of private equity firms and their portfolio companies (though more focused on the latter). The author outlines key principles in plain English and debunks many of the myths surrounding PE.

Very easy read with lots of useful information that can be applied to all work settings.

Highly recommended!

- jonah_diaz

This book is Not for the veteran banker or PE dealmaker. It’s for a beginner in the finance industry. Covers all aspects of a deal. Good summary. Book is not too long either. Can be used as a reference guide as you become familiar with the industry. However if you know something about PE, the last few chapters (20%of book) are the only things that might be interesting. His thoughts on valuation drivers and use of consultants is good to read about. Always nice to hear a different perspective.

- joanna_torres

Great introduction to the world private equity. The book give an excellent description on the history, the players involved and the inner workings of private equity.

- brantley_ortiz

Waste of money

- louisa_phillips

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