FreebirdSMB

Former hedge fund investor and investment banker | now: buying high quality businesses | In pursuit of freedom | Personal views/opinions only

[FreebirdSMB @FreebirdSMB]

Why do Europeans always order tomato juice on planes?

[FreebirdSMB @FreebirdSMB]

@recap_david Newsletter

[FreebirdSMB @FreebirdSMB]

@X_FINALBOSS @jn_jackk X

[FreebirdSMB @FreebirdSMB]

@blennon_ would love to try!

[FreebirdSMB @FreebirdSMB]

@blueprintsmb22 Someone probably will pay that price sadly lol

[FreebirdSMB @FreebirdSMB]

I think this is probably true but you had to be more flexible on geography and business quality almost certainly goes lower if you want the classic 3-5x multiple unless you are willing to buy really small

I also would guess we will see less of the home run outcomes given the moving lower on the business quality spectrum as well

[FreebirdSMB @FreebirdSMB]

Have only invested in 1 search deal so far (a good friend from college). In year 1 they hit the year 5 EBITDA projection.

Asked him what they did differently. He said mostly a lot of little things but most importantly just bidding on more work than the old owner. That resulted in a pretty meaningful revenue uplift

[FreebirdSMB @FreebirdSMB]

@tom_sietsema So accurate. Was under LOI for a deal represented as $1.7m and came in at 900k

[FreebirdSMB @FreebirdSMB]

@ericjackson The point about the net debt wasn’t that it’s disqualifying. It was that you commented about cash being 60%+ of market cap. That is disingenuous when they do have net debt

[FreebirdSMB @FreebirdSMB]

@Storage_Venture Torn labrum and got surgery at HSS in NY. Tough surgery and long recovery. Did 6 months of PT. But it was best decision for me and feels better than ever today and would never know I had surgery

[FreebirdSMB @FreebirdSMB]

@MarceloLima There is no free cash flow if you deduct SBC. That is the problem with TEAM

[FreebirdSMB @FreebirdSMB]

This was so obviously written by AI.

A couple things:
-You keep talking about cash as % of market cap. This is completely meaningless given they have net debt
-FCF is calculated after interest expense/debt service, not before
-I highly doubt the increased spike in “cancel peloton” google searches are tied to earnings. I suspect 99% of users have 0 idea about the earnings result

[FreebirdSMB @FreebirdSMB]

@Will_Schryver I have been under LOI on 3 deals. 1 had a sellside QoE and 2 did not. Guess which deal ended up with numbers closes to what was presented by the broker?

[FreebirdSMB @FreebirdSMB]

It is shocking to me how much money is being raised and invested in VC. It’s like they learned nothing from 2020/2021 and were bailed out by AI. I can’t see how this ends well. It makes no sense to me that a legalAI needs to raise $500 million+ a few months after raising $100 million. It feels like money is just being lit on fire.

Some of these private marks are completely absurd relative to where comparables trade in the public markets. Everything always converges to public market valuations so will be interesting to see this play out

[FreebirdSMB @FreebirdSMB]

@loganbartlett @WeAreLegora Serious questio. Why do they need $550m? Legora and Harvey have raised $1bn+ at insane valuations and it seems like their place in the world is at best fragile. Not clear why this needs to exist outside chatGPT and Claude

[FreebirdSMB @FreebirdSMB]

@pitdesi There is way too much capital out there. No shot these guys need $550 million

[FreebirdSMB @FreebirdSMB]

@awxjack @airwallex @deel @McLarenF1 @boltapp Payments transactions are not ARR

[FreebirdSMB @FreebirdSMB]

@JackieHirsch_ Would place 0 value on something like this

[FreebirdSMB @FreebirdSMB]

@ContrarianCurse this tweet got a shoutout on VIC

[FreebirdSMB @FreebirdSMB]

@mwfinancier he wants to go straight to a binding term sheet and have a non-refundable deposit ha

[FreebirdSMB @FreebirdSMB]

Seller is asking for a $100k non refundable deposit. It’s a good deal with a great price for the size (~2.5m ebitda at <4x). There is 0 flexibility in sellers part. He was under LOI with another group for 1.5 years before the deal fell apart so is very wary now. What do you do?

My thought is that it’s unfortunately a non starter. The true cost is much more than $100k when you account for diligence costs (legal, QoE, etc). Probably not worth the risk