Taylor Hollingshaus

Valuing illiquid securities by day, finding liquid securities to buy by night

[Taylor Hollingshaus @thaus7]

@sodell244 @moizali Because they had already sold off most of the assets of the business. They bought a bunch of motels, slowly sold them off over the course of 12 years to franchisees (for a profit). At the end, they only owned the Motel 6 brand and the franchisor business

[Taylor Hollingshaus @thaus7]

@sodell244 @moizali Blackstone also likely used a lot of debt to finance the original purchase given the amount of real estate involved. This would have amplified their equity returns while executing the strategy.

[Taylor Hollingshaus @thaus7]

@sodell244 @moizali Motel 6 went from having company owned motels to franchise owned motels. I.e. During their ownership, Blackstone sold a bunch of properties to franchisees that generated cash which was likely taken out of the business and used to pay dividends.

[Taylor Hollingshaus @thaus7]

@pestctrlguy Do you think this stems from strategic buyers (e.g, Terminex or the like) driving the market? Seems likely that they would just think about it from a $ per customer/ contract perspective given they have their own cost structure that will be implemented post-transaction

[Taylor Hollingshaus @thaus7]

@JoeCMoran The implied multiple of the business would be 20.0x instead of 10.0x - driven solely by the change in cost of capital. Obviously, this is just a simple example with round numbers to make the math easy, but it illustrates the relationship between cost of capital and multiple.

[Taylor Hollingshaus @thaus7]

@JoeCMoran The above calculation would be equivalent to applying a 10.0x multiple on the $1.0 million of cash flow. In this example, if the cost of capital decreased from 13.0% to 8.0% the value the business would increase to $20.0 million, all else being equal.

[Taylor Hollingshaus @thaus7]

@torysheffer Mt. Prospect is IMO the best bang-for-your-buck in Chicagoland. Ravisloe Country Club is also great

[Taylor Hollingshaus @thaus7]

@ClintFiore 1. How much do you pay yourself and your family members?
2. What personal expenses are in the P&L?
3. Are there any non-cash expenses on the P&L besides depreciation and amortization?

[Taylor Hollingshaus @thaus7]

@chrisxmunn Doesn’t surprise me. There is a reason why some companies trade at higher multiples than others. Ultimately, valuation comes down to cash flow growth and the riskiness of those cash flows. Higher entry multiple = higher quality, faster growing business = better future returns

[Taylor Hollingshaus @thaus7]

@TripleNetTyler @Keith_Wasserman Saw this near me recently. They relocated to across the street. Old location is the red circle, new location is the green circle.

[Taylor Hollingshaus @thaus7]

@ClintFiore 3) I would need him to have him put some capital in as well, especially given there this no PG. No specific amount, but enough to be a significant portion of his net worth.

[Taylor Hollingshaus @thaus7]

@ClintFiore Couple thoughts:
1) I would want at least 33% equity for putting up 2.5mm of equity on a 7.5mm purchase price.
2) I would need some sort mechanism to get paid back in full before he participates in equity distributions (e.g., preferred equity or another similar structure.)

[Taylor Hollingshaus @thaus7]

@SkolCapital As a new dad of twins, I really appreciate the insights, Matt!