Structure For Opportunity

Michael Girdley shares his perspective on running a holding company (holdco) and structuring investments. He emphasizes flexibility and the importance of being able to pursue various types of opportunities while maintaining the right mindset for each business type.

Key Points:

• Structure & Investment Philosophy:

  • Maintains flexibility to pursue any opportunity that comes through the door
  • Different businesses require different capital structures and approaches
  • Puts substantial personal money into new ventures before raising outside capital
  • Typical portfolio businesses run 15-20% EBITDA margins

• Business Operation Strategy:

  • Prefers to reinvest profits rather than take distributions
  • Partners with operators rather than running businesses directly
  • Maintains significant ownership stakes (30-60%) in portfolio companies
  • Focuses on strategy and high-level decisions rather than day-to-day operations

• Partnership Approach:

  • Claims 100% success rate on partnerships
  • Best scenario: co-founder who puts in their own money and runs the business
  • Equity arrangements vary from 5-40% depending on situation and timing
  • Provides value through strategy, insights, best practices, and connections

• Personal Operating Style:

  • Lives at "80,000 feet" with big ideas and strategy
  • Acknowledges being "precisely wrong person" for optimization and operations
  • Prefers idea space over day-to-day management
  • Finds accounting, HR, and optimization "incredibly boring"

• Investment Philosophy:

  • Only raises money when putting in substantial personal funds
  • Investment size ranges from $50,000 to "couple million"
  • Uses personal guarantees and debt when necessary
  • Focuses on long-term compounding rather than immediate cash flow

• Key Learnings:

  • Running a holdco is harder than most people think
  • Requires different skillset than being an operator
  • Must resist urge to jump in and fix problems
  • Success depends on finding the right operators and maintaining strategic oversight