Private Equity Strategies

The money that is invested into companies that are not publicly traded is called private equity. Companies that are public, are businesses that have equity structured as shares of stock. Those businesses are typically traded on a stock exchange after an IPO, which means Initial Public Offering. It also refers to the strategies that investors typically use to make money from their Investments.?

There are many opportunities that can come from a private equity investment. Investors have the freedom to invest in startups with promising futures or breathe life back into a dying brand. Regardless, investors are looking to earn more substantial returns than they can through stocks.?

Types of Private Equity

Private equity is usually thought of as an alternative means of investing. This is compared to buying stocks or real estate properties and assets that have long-term growth potential.?

LBO: Stands for Leveraged Buyout. This type of strategy typically combines borrowed money with investment funds. The purpose is to buy companies and make them more successful and profitable. When the borrowed money is combined with the money from an investor, the fund manager has more ability to buy larger companies. When this happens, companies can either be bought outright or the purchaser can take a majority stake in the business in order to control its business plan, operating methods, and strategies.

VC: Venture Capital is a type of private equity and financing. It deals with funding early-stage companies. From thought to start-up, venture capitalists are there to invest in businesses that they believe have significant growth potential. They will also fund startups that have overcome the odds and grown quickly, in order to expand them.?

Leveraged buyouts and venture capitalists differ because Venture Capital funds generally take a minority stake. This allows the control of the business to stay in the hands of the company management. It is considered a higher-risk strategy because the businesses are so new that they have no real record of making money.?

GE: In order to boost expansion, companies will raise capital through growth equity. Growth Equity is also commonly referred to as growth capital or expansion equity. The inner workings are very similar to venture capital. But, they are a lot less speculative as these firms will do what they can to make sure that the companies who receive these Investments are already profitable and have a lower risk of failure.

Truth Capital will more likely invest in companies that have matured that are looking to expand or grow their business by embracing new aspects or buying other companies. They typically issue minority ownership to investors in preferred shares. This funding will allow investors to make high returns but with medium risk.?

REPE: Real Estate Private Equity is a fund that invests in real estate properties using a variety of different strategies. While some funds may be conservative, low-risk with predictable incomes, others will be “development” deals that offer a greater return, but also a greater risk.

Infrastructure: Infrastructure is very similar to real estate equity. Capital is raised by private equity investors and they use it to buy assets, they make them more efficient and profitable, and then they sell them for a bigger profit. The only difference is that it deals mainly with assets that provide essential utilities and services such as gas/electric companies, transportation services, etc. This is considered low-risk investing.?

Private Equity Fund of funds is a strategy that raises money from investors but doesn’t invest in private assets or businesses. It basically buys into the portfolio of different private equity funds. This means that it can invest in venture capital, leverage buyout, real estate, Etc.

Distressed Private Equity: This type of funding specializes in helping companies that are in financial crisis. Their main goal is to take control of the business during a bankruptcy or restructuring phase in order to buy the company at a lower purchase price. Then, they will focus on the goal to make the company more efficient and profitable and then sell them.?

Knowledge is Power!

Arming yourself with knowledge is empowerment. The more you know about the world of private equity, the better decisions you can make for your family entertainment facility. Our goal is to be the best in our industry. If it seems like productivity and profitability are slipping away, always remember there are other opportunities out there to make your business more successful.?

Have you read an article I’ve published here on LinkedIn and want to talk about the topic a little more? If you’d like to book a call with me regarding the Family Entertainment Industry or Private Equity, please feel free. I enjoy connecting & collaborating with others in the same professional space.

Tim Murphy is CEO of APX Operating Company, dba Boomers Parks, under the ownership of Cerberus private equity ($60B assets). Boomers Parks owns six family entertainment centers and two water parks with locations in California, Florida, and New Jersey.

As CEO of Boomers Parks since 2020, Tim took these eight parks from bankruptcy to profitability in just a year – in the middle of a global pandemic. When Boomers acquired these parks, they were operating at a $10 million loss. Tim transformed the customer experience and added new revenue streams to generate a 180% increase in revenue in 2021 and on a similar trajectory in 2022.

Tim launched his 35+ year career at Walt Disney World and has since served more than 150 entertainment, restaurant, and food & beverage brands across more than 10,000 locations in C-suite and senior positions.

Additionally, Tim is a Board Director with Coney Park & Happy City - Family Entertainment & Amusement Parks, part of The Carlyle Group ($276B assets), a private equity firm that operates 150+ family entertainment centers and amusement parks in Latin America.?

Tim has worked with top-tier entertainment and restaurant brands including Disney, Rebounderz Trampoline Parks, Darden Restaurants (Olive Garden, Bahama Breeze, etc.), Red Lobster, Jimmy John’s, Applebee’s, Sonny’s Bar-B-Q, Denny’s, El Pollo Loco, Hardee’s, Golden Corral, and Firehouse Subs.

Tim has overseen more than 35 purchase transactions involving over 1,200 restaurants, stores, and park locations.? With extensive experience in buying and selling businesses, handling negotiations with buyers and sellers, and creating strategic partnerships to build strong brands, Tim has facilitated deals ranging from $11 million to $350 million+.

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Tim is a member of International Association of Amusement Parks & Attractions (IAAPA), California Attractions and Parks Association (CAPA), Florida Attractions Association (FAA), American Amusement Machine Association (AAMA), National Restaurant Association (NRA), California Restaurant Association (CRA), World Waterpark Association (WWA) and International Franchising Association (IFA). He is a licensed commercial real estate broker in the State of Florida. Tim earned a BS/BA in Accounting from the University of Central Florida and an MBA in Finance from Orlando College.