Take Five #075: Warren Buffett’s financial statement rules of thumb, and more
Codely v2.0 public release is here
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What has changed in our latest release?
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All new features available for all public channel users
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Coding collaboration with over 200 users at once
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Take Five #075: Warren Buffett’s financial statement rules of thumb, and more
1. How a buyer with no experience in the field acquired accounting firm and tripled revenue in 1.5 years
Not only did Hampton member Patrick Dichter acquire a business he had no formal training in (accounting), but he did it his own way, going around the typical brokers in the space, and cold-emailing his own list of prospects until he found the one.
Over the last year and a half, he's 3X'd its revenue, and in this article, he breaks down all the cool stuff, like...
- Typical gross and net margins
- A look at his recruiting playbook and EOS scorecard
- Key growth channels and how he uses them
- How he structures compensation to overcome common industry challenges
- Where he sees untapped opportunity in the space
- And more...
Whether you're currently building a HoldCo, or eyeing your first acquisition, you'll get a ton from this. Without further ado, enter, Patrick...
Find the rest of Hampton’s interview here.
2. New 2024 LLC registration requirement details
3. Brief history on the EBITDA metric, its purpose, and why not all EBITDA is the same
The idea of EBITDA was created by the CEO of TCI, John Malone, back in the 1980s.
Malone was an incredible entrepreneur, whose journey is chronicled in the wonderful book Cable Cowboy. In the early 1970s, Malone saw that the cable industry:
1. was growing rapidly rapidly growing;
2. was fragmented across many providers; and
3. had incredibly sticky customers willing to pay a lot for the service.
That led to Malone’s bold strategy: borrow lots of money to buy lots of cable franchises across the US, ensuring that the cash flow from each acquisition could cover the debt repayments on that asset. Over time, the debt would get paid down, the asset value would grow, and TCI’s shareholders – including Malone – would get very rich.
It’s a beautiful strategy. And it worked like a charm.
This strategy had one big downside though.
Acquiring cable franchises – and spending money on upgrading them – leads to big costs in your P&L for depreciation and amortization.
How did Malone deal with that?
Read the rest of Net Income’s article here.
4. Warren Buffett’s Financial Statement Rules of Thumb (with a quick-reference graphic at bottom)
5. “Don’t be the bottleneck” and other ways to maximize resources and meet growth goals
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