How does an IPO eliminate my VC preference stack?

going public is not for every CEO. It's an extremely challenging role to be in at a founder. What do you typically see as best practices for lockup periods currently in this market right now? I think the biggest misunderstanding for those that are interested in the small cap and micro cap is that you don't have to be a giant unicorn and VC backed company in order to go public. Hey everyone, welcome back to Fundraising Demystify. Today I'm inviting back Peter Goldstein, uh, the expert in the IPO market, also the author of the entrepreneurs IPO and soon to be author of the investors IPO. Peter, welcome back to the show. Thanks, Jason. Great to be here again, Grim and excited to have another, you know, in-depth conversation about the IPO market and all of the complexities that surround that in today's day and age. Yeah, there's a lot of questions that I have because, you know, we're we're talking today at the end of March, you know, so end of Q1 2025. Uh there's been a huge kind of market uh scare and kind of like, you know, drop in the last few weeks, the last month or so. Uh IPO markets were everyone's begging for liquidity in the markets and yet there hasn't been any major activity, but a lot of talk. So to kind of kick things off, you know, being that you're the called the resident IPO expert on our show, I'd be curious to hear your your thoughts on kind of what your take on the current IPO landscape for 2025. Yeah, there's there's no straight and direct like easy answer to that, Jason. Right. These are complicated times and and the optimist because I'm a I'm a very forward-looking kind of optimist. I'm very pragmatic. But I think that in the the volatility that we're seeing after we get a few successful large IPOs, which there are some teed up right now, uh we'll we'll see the market open up. You know, we've had a pent up demand and and the pipeline is very full on the IPO side and the capital is waiting to be deployed. So what what I've seen before and as last time was in 2021 where once the market opened up there was a significant number of entries into the marketplace. So time will tell. Uh I I think that really we need we as we have some we can talk about some big ones that are coming up that are very significant in the tech sector in the AI sector and when these anticipated IPOs come and they open up and they perform well you know then that will really shift the IPO market as we know it today. How important is timing for these companies? Like I imagine that's why they're holding out for so long but like how much does timing impact the decision to go IPO? timing really is critical, Jason, because there's a number of sensitivities here and and that's the the the complexity of an IPO coming in together is that you need to have the market conditions, right? Your underwriter needs to be aligned, management needs to be aligned, and the board needs to be aligned. And so, typically the sensitivities are around bringing all that together and and let's be honest, it's about valuation, right? So, so the the demand for the stock, you know, IPOs have a limited supply of stock. every one of them is only issuing so many shares. So then it really comes down to that timing relative to all those factors coming together under one unique time frame. What are you seeing behind the scenes right now when it comes to companies looking at going IPO? I know your specialty is more than micro small cap, but from an investor sentiment, so the investors that have a bunch of dry powder sitting on the sidelines waiting to see what happens. Are you seeing a lot of companies going on road shows entertaining and whining down these investors right now or are people still kind of in a holding pattern waiting for better times? I think what what companies are doing preparing, you know, the smart management teams understand that it takes time that it can't just roll out an IPO overnight, right? So, companies that are are even able to file confidentially with the SEC uh allows them to put together the infrastructure and being what I would call IPO ready. And and you know, I have a great saying, Jason, if you're IPO ready, you're any for ready for anything in business. So it takes you know a very strategic management team to understand all the different stages of being organized around an IPO and and there are regulatory restrictions. You can't ne necessarily just go out and road show can't necessarily solicit and announce your IPO unless you're under the certain confines and constructs that are you know allowed through the regulations that the SEC provides. I guess from the investor sentiment like what's the what are investors wanting right now? What are you seeing on the investor side? You know, they want it all. They they want and they have the ability to to to be very picky and choosy about it. So you know what is that valuation uh growth right solid management team and I think o overall that it's a company that really is truly positioned properly to bring that together in the open markets with liquidity and and that takes you know really kind of that orchestration investors have the ability now where they want to know that look look let's be very clear about it many of the IPOs haven't traded well in the open market and and while there's an overall all return. Uh there's a lot of concern there and and so that's why the money is is is somewhat on the sidelines and and yet that money Jason has to move. The money has to come into the market in order to get a return on its investment. So that selection process of bringing it all together uh is really what the investors are looking for in today's market. Well, it's interesting because I was looking at a recent stat on the secondaries market and I think it was like went up from like 40 something billion a couple years ago in total transaction volume like 140, you know, billion in in last year and to see that kind of uptick is that like why why do you think investors are pouring so much money into secondaries right now? Well, again, if because the money really has to come into the market for the investors to get a return on their investment, it's not if they're not in the venture capital or private equity market and they're investing in liquidity and investing in the public markets, then that's the mechanism for their money to get in at at a reasonable discount, right? They can always buy in the open market, but secondary typically has better terms for the investors than it would if you're buying in the open market or it has the ability to come into the market knowing that there is a significant event and opportunity for those investors to get a return on their investment. So the the secondary market I think will continue to grow uh as an alternative to those companies that are already public because those companies need to seek capital to continue their growth, right? you know, these companies went public at whatever time frame they did and are able to take advantage of access to capital, whether it be a debt, uh, you know, equity or some structured financing. Yeah. And I I think it's a bit of an anomaly what we're seeing is like I think it was almost like 70% of all that capital went into just a companies like SpaceX, OpenAI, and things of that sort. Uh and for them it's basically like being a public company with how much liquidity there is for their their stock and it allows them to have full control. But you know when you think about the other 20% 30% of the secondaries capital being distributed amongst hundreds or thousands of companies you know it's a lot less liquid for those guys. Um and I guess that kind of brings the point of why maybe considering a a micro cap or a small cap listing might be more advantageous. So, you know, give give our audience that maybe didn't watch our first episode uh together, which, you know, we'll link in the description below. But, uh, what's the difference between like small and micro cap versus kind of these, you know, mega behemoths, you know, the deck of corns that are still private? Yeah, I think the biggest misunderstanding, Jason, for those that are interested in the small cap and micro cap is that you don't have to be a giant unicorn and VC backed company in order to go public. So by definition, micro cap is 50 million to $300 million market cap and then from 300 million to a billion is small cap. And these are kind of the future stars, right? These are these are smaller growth companies that are looking to see capital and liquidity at an earlier stage in their development than they would be if they were a bigger PCbacked or private equitybacked company looking for an exit and liquidity. And that's the the sector that I work in. It's much more emerging growth. We have now some interesting stats around that. You know, in 2024, Jason, 60% of the IPOs that were coming in at small cap and micro cap were foreign companies and those are companies seeking access to capital and liquidity that are emerging growth companies outside of the United States. So we have this kind of you know blend of of opportunities not just with emerging growth companies but in emerging regions of the world that bring the credibility the regulatory oversight the transparency by being a public company here in the United States on a senior exchange. So you said 60% of the micro small cap listings were international companies. Correct. Yeah. What they call foreign private issuers. Right. And and those foreign private issuers um use a form with the SEC called an F1. So it's a different IP registration process for the IPO, but the listing ultimately is the same where the share common shares are traded on on the open market in in both the NASDAQ and the New York Stock Exchange. So there's NASDAQ capital markets and New York Stock Exchange American. So in your experience kind of seeing this landscape like how are those companies performing? How how's the general micro and small cap market performing overall? Uh very disappointing how the stocks are trading in the open market. So that's one of the sensitivity items right there are just like in any in any market there's going to be you know the exceptions to the rule and those that are wellprepared they they've taken 12 18 24 months to prepare. They have the proper infrastructure, proper investor awareness program, and they have a growth trajectory and a strategy for entering the public markets. Those are the ones that perform well, and those are the management teams that we work with uh and and really have seen the the distinction, but I think you see it all the way up. You see it micro, small, mid, and large cap that that those characteristics of a successful IPO cut across the board in every sector. So yeah, a part of every IPO there's, you know, usually unless it's like a direct listing, but in most cases there's an IPO and there's initial investors coming in and buying up the uh the IPO shares. You know, who are these investors that are buying up micro and small cap uh shares at IPO? It's a blend, Jason. You have, you know, I would take it from the bottom. have retail investors and what's changed significantly is that you know 20 to 25% of the buyers in those IPOs end up being retailbased investors and and these are accredited investors high net worth you know the the advent now of technology and trading platforms has opened that up to investors to participate and get access to these smaller IPOs where they never had it before and then you have a blend of family offices and kind of special purpose But, you know, fundamental um institutional investors and and those are investors and they're hedge fund oriented that that are higher risk or at least take a portion of their portfolio that's designated for this higher risk category in the emerging growth sectors. So, and I guess walk us through some some examples of deals that you worked on that you were there in terms of advising from start to finish and kind of seeing how they perform. Like what what's kind of an interesting story of one of the companies you've worked with? you know, most most of the the so I've had a very kind of quiet last year because of the markets and we're selective like many about those that we work with and and and what we've learned is, you know, one example of of a medtech company and and medtech and life science are unique because they're either pre-revenue or they're early revenue and and we we also invest in these companies before they go through their IPO. So, we're able to to to fund the company for strategic growth capital prior to its listing. We listed them on an NYC American and then from there on they've had their journey continue on where they've raised you know three times the amount of the initial IPO in the secondary markets to help to support their growth as their revenue and the life science and in this case medical technology comes on board. So what I really look for is a fundamentally good growth story, solid management that understands the capital markets, you know, support of a board to bring that in and then the ability to know that in the next ensuing 12, 18, 24, 36 months like with this company, they're going to be opening up and developing their market with a strategic roll out. And then this capital Jason becomes really transformational. You know, if you look at some of the bigger anticipated events that are coming out right now and and some of the big IPOs that are coming, it's not as much of a transformational event in the small cap and micro cap. These are going to be transformational forms of capital that will take a company from its early stages of growth and accelerate it in the next 18 24 months. So, you know, we're we're seeing obviously some of the big ones, right? Like CLA as an example. If we go back up the food chain, CLA was expected to go out in 2021. Yeah. And it didn't happen, right? And it's similar with the company that I just told you. We were able to do it because they're smaller amounts of capital. When you're talking with a valuation of, let's say, where's Clara? It was 12 to$15 billion. That's significantly different than we're talking about $120 million micro cap offering, right? So, you know, these are going to be very interesting bellweathers for the market as we look at the differential between the large cap and the small cap and the micro cap offerings. Let's just say, you know, Clar and I have these, you know, bigger companies that have had tons of secondary and there's been a lot of liquidity on behind the scenes. um when they go public if they are up into the right I think it's everything's you know gonna whole market will probably rip with it but if if they don't go up into the right and they flatline or they they start to tank you know do you think that's a direct correlation to the small caps and micro caps or do you think there could be some uh you other potential for for those companies I think there is a correlation just generally speaking you know the IPO performance It's going to it's going to affect every sector and and obviously you know data bricks strike cla you know cororeweave these are big names and investors you know will will be able to demonstrate their appetite. So you have AI focused right you've got technology companies you know there's been very strong interest and investor sent around around every one of these sectors. So with that substantial interest from investors looking for the growth opportunities and you know tech and fintech especially uh that the performance of these IPOs is going to impact all of the other sectors and in a positive andor potentially negative way. So, you know, we're watching all of those very, very closely because the pipeline is filled and what we've seen, Jason, once the pipeline opens and and the window is open, things move incredibly fast then into the marketplace. No, I think that's going to be very exciting. I think if any of these big, you know, private companies have a successful IPO, the everything's just going to rip wide open. I imagine the the floodgates will be open and everyone's going to be trying to get get in there. everyone at least that's been prepared and has has done their diligence uh in in prior but when it comes to getting these you know as a founder in a founder mindset of looking at your options for liquidity uh either to fuel growth or for you know uh for existing investors yourself or whatever to kind of get liquidity when they're looking at an IPO obviously they want a great outcome you know and you can do your best to kind of you know do the road go set the price and hope for the best. But in the event that you go public and you don't really know what's going to happen in the macro market and that's a risk you take. Uh what's some like words of advice to those founders that might want to you know know what happens after IPO in terms of the good, bad, and the ugly. Yeah, it's really about the long game. Jason, you're right. There are options, right? And IPO is just one of them. you could continue to stay private, you know, seek venture, you know, growth capital, you know, look at funding from PE or from other sources. And and then of course, you know, there's the optionality and most investors that would take that route are looking for liquidity at some point in time. More companies are staying private right now because they have access to capital and they have access at high valuations with less volatility in in their price. So, you know, there are benefits and there are pros and cons. Obviously going public is not for every CEO. It's an extremely challenging role to be in at a founder to be in that position where you're really in a sense running two companies. You have the operating side of your business and then you have the public facing side of your business. And so I actually try to really talk people out of this. We need to know that they're fully focused for the long run if they're looking for shortterm gains. Founders and CEOs don't typically take money off the table at the IPO. Investors don't want to see that. So, there's a lot of misinformation. When I took my first company public, I thought once I got listed, all of my all of my issues and and my pot of gold would be waiting for me. Uh, didn't work out that way and it doesn't work out that way in reality. So, you know, the the the advice is if you're going to go, be fully ready and be fully prepared. And that's a very robust plan. Have a right team around you. Have the right advisors around you. Have people who are experienced not just in the IPO market, but in today's IPO market because it's different, Jason, than it was in six months ago, a year ago. You know, there's an old joke in our industry, you know, if you've done two IPOs, you consider yourself an expert. Well, I like to look at in what time frame and and in what sector and how does that relate to the companies that we're working with. And so when we bring in, you know, a CEO, we spend 12, 18, 24 months working and prepping and educating for what it's going to be like. And then, of course, there's no certainty. So that's both on the positive and on the challenging side of being in the IPO market. So, it's a long run, long view perspective that you have to have where you're not going to be looking at the stock ticker every day and focused on the volatility in your stock, but you're going to be understanding that this is going to give you access to more capital, right? Credibility, visibility, liquidity, and that's got the benefits that far outweigh the risks. And of course, in my opinion, because that's the sector that I'm focused on. You're likely having trouble raising money or selling your company. Personally, I've had four exits and I've raised over $145 million. 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No, I think that's an interesting perspective and then you know you kind of bring it this point of like okay just because you went public doesn't mean it's payday for everyone because one who knows how the stock performs but two there's typically these things called lockup periods like what do you typically see as best practices for lock up periods you know currently in this market right now so there there's two stages and I think it's also important for the investors that are listening to understand if they're if they're investing in an IPO the the the first one is a six-month time frame and and prior investors to the IPO are typically locked up for a minimum of six months. And when those lockups come off, and this is what's interesting for investors, you want to be tracking that time frame because there's likely to be a sell-off. Then there's certainly more shares that are available to be sold. And many of those investors, Jason, have been in this company for a very, very long time. And so they have their own sentiment around wanting to sell uh and and the ability to sell after that first benchmark which is six months. The second one comes at one year and insiders founders are often locked up for at least one year from the IPO and so that's the second trunch. Of course insiders have to record any sales so you don't know if that's happening. Uh but the the the really key markers there are watching what happens with the stock after the lockups come off during that sixmonth and and 12-month time frame. So, it's important for founders to know it's like you have to continue to operate this business because I know plenty of stories, especially 2021 founders took their companies public but had the one-year lock up and lost 50 75% 80% of the value by the time the lockup was uh over and they were able to sell their shares and it was a meaningful negative impact. Yes. for now that was more macro then you know they probably the valuation is probably too high to begin with and you macro market and things of that sort but um you know how important is it for founders to think about you know pricing because everyone wants the highest valuation but is it a valuation they can live up to what are what are your thoughts on that yeah I I'm a big believer Jason the the market's really going to set your valuation for you and and what I mean by that is when your IPO comes out to market typically there's a range and and demand if it's strong will have your IPO done at the higher range. If it's soft, of course, in the way of demand from investors and your IPO is likely to price at the lower end range. And and so that takes a lot of work to understand who are your comps, right? Comparable companies in your sector in the marketplace, how are those performing, right? What what is that kind of bundle look like in the open market? and then to be able to set a realistic valuation. And I think honestly one of the reasons why more companies aren't coming is because they've gotten very high valuations in their private life and they don't want to do necessarily a D now round or round that would be below the last valuation. And so if you go out too high, then of course you're going to have a lot of pressure on your stock and and then you have the herd mentality. When when stock is pressured and stock tends to go down, then people unfortunately tend to want to sell and and and jump onto that kind of herd mentality. So valuation becomes a very very critical piece of your IPO and of course you know that has to be matched up not just at the time of the IPO but with the prior rounds of financing and being able to build in a price point that's attractive to bring strong demand. If the demand is there on the IPO then you have a higher likelihood of buying in the open market with an uptick. If the demand is soft then obviously you run the risk as you said of the price you know getting under pressure and then the valuation being eroded for all of the stakeholders. So for founders out there that you know want to consider this what would be some of the check boxes that you would look for in a company? So you mentioned some of like management team and sure but like what are some of the hard like concrete like either stats like you need to be growing X year over year you need to be because like it has to be marketable like anyone can fill out documents and file for an IPO but at the end of the day there's going to be buyers on the other side that think you're attractive that's so like what what do founders need to consider when you know taking a taking a company public? If you want a growth marker for me, it's 30% minimum year-over-year growth. And not just the company's growth, but inside of a sector that has a large addressable market and is growing itself. And that could be niche, it could g be geographic, it could be macro, but you want to really align, you know, the company's growth inside of a growing sector. Th those are critical markers for us. and and you don't want to take out a company obviously that doesn't have that trajectory over the next 12 18 24 36 months you know beyond that Jason no one knows what's going to happen you know in this complex market but I look at three years and and three years and then we work backwards from where would we be then into now and look at the assumptions that are made to be able to support you know those growth projections and and the strategy organic and it could be inorganic meaning that that could include an M&A which is really a robust opportunity to grow your business and organically. So the strategy in order for just not just where your growth has been historically but what it's going to be coming up in the next 12 18 24 36 to keep on that growth of a 30 to 40% you know annualize. So having a clear growth strategy to maintain that 30% year-over-year growth whether it's you know growth buyout strategy buying up competitors or consolidating or whatever might be or just having a clear definitive sales plan like market but I guess from like um revenue or ebida like are there certain kind of baselines that you would kind of encourage founders not to really even consider an IPO until they hit certain benchmarks there? I think it's more about cash burn Jason than it is about revenue and and IBIDA and and you know tech companies and other companies that are coming out you know it's really critical to understand your burn rate you know in in our sector small cap micro cap a lot of these companies are not yet profitable that happens all the way up the food chain and and so you know I'm more focused then on company's capitalization its strength on its balance sheet both coming into the IPO And once the company is further funded, so are you saying like companies could be like 50k a month burn rate and 5 million revenue and go public? Would you advise that or would you be like no wait until you're like 25 million 50 million? Well, you know, again, it's there's a market cap measure here, right? So, you know, if you're putting a $50 million valuation on a company, uh there has to be enough of a multiple to support that in the way of revenue. So for us 10 million in revenue is typically a floor. Uh right and then up there are companies that are below that. Uh that could be life science, it could be medtec, it could be something that needs time to develop you know the intellectual property and to be able to bring that out to market but any anything realistically and there are some new rules that have come out Jason that'd be interesting to share with you. So NASDAQ has recently changed and has SEC approval to have a minimum capitalization in the flotation of shares of 155 million. So that sounds small in the big world of of of IPOs. Um but there were a lot of number of companies to your point that were smaller earlier stage that had a bigger cash burn that were raising less money than that and entering into the markets and so now there are new regulatory guidelines that have put a floor to the IPOs at $15 million and above which went away after 2021 with basically underwriters and companies getting creative about ways to enter the market and unfortunately that creativity really didn't worked very well in the sense that these were thinly capitalized companies with a high burn rate and they didn't have the revenue streams and the institutional support to be able to maintain you know that stability that's needed in the open markets. What do you think drove that? Do you think that's like founders leading that or is that like advisers trying to make you know advisers investors trying to make fees and trying to make a quick buck as opposed to what's actually materially valuable for the company long term? All the above, Jason. You know, it it's, you know, it's Wall Street. It it's it's and and the micro cap and small cap markets especially uh are are very opportunistic in a sense. And I tried to bring different leadership and integrity to that. So that, you know, we're really selective about being able to protect all of the parties involved, including the founders, but nobody really wins. maybe outside of the people that get paid in in transactional fees. If a company enters the market and it doesn't perform well, isn't really organized properly, isn't structured, isn't educated about what it is to be a good solid corporate citizen as a public company. That sustainability is one again that we've seen time over time. You can't rush into the market. You can't be under finance. You need time to prepare. You need time to make sure your management is ready, your board is supporting that you have that growth trajectory. And you know, one of the things I love about what I do is there's any not one particular area, it's all of this from a 360 degree perspective. And yes, you know, Wall Street is built on greet. So FA financial adviserss uh other other participants in uh in the sector uh are looking to bring transactions together because that's how they make their money. I like to look at it very differently, which is how is this public company going to operate in the open market and have they taken the time to prepare to organize and to set themselves up for success in the open market. So I think it'd be good for us to educate founders on, you know, kind of these these two different paths of because venture has just become the deacto path for so many you know companies but there's a certain point where um I think founders really need to consider this where they might because 30% year-over-year growth is no longer venture sexy in most cases. Um, and at that stage, say you're a great company, you're doing well, but you're not 1x, 2x year-over-year growth, uh, in a hot sexy, you know, category. Uh, and maybe you raised venture previously. So, I know a lot of companies that have some pretty high prep stack. So for the audience that doesn't know what a prep stack is, it's when you have let's just say raised 40 million on a 1x like breath like you have to clear 40 million and then there's dispersements to um the rest of investors if there's like an M&A activity uh or something of the sort. So when these companies that have these large prep stacks that are no longer going to be able to raise follow on funding from traditional venture like how should they look at this path and what would be the net benefits of considering going public uh versus you know trying to chase VC or maybe growth equity. I mean it just starts with access to capital. you have a much broader pool of investors and investor base and one of the things that I would focus on is control right you just mentioned in these craft stacks that you know the the prior investors have a significant amount of control o over the entrepreneur and the founder and the management teams and how they're able to navigate and it diminishes options. So one of the tools that is used in in these smaller companies going public is to separate the shares so that the founders and the management team can still have voting control and that gives them the ability to access capital without significant dilution while they're opening up the pool to both institutional debt and institutional equity participants. And and so it really this becomes, you know, choosing your lane, Jason, right? And and looking at the the opening up and really the other critical component that I think most founders should consider is using that stock for other purposes, right? So that's to be able to reward your employees to attract employees, reward them, your stakeholders, right? The credibility, the value that comes out of the intangibles. So you have your quantitative and and and the qualitative. And I think the qualitative is often overlooked as another benefit from being publicly listed. So like to kind of recap, I would say for for founders that are considering going public, like the prep stack effectively gets eliminated, you know, so when you go public, correct? Like there's there's no retention of that prep stack. So maybe you over raise at a too high valuation. You might take a a haircut on valuation, but you you eliminate that prep stack. uh which could make a material impact and gives you more more control potentially over the board and voting control because in most cases those investors would probably move on that uh you were previously uh the private side and new public investors would step in. Is that is that a fair assumption? 100%. So not only do you remove it but it gives you a whole new world of optionality uh and and then you have the ability to utilize all of those tools that we discussed. Yeah. especially for like growth buyouts. We're working with a company now where, you know, the idea of going public makes a lot of sense because, you know, they're a strong number three in their market, but to kind of get to number two or number one, they want to consolidate, be the first to start consolidating the market beneath them. And as a private company, you know, you're kind of coming out with these phantom shares like, yeah, well, you know, come in with this. And it's just like I see so many people on the sell side that get those offers and turn them down because you know they're usually over inflated valuations. There's no way to really know what's going to happen. But if they get an offer from a public company, you know, then they can actually count their chips and be like, "Oh, okay. Like that's actually how much these shares are worth right now in the market. Here's how they're performing. Okay, this is a serious offer that we can consider if they're offering stock." And it makes a material difference in M&A discussions if that's a particular path for a company. Couldn't agree more and I think it's often o overlooked. You know, you're using stock as a currency now in in addition to the capital and then of course there's additional capital just for acquisitions. There are a number of investors that you know support a roll-up strategy or an M&A growth strategy uh that would really then give you the ability to have access to being able to buy those companies with stock right with a blend of equity and with debt. That's how I took my first company to NASDAQ was we we did a roll up after roll up after rollup. And and for those companies that want to grow their market share, I don't know of any faster way to be able to do that than to build a well capitalized M&A strategy along with utilizing shares with a marktomarket. So the big difference there of course is you have fluctuation, but you have the ability to do marktomarket when you're utilizing those shares as currency in the M&A strategy. Gotcha. So just for fun, could you tell the audience a little bit about your I know it's a little while back now when you when you did that strategy, but kind of walk us through what the company was, why you decided that growth buyout strategy was a good growth strategy for you guys and kind of how did you guys go about funding that? So we we were in the staffing sector and what I was looking for and this is quite some time ago uh so I'm going to date myself uh but but really Jason what it was was finding smaller fragmented space that could be aggregated into a much larger sector and that exists in in many many different spaces around the world and in industry sectors. uh we chose that because we had a foundational company that was the core that we started with but when we began that journey we didn't have any organic operations and this is part of what you know you know the the journey was like when we wanted to start with we were brought an opportunity that we wanted to buy and then we saw and did our homework and diligence on the sector and what we found were you know very very profitable but small fragmented companies that would hit their ceiling in the 58 $10 million range. Again, we're small cap and micro cap. But then we begin aggregating those one by one and it was kind of high-end staffing, white collar staffing, if you will, cyber accounting were were our focus around, you know, the areas that that we began where we were just it was just an arbitrage play, right? We're we're buying them, let's say back then, you know, four to 5x uh at a multiple and immediately we're getting a double and then growing those and aggregating where that double increase in value would turn into three, four, 5x on return as a total bundle. And it was a great exercise. Uh taught me obviously the benefits of being able to use a blend. And what we did, I'll just give you my formula, was a third stock, a third debt, and a third equity. And the management teams of the target acquisition had to stay on for at least 3 years. So we knew we were maintaining the human capital along with the ability to grow and aggregate those through an M&A strategy. I would say equity was it? So you did third stock of your stock uh and then you raised a third of it in debt and then you the third equity that was cash coming out off your balance sheet or Okay, gotcha. Good good strategy. You know, it's kind of safe safe enough kind of like blends blends it all. Um and kind of what was the outcome like you you went through that path, you executed on that strategy. What was kind of the the outcome for you at the end? So for me founder chairman uh we we brought in you know much more experienced management than I was in the sector who took over and then and then I took my exit. So it was a it was a good outcome. Uh everybody won and and that's what I you know obviously look for uh you know in the transactions that I'm involved in. You know when when you have these small private companies who don't have an exit strategy, they don't have a succession plan. This is like a really great way and I think there's more and more of those right now given the boomers who didn't plan on well organized and aren't big enough to have the big VCbacked exits or the PE exits and and so those are the companies that I and and and I'm an entrepreneur at heart Jason so I really love working with you know people who have dedicated their lives and careers and their identity around building a business that then have an alternate strategy that they didn't have before. Well, I appreciate that, Peter. I think it was a pretty valuable insights in terms of what we're looking into in ter current current markets as well as just some common uh good advice for for founders take into consideration for for going public. Uh Peter, can you share a little bit more about the entrepreneurs IPO and your new book coming out, The Investors IPO? So, the entrepreneurs IPO is a lot of what we've kind of still talked about here today. It's a it's a go-to uh yeah, step by step. Thank you for the for the plug, for the shameless plug. It's a good book. But it it really is there's there's when I took my company public, I didn't have any place to go to to give me the knowledge that's practical and actionable to enter into the public markets. Of course, I could talk to a lawyer, I could talk to a banker, you know, I could talk to my auditor, but they weren't really giving me the business counsel and the knowledge base. So during co I decided to write the book and put it out really designed for small cap micro cap entrepreneurs and founders and what I've learned since is that you know two things uh one is that any in founder CEO entrepreneur can benefit from an IPO organized mindset meaning if you put the stay private and you never want to do an IPO there's value to you when you're running your organizations with the controls and the systems and the accountability that comes comes to your stakeholders. So I think it's a good read for anybody even if you're not considering an IPO. And then separately what I realize is that IPOs are have a lot of mystique around them, a lot of of of kind of smoke and mirrors and they're largely misunderstood. And so the bigger pool of opportunity comes in those investors who are interested in investing in IPOs. So I decided to go about taking and informing investors on what it is to get access, how to look at IPOs, how to understand them, how to really look at the process more from the investor filter versus the entrepreneurs filter. And uh that comes out in July. You said comes out in July to be released, you know, July 9th. I'll be in Singapore uh and we're releasing the book to a large audience of investors at that time. Happy to share it with you when the time is right. No, I'll be be happy to to read it. Um, enjoy the first book. It is just a straight to the point like here's what you need to be aware of, here's what you got to do. Uh, not a lot of thoughts, not a lot of extra stuff. It's pretty short and to the point, so I appreciate that. Um, and then for founders that are interested in maybe getting in touch with you either to talk further about the consideration of IPO or just the public markets in general, what would be the best way for them to to learn more about you and get in touch? Best and easiest is just reach me on LinkedIn. I'm quite active. I put out a lot of information around the IPO market, around the capital markets, around entrepreneurship, uh because I'm very passionate in in helping and assisting entrepreneurs in their journey. So, just connect with me on LinkedIn. Feel free to send me a message and u and I'm happy to chat just about anybody about the topic. I really appreciate it, Peter, and thanks again for being on the show. Thanks for having me, Jason. Thank you for watching today's episode. As a reminder, I'm your host, Jason Kirby. I have built and sold multiple companies with over 135 million in transactions as either a founder, operator, investor across multiple industries. I'm currently the managing director and founder of Thunder.bc, where we help companies and founders at all stages navigate what capital to raise and who to raise it from and help improve company's odds of raising the capital. If you need help, reach out to us at help.under.bc. If you like today's show, please share with your friends. Give us a like or comment down below. And as a reminder, this show is published weekly. And to get notified of new episodes and our newsletter, be sure to go to our website at join.thunder.bc. And if you sign up today, I'll send you a few freebies on how to negotiate a term sheet, how to get a free list of relevant VCs, and much more. That's it. No more shameless plugs. Thank you, and see you next week.