I am on the board of a small PE backed business. It is literally a case study in the value private equity can add. Bought when it was about $2M of EBITDA, but it felt smaller. The business had been family owned and then managed by a couple local investors who bought it from the founder. They did nothing with it, really just harvested cash flows. In steps this new PE group… They saw the opportunity to add more services and sophistication. First they had to replace existing management. Really two leaders- a president and a COO. The president was a nice guy, but just wasn’t really capable of taking the business to the next level. The COO was a tyrant. In the absence of the president’s strong leadership, he had filled the void. He was a brute, disrespectful, and keeping the business from progressing. Everyone was scared of what would happen if he left. And, they were scared of him. The PE guys decided to bring in a CEO first. He had a pedigree in growing a business and interviewed well. Now the decision was ostensibly his to make. For my part (advisory), I was adamant from the start that we should replace the COO. People are always worried about what’s going to fall apart when you let someone go, especially in small businesses. While there is some prudence in that, with a PE firm behind the company and a CEO/team in place, these decisions should very often be made faster. To be fair, I never relish letting people go. It’s terrible. Very good to be prudent but also, when you know, you know. Anyway, they eventually made the change. Let the COO go. Then replaced the CFO again. Major upgrade. Like the biggest upgrade I’ve ever seen. Then they hired a division president. And the business just takes off organically. Finally the firm is free to do what they do best, deals. So they get after it. Four add-ons, two more in the hopper, all at multiples lower than what they originally paid. That’s in about an 18-month span. The business gets a lot bigger… About 3x EBITDA from where it started. But on top of that, they invested well and pivoted masterfully. The business they bought was in a recurring revenue space, not really considered / just outside of TICC (testing, inspection, certification, compliance). Since then, they have pivoted, organically and inorganically, more toward that definition. Now it’s a true TICC business (that’s growing) with high recurring revenues and tons of upside. A demonstrated platform that still is small enough to have tons of room to run. As a result, the multiple they paid for the business has nearly doubled. 3x EBITDA and 2x multiple… not too shabby. But importantly, the business is stronger in every way. There is a real organic growth engine. The CFO has the back office dialed in (scalable). They have a proven track record on integration. And they have an acquisition engine and pipeline that supports further growth. Customers are happier, employees are happier, and shareholders are more than satisfied. When it works, it can be a beautiful thing to behold.