Why You Should Care About Business Quality - EP.19

Why You Should Care About Business Quality - EP.19

Author: Brad Johnson September 20, 2018 Duration: 18:46

Today’s an exciting show — we’re talking about business quality. Who doesn’t want to buy a quality business?


Business quality is a little bit of an amorphous term, but today we focus on thoroughly explaining what it is and why you should care about it as investor. We also put together a framework of categories for high quality businesses, such as: the organic grower, the mergers and acquisition machine, and the ATM machine (yes, we know that the M in ATM is machine.) And of course, since we talk about the businesses that are the most high quality, we also had to talk about what we call “the valley of death” — the category of businesses that we would never touch.


At the end of the day, any investment you make in a business, you want to get that investment back in the form of cold, hard cash. But to do that, you have to think not just about the price, but about the quality of the business.


Key Takeaways:

[:27] About today’s topic: business quality.

[:41] Why, as an investor, should we care about business quality?

[1:59] Our first category of a high quality business: an organic grower.

[4:52] An example of an organic grower.

[6:48] The second category: a mergers and acquisition machine (“an inorganic grower.”)

[8:57] Some examples of a M&A machine.

[11:01] Our third category: an ATM machine.

[12:38] Examples of an ATM machine.

[14:18] The category of businesses that are (usually) not high quality: “the valley of death”.

[17:49] Wrapping up today’s show with our key point: “quality, quality, quality!”


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For those looking beyond the ticker symbols, The Alternative Investor explores the tangible and often complex world of assets that don't trade on a public exchange. Host Brad Johnson, drawing from his experience at Evergreen Capital, believes a well-rounded portfolio often exists outside the daily noise of the stock market. This podcast digs into the practicalities of private equity, real estate, venture capital, and other non-traditional avenues. While these opportunities can offer different paths to growth, they come with their own unique set of questions and due diligence. Each conversation is geared towards demystifying that process. You'll hear detailed discussions on how these investments actually work, the structures involved, and the long-term mindset they require. The aim isn't to offer quick tips, but to provide a clearer framework for evaluation. Johnson breaks down real-world cases and strategies, focusing on the critical factors that can influence an outcome. It’s a resource for anyone considering how to allocate capital towards assets that aren’t as easily quoted or sold, with the understanding that higher potential returns often walk hand-in-hand with increased complexity. Tune in for a straightforward take on building resilience and potential through alternative holdings.
Author: Language: English Episodes: 77

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