June 12, 2025
HALO Talks Fast Break: History of Private Equity
In today's episode, Integrity Square Founder Pete Moore dives into the roots and current landscape of private equity (PE) β and why it matters to literally π¦π·π¦π³πΊπ°π―π¦ in the HALO sector. Ignore at your own peril.
β’ PE's Evolution: PE started when changes like the Prudent Man Act allowed institutions (think university endowments and pension funds) to invest in private companies. This ushered in a new era for higher-risk, higher-return investments.
β’ The PE Playbook: Early pioneers like Kohlberg, Kravitz & Roberts (KKR) built the model we see today: Acquire private companies, add layers of financing, optimize operations, make additional add-on acquisitions, and resell for higher multiples and strong returns over a 5-7 year hold period.
β’ PE's Widespread Impact: For better or worse (more on that in future videos) private equity now owns major brands across industries (including popular gym chains and franchises in the HALO sector.) Their involvement accelerates change, competition, and operational improvementβif you're in the industry, you're either a target, a competitor, or a potential partner.
If you missed our video about EoS Fitness, we touch on that here: https://youtu.be/CQtaGUQIyxY
Want to learn more? (You should. Otherwise you're playing checkers while the rest of the industry plays chess.)
Give us 10 hours of your time at the next HALO Academy starting June 24th. Register at https://www.thehaloacademy.com now for $495 and earn a $100 gift card from our friends at Promotion Vault. Testimonials at https://www.thehaloacademy.com/testimonials
==================================================
Thanks to Promotion Vault and HigherDose for sponsoring. For 15% off products sitewide (excluding bundles, kits, and full saunas) use the code GOHALO at https://tidd.ly/4l1WXEf
Transcript
1
00:00:01,280 --> 00:00:05,080
This is Pete Moore coming to you today on a Thursday fast break
2
00:00:05,080 --> 00:00:08,840
sponsored by Promotion Vault Reward Intelligence. Might be a good
3
00:00:08,840 --> 00:00:12,360
idea to find out more about your members. I'm sitting in Chicago right now. I
4
00:00:12,360 --> 00:00:15,400
am on a higher dose PEMF map. Pulsating
5
00:00:15,400 --> 00:00:19,240
electromagnetic field. Bam. Bam. And I'm going to talk to you about the first two
6
00:00:19,240 --> 00:00:22,920
letters. Pe, which is private equity. People say, oh, private equity
7
00:00:22,920 --> 00:00:26,640
owns eos, they own Crunch, they own Bay Clubs, they own Dunkin Donuts. Well,
8
00:00:26,880 --> 00:00:30,520
let's find out where this private equity came from. Okay, so if I was an
9
00:00:30,520 --> 00:00:34,360
endowment fund back in the 70s, I would only be allowed to invest in public
10
00:00:34,360 --> 00:00:37,880
equities like stock market, real estate, treasury bills,
11
00:00:37,880 --> 00:00:41,640
municipal bonds. But I could never invest in private companies. I was not
12
00:00:41,640 --> 00:00:45,360
allowed to do that. That was called an alternative investment. And there was a new
13
00:00:45,360 --> 00:00:49,200
law passed called the Prudent man act that allowed endowment
14
00:00:49,200 --> 00:00:52,720
funds and pension funds to start investing in things that maybe would give them a
15
00:00:52,720 --> 00:00:56,410
higher return but have higher risk. So what happened back in the
16
00:00:56,410 --> 00:00:59,970
70s? There were a couple of guys who were bankers called Kohlberg,
17
00:00:59,970 --> 00:01:03,650
Kravitz and Roberts. And those guys left Bear Stearns and started to
18
00:01:03,650 --> 00:01:07,210
buy private companies. And they went to all the pension funds and they said, hey,
19
00:01:07,210 --> 00:01:10,690
give me some money. Pay me 2%, I'll keep 20% of the
20
00:01:10,690 --> 00:01:14,490
upside. I'm going to go and find some undervalued companies because I've seen
21
00:01:14,490 --> 00:01:17,890
thousands of them. And I know that these guys make a ton of cash. And
22
00:01:17,890 --> 00:01:21,420
quite frankly, they don't know exactly what they're doing. However, I'm going to go in
23
00:01:21,420 --> 00:01:24,780
there, I'm going to put a lot of debt on the business, not recourse. And
24
00:01:24,780 --> 00:01:28,460
I'm going to go get these families that own these businesses that
25
00:01:28,460 --> 00:01:32,220
don't have a succession plan or don't want to give it to their kids. And
26
00:01:32,220 --> 00:01:34,740
I'm going to say, hey, I'm going to offer you the deal of the lifetime.
27
00:01:34,740 --> 00:01:38,380
I'm going to give you $200 million cash for your
28
00:01:38,380 --> 00:01:41,980
business. I'm going to go borrow $150 million from different
29
00:01:41,980 --> 00:01:45,460
banks, and then I'm going to put a sliver of equity in and I'm going
30
00:01:45,460 --> 00:01:48,260
to go and I'm going to gut the company, going to clean it out. If
31
00:01:48,260 --> 00:01:51,780
you remember Wall Street, Blue Horseshoe loves Anacott
32
00:01:51,780 --> 00:01:55,380
Steel. Watch that movie and you'll understand that buying
33
00:01:55,380 --> 00:01:59,220
private companies now became an asset class. So you had
34
00:01:59,220 --> 00:02:02,740
guys like, guys at Bear Stearns, you had a guy named Thomas H. Lee and
35
00:02:02,740 --> 00:02:06,540
Partners, you had another Guy named Forceman Little. And what they did was they
36
00:02:06,540 --> 00:02:10,100
consolidated funds and pools of capital from endowment
37
00:02:10,100 --> 00:02:13,620
funds, the schools you went to where there was $875 billion
38
00:02:14,020 --> 00:02:17,610
worth of money. And all these schools and universities and
39
00:02:17,610 --> 00:02:21,250
pension funds are looking for returns. How am I going to get a higher return?
40
00:02:21,250 --> 00:02:24,170
I'm going to take more risk. If I want to take more risk, I can
41
00:02:24,170 --> 00:02:28,010
put a sliver of my fund into private equity, and I'm going to give these
42
00:02:28,010 --> 00:02:31,690
guys money on every deal. And in three to five to seven years,
43
00:02:31,690 --> 00:02:34,930
they're going to return that money. And hopefully they'll get me a 20 to
44
00:02:34,930 --> 00:02:38,570
30% return, where in the stock market, I'm getting a 7
45
00:02:38,570 --> 00:02:42,090
to 12% return. Real estate, I'm getting a 6 to 10%
46
00:02:42,090 --> 00:02:45,770
return. And in treasury bills, I'm getting a 2 to 4%
47
00:02:45,770 --> 00:02:49,570
return. So little by little, all these groups started to
48
00:02:49,570 --> 00:02:53,170
prop up, usually with people's last names, like my boy Brockway at Peter
49
00:02:53,170 --> 00:02:56,930
Brockway, Brockway, Miranda Partners, where I used to work. And their strategy was
50
00:02:56,930 --> 00:03:00,330
to go and buy middle market companies, grow them, give them
51
00:03:00,330 --> 00:03:04,130
financing to go make acquisitions, bundle them up, and then sell it to
52
00:03:04,130 --> 00:03:07,610
the next private equity fund. And those funds were returning anywhere between
53
00:03:07,610 --> 00:03:11,450
18 to 35% returns. And as that started to happen,
54
00:03:11,910 --> 00:03:15,710
a lot of these college chief investment officers said, hey, I got to get
55
00:03:15,710 --> 00:03:19,230
in on this private equity game. I don't care what they're buying. I'm not really
56
00:03:19,230 --> 00:03:22,910
going to ask too many questions as long as they're legitimate businesses and they do
57
00:03:22,910 --> 00:03:26,390
their work. And the private equity market became a private
58
00:03:26,390 --> 00:03:30,070
equity community. And all these guys and all these women went out there,
59
00:03:30,310 --> 00:03:33,750
formed funds and went out and said, hey, I'm going to charge you 2%.
60
00:03:33,990 --> 00:03:37,510
Oh, I'm also going to charge the company a management fee. And I'm going to
61
00:03:37,510 --> 00:03:40,350
put a little bit of my own money in, but not too much. And then
62
00:03:40,350 --> 00:03:43,550
I'm going to get 20% of the upside. So if I buy a company for
63
00:03:43,550 --> 00:03:47,390
100 million and I sell it for 300 million, five years later, I made
64
00:03:47,390 --> 00:03:51,190
a $200 million gain, which you'll see right up here. And out of that,
65
00:03:51,350 --> 00:03:55,190
the partners keep 40 million. Okay, so private equity is
66
00:03:55,190 --> 00:03:58,590
starting to eat up the entire economy. There are groups that look at
67
00:03:58,590 --> 00:04:02,150
industrial deals only. Aerospace, defense, retail,
68
00:04:02,150 --> 00:04:05,790
consumer halo. And in the halo sector, Eos is
69
00:04:05,790 --> 00:04:09,490
private owned by private equity. Now it's owned by TSG
70
00:04:09,490 --> 00:04:12,370
Consumer. Leonard Green owns Pure Gym and Crunch.
71
00:04:12,850 --> 00:04:16,610
Mountainside is owned by Garnet Station Partners. So as you see,
72
00:04:16,930 --> 00:04:20,490
these private Equity firms taking more and more of the economy and
73
00:04:20,490 --> 00:04:24,250
turning them into private companies, they must grow these businesses. If
74
00:04:24,250 --> 00:04:27,930
you are a business that is a target of a private equity fund, you probably
75
00:04:27,930 --> 00:04:31,210
have one time to sell the company and then they're either coming to eat your
76
00:04:31,210 --> 00:04:34,940
city and they're going to grow around you through greenfields, or they're going to buy
77
00:04:34,940 --> 00:04:38,420
up some of your competitors. So the game is not going to stop. It is
78
00:04:38,420 --> 00:04:41,940
going to continue. This is like playing chess and you are playing
79
00:04:41,940 --> 00:04:45,420
checkers. Okay? They do are able to get debt without
80
00:04:45,500 --> 00:04:48,660
any personal guarantees. You don't have to sit down with your husband or wife and
81
00:04:48,660 --> 00:04:52,100
think about if you get a mortgage or home equity and you're going to pledge
82
00:04:52,100 --> 00:04:55,780
all of your assets to build a new location. They just call capital. They
83
00:04:55,780 --> 00:04:59,630
get debt with no recourse. So private equity is here. It
84
00:04:59,630 --> 00:05:03,190
is an alternative to groups such as endowment funds,
85
00:05:03,270 --> 00:05:06,990
companies, pension funds investing in other assets. And
86
00:05:06,990 --> 00:05:10,670
they're giving their money to groups like Blackstone, groups like kkr,
87
00:05:10,670 --> 00:05:14,430
groups like Leonard Green, groups like TSG Consumer. And they're
88
00:05:14,430 --> 00:05:18,030
coming and they're going to go buy as many companies as they can, clean them
89
00:05:18,030 --> 00:05:21,830
up, optimize them, and then hopefully sell it to the next guy. And what you're
90
00:05:21,830 --> 00:05:25,630
going to see on next Thursday's session of Fast Break is how
91
00:05:25,630 --> 00:05:29,440
private equity is basically turned into the equivalent of of a baseball farm system.
92
00:05:29,760 --> 00:05:33,040
So if you want to learn more about this, if those five minutes help clarify
93
00:05:33,040 --> 00:05:36,720
anything for you, this is Petey Moe here from Halo Academy.
94
00:05:36,720 --> 00:05:40,280
I've got a class that I'm doing starting on June 24th. It's
95
00:05:40,280 --> 00:05:44,039
$495. I'm going to teach you everything you know in 10 hours over
96
00:05:44,039 --> 00:05:47,440
two weeks. I encourage you to attend. And remember, go
97
00:05:47,440 --> 00:05:48,080
Halo.
00:00:01,280 --> 00:00:05,080
This is Pete Moore coming to you today on a Thursday fast break
2
00:00:05,080 --> 00:00:08,840
sponsored by Promotion Vault Reward Intelligence. Might be a good
3
00:00:08,840 --> 00:00:12,360
idea to find out more about your members. I'm sitting in Chicago right now. I
4
00:00:12,360 --> 00:00:15,400
am on a higher dose PEMF map. Pulsating
5
00:00:15,400 --> 00:00:19,240
electromagnetic field. Bam. Bam. And I'm going to talk to you about the first two
6
00:00:19,240 --> 00:00:22,920
letters. Pe, which is private equity. People say, oh, private equity
7
00:00:22,920 --> 00:00:26,640
owns eos, they own Crunch, they own Bay Clubs, they own Dunkin Donuts. Well,
8
00:00:26,880 --> 00:00:30,520
let's find out where this private equity came from. Okay, so if I was an
9
00:00:30,520 --> 00:00:34,360
endowment fund back in the 70s, I would only be allowed to invest in public
10
00:00:34,360 --> 00:00:37,880
equities like stock market, real estate, treasury bills,
11
00:00:37,880 --> 00:00:41,640
municipal bonds. But I could never invest in private companies. I was not
12
00:00:41,640 --> 00:00:45,360
allowed to do that. That was called an alternative investment. And there was a new
13
00:00:45,360 --> 00:00:49,200
law passed called the Prudent man act that allowed endowment
14
00:00:49,200 --> 00:00:52,720
funds and pension funds to start investing in things that maybe would give them a
15
00:00:52,720 --> 00:00:56,410
higher return but have higher risk. So what happened back in the
16
00:00:56,410 --> 00:00:59,970
70s? There were a couple of guys who were bankers called Kohlberg,
17
00:00:59,970 --> 00:01:03,650
Kravitz and Roberts. And those guys left Bear Stearns and started to
18
00:01:03,650 --> 00:01:07,210
buy private companies. And they went to all the pension funds and they said, hey,
19
00:01:07,210 --> 00:01:10,690
give me some money. Pay me 2%, I'll keep 20% of the
20
00:01:10,690 --> 00:01:14,490
upside. I'm going to go and find some undervalued companies because I've seen
21
00:01:14,490 --> 00:01:17,890
thousands of them. And I know that these guys make a ton of cash. And
22
00:01:17,890 --> 00:01:21,420
quite frankly, they don't know exactly what they're doing. However, I'm going to go in
23
00:01:21,420 --> 00:01:24,780
there, I'm going to put a lot of debt on the business, not recourse. And
24
00:01:24,780 --> 00:01:28,460
I'm going to go get these families that own these businesses that
25
00:01:28,460 --> 00:01:32,220
don't have a succession plan or don't want to give it to their kids. And
26
00:01:32,220 --> 00:01:34,740
I'm going to say, hey, I'm going to offer you the deal of the lifetime.
27
00:01:34,740 --> 00:01:38,380
I'm going to give you $200 million cash for your
28
00:01:38,380 --> 00:01:41,980
business. I'm going to go borrow $150 million from different
29
00:01:41,980 --> 00:01:45,460
banks, and then I'm going to put a sliver of equity in and I'm going
30
00:01:45,460 --> 00:01:48,260
to go and I'm going to gut the company, going to clean it out. If
31
00:01:48,260 --> 00:01:51,780
you remember Wall Street, Blue Horseshoe loves Anacott
32
00:01:51,780 --> 00:01:55,380
Steel. Watch that movie and you'll understand that buying
33
00:01:55,380 --> 00:01:59,220
private companies now became an asset class. So you had
34
00:01:59,220 --> 00:02:02,740
guys like, guys at Bear Stearns, you had a guy named Thomas H. Lee and
35
00:02:02,740 --> 00:02:06,540
Partners, you had another Guy named Forceman Little. And what they did was they
36
00:02:06,540 --> 00:02:10,100
consolidated funds and pools of capital from endowment
37
00:02:10,100 --> 00:02:13,620
funds, the schools you went to where there was $875 billion
38
00:02:14,020 --> 00:02:17,610
worth of money. And all these schools and universities and
39
00:02:17,610 --> 00:02:21,250
pension funds are looking for returns. How am I going to get a higher return?
40
00:02:21,250 --> 00:02:24,170
I'm going to take more risk. If I want to take more risk, I can
41
00:02:24,170 --> 00:02:28,010
put a sliver of my fund into private equity, and I'm going to give these
42
00:02:28,010 --> 00:02:31,690
guys money on every deal. And in three to five to seven years,
43
00:02:31,690 --> 00:02:34,930
they're going to return that money. And hopefully they'll get me a 20 to
44
00:02:34,930 --> 00:02:38,570
30% return, where in the stock market, I'm getting a 7
45
00:02:38,570 --> 00:02:42,090
to 12% return. Real estate, I'm getting a 6 to 10%
46
00:02:42,090 --> 00:02:45,770
return. And in treasury bills, I'm getting a 2 to 4%
47
00:02:45,770 --> 00:02:49,570
return. So little by little, all these groups started to
48
00:02:49,570 --> 00:02:53,170
prop up, usually with people's last names, like my boy Brockway at Peter
49
00:02:53,170 --> 00:02:56,930
Brockway, Brockway, Miranda Partners, where I used to work. And their strategy was
50
00:02:56,930 --> 00:03:00,330
to go and buy middle market companies, grow them, give them
51
00:03:00,330 --> 00:03:04,130
financing to go make acquisitions, bundle them up, and then sell it to
52
00:03:04,130 --> 00:03:07,610
the next private equity fund. And those funds were returning anywhere between
53
00:03:07,610 --> 00:03:11,450
18 to 35% returns. And as that started to happen,
54
00:03:11,910 --> 00:03:15,710
a lot of these college chief investment officers said, hey, I got to get
55
00:03:15,710 --> 00:03:19,230
in on this private equity game. I don't care what they're buying. I'm not really
56
00:03:19,230 --> 00:03:22,910
going to ask too many questions as long as they're legitimate businesses and they do
57
00:03:22,910 --> 00:03:26,390
their work. And the private equity market became a private
58
00:03:26,390 --> 00:03:30,070
equity community. And all these guys and all these women went out there,
59
00:03:30,310 --> 00:03:33,750
formed funds and went out and said, hey, I'm going to charge you 2%.
60
00:03:33,990 --> 00:03:37,510
Oh, I'm also going to charge the company a management fee. And I'm going to
61
00:03:37,510 --> 00:03:40,350
put a little bit of my own money in, but not too much. And then
62
00:03:40,350 --> 00:03:43,550
I'm going to get 20% of the upside. So if I buy a company for
63
00:03:43,550 --> 00:03:47,390
100 million and I sell it for 300 million, five years later, I made
64
00:03:47,390 --> 00:03:51,190
a $200 million gain, which you'll see right up here. And out of that,
65
00:03:51,350 --> 00:03:55,190
the partners keep 40 million. Okay, so private equity is
66
00:03:55,190 --> 00:03:58,590
starting to eat up the entire economy. There are groups that look at
67
00:03:58,590 --> 00:04:02,150
industrial deals only. Aerospace, defense, retail,
68
00:04:02,150 --> 00:04:05,790
consumer halo. And in the halo sector, Eos is
69
00:04:05,790 --> 00:04:09,490
private owned by private equity. Now it's owned by TSG
70
00:04:09,490 --> 00:04:12,370
Consumer. Leonard Green owns Pure Gym and Crunch.
71
00:04:12,850 --> 00:04:16,610
Mountainside is owned by Garnet Station Partners. So as you see,
72
00:04:16,930 --> 00:04:20,490
these private Equity firms taking more and more of the economy and
73
00:04:20,490 --> 00:04:24,250
turning them into private companies, they must grow these businesses. If
74
00:04:24,250 --> 00:04:27,930
you are a business that is a target of a private equity fund, you probably
75
00:04:27,930 --> 00:04:31,210
have one time to sell the company and then they're either coming to eat your
76
00:04:31,210 --> 00:04:34,940
city and they're going to grow around you through greenfields, or they're going to buy
77
00:04:34,940 --> 00:04:38,420
up some of your competitors. So the game is not going to stop. It is
78
00:04:38,420 --> 00:04:41,940
going to continue. This is like playing chess and you are playing
79
00:04:41,940 --> 00:04:45,420
checkers. Okay? They do are able to get debt without
80
00:04:45,500 --> 00:04:48,660
any personal guarantees. You don't have to sit down with your husband or wife and
81
00:04:48,660 --> 00:04:52,100
think about if you get a mortgage or home equity and you're going to pledge
82
00:04:52,100 --> 00:04:55,780
all of your assets to build a new location. They just call capital. They
83
00:04:55,780 --> 00:04:59,630
get debt with no recourse. So private equity is here. It
84
00:04:59,630 --> 00:05:03,190
is an alternative to groups such as endowment funds,
85
00:05:03,270 --> 00:05:06,990
companies, pension funds investing in other assets. And
86
00:05:06,990 --> 00:05:10,670
they're giving their money to groups like Blackstone, groups like kkr,
87
00:05:10,670 --> 00:05:14,430
groups like Leonard Green, groups like TSG Consumer. And they're
88
00:05:14,430 --> 00:05:18,030
coming and they're going to go buy as many companies as they can, clean them
89
00:05:18,030 --> 00:05:21,830
up, optimize them, and then hopefully sell it to the next guy. And what you're
90
00:05:21,830 --> 00:05:25,630
going to see on next Thursday's session of Fast Break is how
91
00:05:25,630 --> 00:05:29,440
private equity is basically turned into the equivalent of of a baseball farm system.
92
00:05:29,760 --> 00:05:33,040
So if you want to learn more about this, if those five minutes help clarify
93
00:05:33,040 --> 00:05:36,720
anything for you, this is Petey Moe here from Halo Academy.
94
00:05:36,720 --> 00:05:40,280
I've got a class that I'm doing starting on June 24th. It's
95
00:05:40,280 --> 00:05:44,039
$495. I'm going to teach you everything you know in 10 hours over
96
00:05:44,039 --> 00:05:47,440
two weeks. I encourage you to attend. And remember, go
97
00:05:47,440 --> 00:05:48,080
Halo.