Our Mission – Be the most trusted partner for business owners seeking to sell their companies to the right long-term partners, thereby becoming the leading acquirer in the lower-middle market. Thesis Capital is a mission-driven organization. In order to succeed,…
Memo: What Growth Demands – An essay to a management team in turmoil This essay is a modified version of an essay sent to a management team that we advised during a difficult period. The lessons in the letter apply…
This article explores possibilities for American Businesses through the lens of financial posterity. The article also considers how the effect of competition, given this view, should operate in a capitalist economy. The objective of this article is to remind the…
The COVID pandemic has impacted the global economy in many ways. Supply chain shortages, stimulus packages, already low-interest rates, and unprecedented government spending have led to an economy that overheated. Inflation is the natural end result of these changes. For…
Perfect Opportunity Cost Introduced This article strives to accomplish what many have tried – coin and define a new economic definition, Perfect Opportunity Cost. The definition is derived from two well-known economic concepts, opportunity cost, and perfect competition, defined below: …
“The appropriate multiple for a business compared to the S&P 500 depends on its return on equity and return on incremental invested capital. I wouldn’t look at a single valuation metric like relative P/E ratio. I don’t think price-to-earnings, price-to-book…
A dollar earned from a horseshoe company is the same as a dollar earned from a hospital. Strip everything away from a business, its economic characteristics, its people. Cash in and cash out is all you are left with as…
You have likely heard the phrase “more risk, more reward”. But, this is the wrong way to think about an investment or capital allocation decision. The financial definition of risk should be: The probability of loss X amount of possible…
Business protocol isn’t something we come out of the womb with. How could it be? University studies are a very brief period of time and focus more on how to think than what to think. It is not much of…
The problem of managing well is multifaceted. In contrast to many key topics of discussion on this website which attack conventional thinking, the study of managerial excellence is a field that continues to provide a lot of value. Perhaps one…
So you have a grand vision for becoming the next great investor like Carl Icahn, Steve Schwarzman, Bill Ackman, or Warren Buffett? Many of the public articles on this topic are cursory and aimed at driving clicks with no real…
EBIDTA is a flawed measure of earnings that is commonly mistakenly but commonly used as a proxy for the earnings of a business. Interest, debt, taxes, and amortization are real costs to a business and generally reflect real charges against…
What is the best incentive compensation plan for managers? Managers of acquired companies? or general managers? Incentives are just rewards associated with specific goals or actions. Goals should be (1) tailored to the economics of the specific operating business; (2)…
What are Monopolistic Businesses? By definition, a monopoly is the exclusive possession or control of the supply of or trade in a commodity or service. In reality, monopolistic businesses are rare and rarely exhibit full control of their market, but…
Walter J. Schloss was a well know Value Investor and former employee of Benjamin Graham at the Graham-Newman Partnership where he worked alongside Warren E. Buffett. Born in August of 1916, he began his career on Wall street at 18…
Franchise economics are those in which a company’s product or service are: If a company has all three of these characteristics it will demonstrate them by having the ability to regularly price its product or service aggressively and as a…
Cost of capital is the concept that a real cost exists for the use of every source of a company’s funds. As an manager or investor, I want to use the funds I have available to me as efficiently as…
Business owners and managers have only five ways to use the earnings from their business. They are: How to determine what do to with business earnings: Determining what to do with earnings is a simple calculation for shareholders. Management should…
The Paradox of investment skill is the concept that as individuals become better at investment activity, the difference between the best, average and worst gets smaller. As skill of the group increases, luck plays a bigger role. Telling the difference…
An illiquidity premium the concept that an investor will require additional return for holding or acquiring an investment that cannot be easily sold. A liquidity premium by contrast is additional value an investor would be willing to give up for…