Based in panama, rafael has 25 years of investment experience including private company acquisition, public markets, and real estate.

He looks to teach from experience how to be a better investor and business owner.

7 Lessons from Building a Holding Company

Spend time thinking of where you want to end up.  It is easy to grab someone else’s idea of success, but it may not be rewarding for you.  I remember wanting to study “business” when I went to college.  It wasn’t until I had my first internship that I realized “business” covered a lot of territory.  There are so many different paths in business ownership.  There are many different versions of a HoldCo.  Infinite ways to structure and execute.  Take the time to envision what success looks like for you.  It will save you a lot of pain down the road.

 

Understand that the outcome of an event does not speak to the soundness of a plan.  What happened was just one possibility of many that could have happened.  How do we protect against these unknowns?  By focusing on our risk.  Put yourself in situations where your downside is protected.  The upside will take care of itself.

 

Be careful with taking on debt.  Borrowing is receiving something we have not yet earned.  Adding leverage is the quickest way to increase fragility and your odds of blowing up.  If you are going to add debt, be very careful with the terms you negotiate.  Do not assume you will be able to refinance. 

 

You can never have too much cash.  Our overarching KPI is cash flow production.  We focus on it in all our companies and industries.  Once it has been produced, we are not in a hurry to reinvest it.  There is a certain view that holding high levels of cash is “inefficient”.  We see cash as an option for future opportunities.  Holding a lot of cash means you will never be forced into any decision.  It allows you to maintain the option of making decisions from a position of strength.

 

Be patient.  I am playing the long game.  That patience can lead to long periods of little to no acquisitions.  It does not mean I am sitting on my hands doing nothing.  I continue to look at new opportunities and put in my repetitions.  But I will never make an investment decision due to impatience or being bored.  I see no value in hurriedly doing multiple deals to get to some self-imposed finish line ahead of time.  It makes no sense and can lead to some severe consequences.

 

You must put in the repetitions.  My focus is on acquiring new businesses.  I am constantly reading CIMs and Teasers on opportunities.  Speaking to brokers and business owners.  Getting in my reps.  This helps me to strengthen my analysis muscles and build my No filter.  The better my No filter the quicker I can discard deals that do not fit my criteria.  That makes me more efficient and allows me to see more opportunities.  This is a numbers game.  I look at hundreds of companies before buying 1.

 

Make sure you enjoy what you do, delegate the rest.  It is impossible to grow in this game without delegating.  One of the best aspects of all of this has been choosing what I enjoy most in the HoldCo and focusing on those areas.  The rest of the outputs are handled by capable talented people who I enjoy working with.  I focus on attracting them to our business and keeping them incentivized and motivated.

The 4-1-1 offer

The Do Not Buy List