Nice -- enjoy! We're actually going ourselves in Novemeber or December for the winter wonderland too, it'll be the first time we've gone with our daughter (she'll be ~7 months old by that time). I'm very excited -- as much as I joke about it in the article, the reason they charge such high prices is because they have such a great product. It really is an awesome place. Helps that we're less than an hour from the Sherwood site too, which is an absolutely stunning piece of land. I'd love to own it.
Absolutely -- but that's just mathematically true, and the 'right' level of debt depends entirely on the business model, cashflow predictability, growth rate, profitability, and tons of other factors.
and the reason I did a deep dive on Baringa is because they're a great success story in what is typically a difficult business to scale at the pace that Baringa has. That combined with some of the IP stuff I mention in the post linked above makes them a super-interesting business case study.
great read! I actually work at Baringa so was just surprised to see the name pop up some what randomly. Really cool to learn a bit more about the early days
Hi, thanks for the post! I have no knowledge of the area (a friend just sent it to me), but it was very interesting.
I wonder if you could expand on this part: "Because Center Parcs is owned by PE, the company is also carrying a ton of debt."
What is the "Because" implying there? I've seen people talk about PE firms "buying firms and loading them up with debt" (I think it's claimed Manchester United is a famous example??) but I've never really understood how it could work. Do you know of any explainers?
It’s like buying a 100k house with a 10k deposit (equity) and a 90k mortgage (debt). If the house goes up by 10% to 110k and you sold it, you’d pay back the 90k debt and your remaining equity is 20k. This means youve doubled your money despite the asset only rising 10%.
The flip side is if the house falls 10% you’ve lost your entire investment (negative equity)
Great read. Am off to Center Parcs next month. Will brace myself!
Nice -- enjoy! We're actually going ourselves in Novemeber or December for the winter wonderland too, it'll be the first time we've gone with our daughter (she'll be ~7 months old by that time). I'm very excited -- as much as I joke about it in the article, the reason they charge such high prices is because they have such a great product. It really is an awesome place. Helps that we're less than an hour from the Sherwood site too, which is an absolutely stunning piece of land. I'd love to own it.
Have a wonderful time with your daughter making memories!
100% equity-funded business would have a higher cost of capital than one partially funded by debt...
Absolutely -- but that's just mathematically true, and the 'right' level of debt depends entirely on the business model, cashflow predictability, growth rate, profitability, and tons of other factors.
Hey Andrew, another great read! Fyi your book link just redirects to Amazon and not the book.
Nick! Thanks, glad you enjoyed it, and appreciate the heads-up -- I've fixed the link now. FYI the book is here: https://amzn.to/440rnhR
interesting to see Baringa used as an example. Any reason or just random choice?
Because I'd done a deep dive on them a few weeks previously, so for regular readers they already understand the context:
https://www.netincome.co/p/from-2m-to-200m-how-to-scale-a-people
and the reason I did a deep dive on Baringa is because they're a great success story in what is typically a difficult business to scale at the pace that Baringa has. That combined with some of the IP stuff I mention in the post linked above makes them a super-interesting business case study.
great read! I actually work at Baringa so was just surprised to see the name pop up some what randomly. Really cool to learn a bit more about the early days
Hi, thanks for the post! I have no knowledge of the area (a friend just sent it to me), but it was very interesting.
I wonder if you could expand on this part: "Because Center Parcs is owned by PE, the company is also carrying a ton of debt."
What is the "Because" implying there? I've seen people talk about PE firms "buying firms and loading them up with debt" (I think it's claimed Manchester United is a famous example??) but I've never really understood how it could work. Do you know of any explainers?
It’s like buying a 100k house with a 10k deposit (equity) and a 90k mortgage (debt). If the house goes up by 10% to 110k and you sold it, you’d pay back the 90k debt and your remaining equity is 20k. This means youve doubled your money despite the asset only rising 10%.
The flip side is if the house falls 10% you’ve lost your entire investment (negative equity)