Page 301 - James Caan - The Real Deal

30 · Private Equity

take 20 per cent of any gains. So if they buy a company at £100
million, make changes and sell it three years later for £200 million,
they’d take 20 per cent of that £100 million gain, i.e. £20 million.
That’s an awful lot of money, but I had learned that if people
weren’t motivated with a stake in the profits, they were less likely
to produce spectacular returns so I was willing to accept their
terms.
I did what I always did: I sat down with one private equity
company after another and asked them a bunch of questions. Why
should I invest with you? How do you assess opportunities? How
do your investments work? Why are you better? How long until I
get a return? What’s your fee? How do you negotiate the purchase
price? Who does that in your organisation? Can I meet him?
Over the course of a month I probably sat through twenty
PowerPoint presentations of graphs heading for the sky and was
given the CVs of people with backgrounds in banking, investment,
accountancy, law and management consulting. One day, I was
sitting in a plush office in Mayfair listening to a really good
presentation from a great firm and starting to think that I had
found the team to trust with my money.
‘So, tell me a bit about your backgrounds,’ I asked.
One had been at Goldman Sachs, another at Warburgs, another
came from the City law firm Clifford Chance, and the accountant
came from PricewaterhouseCoopers. This was a very high-calibre
team, but there was one component missing: I realised that none
of them had ever run a business. It was at that point that a light
bulb went on in my head: Why don’t I just do it myself? Who
would I trust more to turn a business around and make it
profitable: a bunch of Oxbridge graduates with no operational
experience of managing a business, or little old me? It was my
eureka moment.
I left their office thinking that maybe I should set up my own
private equity firm. I had to do something with my time, and the

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