Making Billions: The Private Equity Podcast for Fund Managers, Alternative Asset Managers, and Venture Capital Investors · Ryan Miller

Private Equity Masterclass: How Billionaires Buy Companies 50% Cheaper Than Everyone Else

·24 min·2 clips

Billionaires use a simple ratio called Tobin's Q to instantly know if buying at discount

Valuation starts with context. Ryan Miller opens the first Making Billions Academy lesson with a useful warning: a premium does not make a deal bad, and a bargain does not make it good. The homework tells you whether the price is worth more attention. The lesson is a practical pricing check for shares in public or private companies, aimed at investors with more opportunities than time. He keeps the math operator-friendly. Working capital becomes accounts receivable plus inventory minus accounts payable, a quick look at how much cash the business needs just to run. Then the softer stuff gets tougher treatment. Customer relationships, licenses, software, and SOPs count if a buyer would need them to rebuild the company from scratch. Loose brand value gets shoved to the side, including goodwill that may already be sitting in the numbers. That matters because the framework is trying to estimate reproducible operating value, not swallow broad brand assumptions. The job is deal triage. If a team has a hundred possible acquisitions, this method helps toss the weak ninety before investors burn time on deeper diligence. Tobin's Q is the filter. Ryan uses it to compare market price with what it might cost to recreate the company's real operating base. A low number can be interesting, but he keeps pointing back to the falling-knife problem. Undervalued does not always mean mispriced in your favor. A premium is not fatal either; it just means the buyer owes the deal more homework. The HVAC example makes the lesson less abstract. A blue-collar roll-up starts with equity, debt, cash, and enterprise value before the buyer decides whether the price fits the thesis. Capital raising is the backdrop: find good deals, buy with discipline, and raise the money to do it.

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