Brad CostanzoEntrepreneur, AI & Innovation Strategiest

Callum Laing: How Private Companies Benefit from Agglomeration

Name: Callum Laing: How Private Companies Benefit from Agglomeration
Uploaded: 2020-04-08T01:51:15+00:00
Duration: 1 min 56 s
Channel: Brad Costanzo
Description: This content was created by Brad Costanzo. This content was uploaded by Brad Costanzo. This is a YouTube video titled "Callum Laing: How Private…

8 Apr 2020 · 2 min

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This content was created by Brad Costanzo. This content was uploaded by Brad Costanzo. This is a YouTube video titled "Callum Laing: How Private Companies Benefit from Agglomeration" (created 2020-04-08). The excerpt is a spoken explanation—likely from Callum Laing—describing a structure for aggregating private companies into a public limited company (PLC): companies receive a multiple of EBITDA on day one but then earn additional public shares each year based on profit contribution (a perpetual-earnings allocation). The model is presented as equitable—growing companies gain larger share allocations, plateauing ones fall back—with founders swapping private stock for public stock, joining a "senate" of principals that collectively own about 70% of the PLC and retain the power to replace the board, ensuring founders remain in control rather than the holding company.

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It's not an exit. So basically, the way that we structure it for companies coming in, they'll get a multiple of EBITDA on day one. But it's a perpetual earning. So the more profit that company contributes the following year, the more shares they earn, and so on and so on. Which basically means that regardless of the share price, if you imagine the share price stays flat for the next 20 years, but your company is growing, you're able to go to bigger contracts because you're part of a plc, but the companies that do well in a given year earn a bigger slice of the pie. Companies that plateau will go backwards. There's no penalty for that. But obviously that year they wouldn't additional stock. So it's a very equitable solution. And I think the other really key element to this is this isn't something that we've built with a desire to sort of sit and run the holding company. And these companies sit underneath us. When a company comes in and joins us when it swaps its private stock for public stock, that owner now becomes a significant shareholder in the plc. They join what we call a senate, which is kind of the principles from each company. And so the founders of those companies together make up 70% of the owners of the PLC. So they're always in control of the PLC. If they don't like the way that the direction the board's going, if they don't like any decisions, they can always fire the board and put their own board in place. So, yeah, we've built this very deliberately from day one, not for us to have control, but for the principals coming in to really own their own, their own group at plc.