1.
A ppe ndix 8
“ cA rlisms”: ke y p rA cT i c e s
for p riv A Te -e q u iTy
inves To rs
Carl D. Thoma
Thoma Bravo, LLC and predecessor firms Golder Thoma & Co.;
Golder Thoma Cressey Rauner, LLC and Thoma Cressey Bravo, Inc.
Carl Thoma, of Thoma Bravo, is a person of few but memorable words—
plain-spoken expressions that have become familiar to the partners,
entrepreneurs, and advisors with whom he works. These phrases, heard
frequently by anyone who works with Thoma, seem designed to focus
attention and serve as a shorthand of success in a competitive, fast-moving
private-equity marketplace. Listed here are some of the best Carlisms.
Buy and Build. Partner with great management teams to grow com-
panies in consolidating industries. Grow cash flow over time via a
three-pronged strategy of (A) operational improvements, often identi-
fied during due diligence and completed quickly post-close; (B) add-on
acquisitions; and (C) organic growth.
How Can We Pay More? A private-equity firm should develop a spe-
cial, unique angle it sees in the business and leverage the experience and
other resources that only it has. Make sure our return is higher than the
next investor’s. That way, we can afford to pay more if necessary.
• 297 •

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298 • Appendix 8
Can We Get It for Less? As a value investor, figuring out how to cre-
atively pay a lower price is part of adding value. You get what you
negotiate.
Learn More. Never be caught off guard by surprises. When interviewing
management, management candidates, customers, or competitors, go off
the list of typical questions and points of reference. Track specific perfor-
mance at prior stops. Challenge answers. Quality of earnings at close is
important. Send in your best accounting team; look under all stones.
Improve Multiples. Add-on acquisitions, operational improvements,
organic growth, and/or expansion through merger and acquisition
bring size, scale, a better company, and higher exit multiples.
The Game Plan Is Simple; Sticking to It Is the Tough Part. Making
money and building value stem from a relatively simple set of tenets.
The challenge comes in discerning when actions and strategies are be-
ginning to divert from plan. Have the wisdom to know and the disci-
pline to stay within the guard rails of strategy.
When You Can, Stretch It Out. Looking at companies over time and
as long as possible through a cycle can be helpful. If a slower pace does
not put the deal at risk, do not go too fast. Press hard on key items.
Don’t Make Mistakes. This isn’t venture investing, where a few
highly successful investments will offset a large number of failures.
Avoid the mistakes that create the losers, and aim for returns from
every investment.
Inexperience Can Be Very Costly. Try to know what you—and
your team—do not know. Use study and experience to focus on sec-
tors you can know as well as any strategic investor. Keep in mind
that younger personnel likely have not been through economic cycles
and volatility. Acknowledge your limits. Recruit people who will do
the same.

3.
Appendix 8 • 299
We Can Raise All the Money You Can Spend Responsibly. If a
CEO or founder can develop a strategy that will create a return, an
institutional investor can raise virtually unlimited resources to make
that happen. Show me the returns, and I can show you the money.
This comes as a revelation to CEOs or founders with no prior private-
equity experience.
Doesn’t Matter How, Just Get It Done. Process and organization are
not goals unto themselves, just means to the end of making a good
investment. As staffs get larger, the risk rises that people will focus on
process and lose site of the real goal. Within the vital limits of law and
ethics, it’s getting the deal done that counts.
No Deal Is Done Until It Is Done. Have the discipline to divorce any
emotion or sense of obligation from a decision to close, even if you
have signed a letter of intent. If performance erodes or you find out that
something is not as represented, be willing to walk. Work due diligence
until pencils are down. Keep challenging the investment case until the
deal is done.
When Are You Moving to Akron? If a deal is not performing, the deal
professionals may well find themselves living with it—moving to the
headquarters, if necessary. This is a form of internal threat or gentle re-
minder that if management is not fixing the problem then we need to.
Are You Building Personal Equity? I Can Help Dwarf What You
Make Now. This is the basic case for why a CEO or founder should
accept an infusion of private equity. If we can make them more money
than they can make themselves, that should be the basis of a productive
partnership.
The Only Person Above a CEO Is the Owner. While management’s
skill, experience, and dedication are critical, the controlling investor
ultimately is responsible for the business. When necessary, step in as an
owner to make the tough decisions.