As we prepare for deeper conversations across different types of capital providers, including PEs, RBF investors, family offices, VCs, HNWIs, banks and other institutional investors, I keep coming back to one question:
What do PE funds actually seem to look for when they invest and why do some founder-led businesses appear to fit that way of thinking better than others?
I’m writing this primarily for business owners. Not as theory and definitely not as a pitch deck guide. More as a summary of what my own research, conversations and reading have shown me so far and how that thinking is influencing how we look at Koykan.
If you’ve been following my recent posts on 365weeks.com, you’ll probably recognize some recurring themes: running operations well, allocating capital carefully and trying to build businesses that can operate consistently without constant firefighting. From what I’ve seen, this also tends to be where PE conversations usually begin.
What PE Funds Appear to Be Buying
PE is usually less focused on stories and more focused on how a business behaves in practice.
In simple terms, they seem to look for businesses that:
- Generate relatively predictable cash
- Can reinvest that cash into repeatable growth
- Are able to handle downside scenarios without breaking
Most founders naturally talk about upside first. From what I’ve seen, PE tends to start by testing the downside.
The early questions often sound like:
- What could realistically break this business?
- What happens if capital markets slow down or shut off?
- Does growth depend on flawless execution or constant new funding?
That’s probably why PE discussions often move quickly toward quality of earnings, controls and unit economics well before anyone gets excited about expansion plans.
The PE Return Equation (As I Understand It)
Two concepts seem to dominate PE thinking:
- MOIC — how many times the invested capital comes back
- IRR — how quickly that return happens
From what I’ve learned, a deal does not need extreme multiples to be attractive if cash flows are stable and reinvestment is disciplined. What PE seems to be more cautious about are businesses that only work if they take on a lot of debt, assume they can be valued much higher in the future or need constant injections of new equity to keep growing.
Those approaches can work in strong markets but tend to struggle when conditions change.
Why the Koykan Model Seems to Align
Koykan is not a single-asset story. It’s a QSR business built around repeatable store-level economics.
Based on our own analysis, three characteristics matter most:
1. Repeatable unit economics
Each store follows the same CAPEX logic build process and ramp-up curve. This makes forecasting more realistic and allows for fast course correction at the unit level.
2. The potential to self-fund growth over time
At scale, the existing base should be able to generate enough cash to support further expansion. From what I’ve seen, this materially lowers risk and tends to resonate well with long-term investors.
3. Flexibility in how growth is financed
Rather than relying on a single source of capital, the business can grow in different ways. That can include opening corporate stores, working with franchise partners, co-investing with others, using instruments like bonds or RBF and eventually adding senior debt.
The point is not to use all of these at the same time. It is to have several options available and to choose the right one depending on the situation, the level of risk and the stage of the business.
When these elements are in place, PE does not seem to require an oversized story to get comfortable with expected returns.
How We Currently Think About Deal Structure
Before looking deeper into PE, I used to think a PE deal was mostly about one thing: they wire money and growth accelerates.
What I’ve learned is that the structure often matters just as much as the amount invested. From what I understand, PE prefers equity to be used when risk is highest and then gradually complemented or replaced with cheaper forms of capital as the business proves itself.
The principles we are currently working with are:
- Equity discipline — treating equity as a scarce resource rather than default fuel
- Clear capital stack rules — understanding who sits where, how cash flows and how refinancing risk is handled
- Downside protection — thinking through what happens if things go wrong, such as lower sales, higher rent costs, staff shortages or slower execution and making sure the business can still operate.
- Decision-grade reporting — consistent store-level P&Ls and clear KPI definitions
From what I’ve seen, many deals struggle not because the underlying business is weak but because the information available is not solid enough to support decisions.
In practical terms, this is also what we have been focusing on inside Koykan. Throughout 2025 we have been putting the foundations in place to run the business with a long-term mindset: cleaner store-level reporting, clearer capital allocation rules and a stronger focus on cash generation at the unit level. In 2026 we are continuing that work more intensively, building systems and habits that allow us to grow without losing control of returns. The goal is simple and very deliberate: to manage the business in a way where what matters in the long run is the increase in per-share value rather than headline growth or size, and where cash flow rather than reported earnings drives how we think about long-term value.
At least from where I’m standing today, PE logic appears to reflect a simple principle:
Run operations efficiently. Deploy capital rationally.
This reflects my current understanding and thinking as we prepare for these conversations. I fully expect this view to evolve as we learn more and test these assumptions in practice.