A Different Approach to Private Equity with Michael Arrieta

Why It Matters

Garden City’s long‑term, low‑debt holding model demonstrates a viable, people‑centric alternative to traditional private‑equity cycles, potentially redefining investor expectations and portfolio performance.

Key Takeaways

• Garden City Equity uses a 30‑year holding model, not typical PE flips.
• Emphasizes long‑term value over short‑term IRR, investing in transformative tech.
• Holds a network of 200+ LPs who actively support portfolio companies.
• Avoids debt, preferring equity to maintain flexibility during cyclical downturns.
• Capital raises rely on personal contacts, creating a virtuous deal‑flow cycle.

Summary

The Royal Selection Private Equity podcast featured Michael Arrieta, founder and CEO of Garden City Equity, a holding company that acquires founder‑owned businesses and intends to keep them for decades rather than the typical three‑to‑seven‑year flip cycle.

Arrieta explained that a 30‑year fund life lets the firm prioritize MOIC and long‑term transformation—investing in ERP, CRM, and AI even when payback takes years—over short‑term IRR gains. The model shuns leverage, favoring equity to preserve flexibility during market cycles, and it relies on a curated network of over 200 LPs who contribute expertise in sales, supply chain, AI, and more.

He illustrated the approach with anecdotes: “If you own Amazon, why sell just because the fund forces you?” and described a recent $255 million raise sourced entirely from personal contacts and earlier investors. LPs are matched to portfolio needs, turning capital providers into active operators and creating a virtuous deal‑flow loop.

This strategy challenges conventional private‑equity conventions, offering a sustainable, people‑first alternative that could reshape how investors think about capital deployment, risk, and value creation over the long haul.

Original Description

Guest: Michael Arietta

Host: Alex Rawlings

🕒 Key Timestamps

00:00 – Intro

Overview of Garden City Equity’s long-term, people-first model.

00:40 – Biggest PE Mistake

Short-term thinking (IRR focus) limits investment in transformational initiatives like ERP, CRM, and AI.

01:37 – Long-Term Hold Strategy

30-year horizon allows compounding value without forced exits.

03:05 – Holding Company Model

All investors share ownership across all assets—better alignment and flexibility.

05:55 – Leveraging Investor Network

LPs provide deal flow, diligence, and operational expertise.

09:15 – Sourcing Investors

Built بالكامل through personal network—no institutional reliance.

10:42 – Strategic vs Institutional Capital

Strategic investors add value beyond capital.

13:17 – Low Debt Approach

Less leverage = lower risk, more flexibility, and founder alignment.

14:47 – Founder Advantage

Low-debt model appeals to founders seeking stability.

16:21 – Recommended Reads

Unreasonable Hospitality

Excellence Wins

You Can't Hurt Me

🔑 Key Takeaways

Long-term ownership drives better outcomes

Strategic capital creates a “virtuous cycle”

Low leverage reduces downside risk

Investor alignment is a competitive advantage

Raw Selection partners with Private Equity firms and their portfolio companies to secure exceptional executive talent. We focus on de-risking executive recruitment through meticulous search and selection processes, ensuring top-tier performance and long-term success.

🔗 Connect with Alex Rawlings on LinkedIn https://www.linkedin.com/in/alexrawlings/

🌐 Visit Raw Selection www.raw-selection.com

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