LP Equity & Co-GP with Darryl A. Cavitt, Sr.

LP Equity & Co-GP with Darryl A. Cavitt, Sr.

Darryl A. Cavitt, Sr. is an entrepreneur with expertise in business development, capital raising, and tax consultancy for ultra-high net worth clients and accredited investors. He primarily oversees the capital raising efforts for GenEx Cap and has raised over 250M+ across industrial, manufacturing homes, and public-private partnerships for VA clinics. Mr. Cavitt held his Series 7 & 66 licenses in his previous roles at Fidelity Investments and HD Vest Financial Services.

Mr. Cavitt attended the University of North Texas, earning a BA in Economics and Political Science-Pre Law. Currently, he’s pursuing his MBA at the Cox School of Business and served in the 249th Signal Battalion in the Army National Guard.

 

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LP Equity & Co-GP with Darryl A. Cavitt, Sr.

 

Brett:

I’m excited about our next guest. He’s from the great state of Texas. He’s an entrepreneur with expertise in business development, capital raising, and tax consultancy for ultra-high net worth clients and accredited investors. He primarily oversees the capital raising efforts for GenEx Cap and has raised over 250M+ across industrial, manufacturing homes, and public-private partnerships for VA clinics. Mr. Cavitt held his Series 7 & 66 licenses in his previous roles at Fidelity Investments and HD Vest Financial Services, and so much more. Please welcome to the show with me, Darryl A. Cavitt, Sr. How are you doing?

Darryl:

Hey, how’s it going, Brett?

Brett:

It’s going great. And it’s good to have you here. I’m excited to get to know you a little bit more and help our listeners as well. We’re talking about LP Equity and Co-GP, we’re gonna talk about real estate, we’re talking about raising capital, we talk about Darryl story, we talk about the great state of Texas, but before we do that, Darryl, would you give our listeners a little bit more about your background and your current focus?

Darryl:

Absolutely. I’m Darryl Cavitt from Dallas, Texas. From a town right outside of Dallas, Texas, Mesquite. I grew up there. As for my background, my mom was a single parent, and she had five children. So as far as I can remember, I just always wanted to try to help out and help her kind of carry the load. So I started off pretty early. I can just remember, just like little stories of Jess are times in which wherever was, I could do you know, whether that was honestly and embarrassingly, or what have you whether it was jumping in dumpsters to get cash to recycle or helping with envelopes to get some type of remuneration from that. Even to the point where I was probably 11, 12, when I would get out of school that would be like my seventh or eighth-grade year in my ninth-grade year. I was selling candy. You know, after school, I would work six days a week, going into, like, the nicer parts of Dallas would be kind of traveling out by a gentleman that would take us out there a bunch of kids in the inner city. And, my brother works with the top salespeople there and these consistent producers, and I’ve never really stopped that entrepreneurial spirit. And when I graduated from high school, I didn’t really know what I wanted to do. I’d like the stock market and things of that nature, but I didn’t have the greatest grades. I was a C student, so definitely not going to hear you know, valedictorian most likely to succeed or anything like that. I was just doing what I had to do. So I joined the military, the Army National Guard, tie or pay for school. And then no, from there I went, I could say we’re in Dallas, Dallas Fort Worth Metroplex. So, the fourth largest school in Dallas, and Texas is actually the University of North Texas, we actually just made our first March Madness appearance in school history. It’s my understanding. And so anyway, so it was doing that got my first foray at Fidelity Investments. Back in my was a senior in college when I was studying Economics and Political Science. wanted to go to law school at that time, but I hated writing. So I just decided to pursue a career in sales. 

So I started off at Fidelity in Westlake right in my backyard. That’s where all the action is happening right now. So you got fidelity, Charles Schwab, TD Ameritrade, they’re all pretty much on the same strip. And so that’s kind of where I started cutting my teeth on I was back in July of 2007. So it got me on my 63 766 all that stuff there for about six years. And then you know, again, start getting entrepreneurial spirit, again, are the bugs so to speak. So actually left, started a tax practice that I wasn’t a CPA or anything like that. I didn’t want to compete against that market. I wanted to leverage that time, my skill set, which was the founder advisory thing. I just wanted to kind of do more of a holistic service. So from there I basically found myself at HD bass, which is an independent broker-dealer based out of Irving, Texas. And I will start with a CPA back in the 1980s. And he was very big in lobbying, the Pff, the AI CPA, and helping CPAs get their investor licenses, that’s kind of what that was about. So, in that role, I recruited about 678 CPAs, and other tax professionals helping them expand their practice into the wealth management space. And so that’s when this is when it starts getting really interesting for me, I’m so you know, at that point, I’m looking at the market and more, the financial advisory Archer services, the more commoditized space, right, because now I’m actually helping advisors get into that space or CPAs, or other tax professionals get into that space and add the wealth magnet component to increase the valuation of the practice. So that was kind of you know, in that time, I get get a call from a colleague of mine by the name of Michael Potter. And he and a buddy of his who had left PwC was he was an auditor, audit different private equity funds and that sort of thing. They started a private equity shop called Packs Equity. And they asked me to join their team. And to kind of help out that they had seen kind of what I was doing entrepreneur really kind of follow me on Facebook and, and I’m a Christian hope, I’m glad to say that. And so they liked my mouth a lot. And so packs equity, what’s Pac, Stanford is Latin for peace. And so one of the things that initially made me want to be a part of that group was that 20% off profits was actually wanting to spread the gospel. So I was really off for that. And there was no, look, we actually were in training at fidelity we’re good buddies. We competed on the floor at fidelity, that sort of thing, we took different paths, but for the most part, we, for the most part, stayed in contact and had respect for one another. So that was back in September of 2016. And he said, hey, look, we’re gearing up for this family office conference, this super conference, and it’s gonna be in Miami. And we want you to come with us and say, Look, we don’t know what we’re going to find there. But look, let’s just go and find out let’s go raise some capital. And it was really, really the Wild Wild West. So I get there. And this is a super conference. And man, it was so much money in this room. I have never seen anything like I’m at that time. I think I was barely making Power BI a little more for 100,000 a year. And I’m seeing people talk about 100 million dollar deals like it was like toilet paper, and I was like, with this family office stuff. And I was so intimidated, man, like I said, I went to North Texas, man. So these guys will I mean, the creme de la creme you name it. Goldman Sachs, black stock Blackstone whatever Princeton, Yale, I mean, you could throw a rock and hit one of those guys in this room. So these guys’ resumes were so impressive. I literally felt like the dumbest guy in the room. Right? And so that was back in September of 2016. So we get back and we’re debriefing about this conference, and it was like, everybody will start shaking their hands. Dirty did a great job. What are you talking about? Man, you killed it in there, man. He was working the room. And so it was kind of like that duck thing, right? You know your feeders shaking at the bottom or whatever. But you look calm. And you had your poker face on? Like, I don’t? I’m like, okay, right. I didn’t think I did well at all right. And so I, we kept going these different conferences and things like that probably once, like, 30 plus of these days. And so slowly, but surely, I started kind of getting comfortable. And this is why and I share this with many people, I started to get to a point where like, I really didn’t care, right? I mean, it got it became normalized to me. There were just people and honestly, I started to watch what people were doing wrong and what people were doing right as it relates to raising capital from family offices and, and, and that type of crowd so to speak, and the seen what people were doing wrong and just the opposite. So I started having success and just really really listened and, and try my best to understand and add value in and just treat them as people and then now to always talk about money or anything like that. And I’ll say what to say that’s kind of how I got into that space in that world. So anyway, author, a guy, a colleague of mine, the guy that was kind of mentor me, he kind of took me under his wing. And he brought this deal to me and said, I’m this guy, I lose this a mezzanine lending for it was a family office goodness, they had the girls looking for the LP equity. We don’t really do that. And maybe I think you should take our deal and help them out. This is really more your speed. I’m like, okay, I talked to him. He says, Well, look, man, I’ve never seen anything quite like is it’s a public-private partnership. Dude, you can’t lose money on this deal. I know. We’re not supposed to say that. But no, I’ll let go. So to get free to say that now should be held the SEC doesn’t send me any type of ceasing to desist letters, right like that. But so the gas like main or you’re not, you can’t lose money. I’m like, what do you mean, we’ll check this man. So it’s a guaranteed lease, the firm term leases. And the government’s paying man, and you know, it’s a perfect deal and gave me some other particulars now, like me, I don’t believe so he sent me the ppm I read when you read through 100 of these things over the years, I’d like to meet this guy. So I meet the CEO of the company, and that hires me and basically say, hey, look, I want you to raise 200 million for me. And I just start roadshow and, and was able to do it, that was last year, where most of it basically raised 247 on that particular deal. And it was actually someone out of the one who found office complexes, and that I’ve been going to for years and years and years. So this kind of overtime just kind of builds up a network of different institutional ambassadors and things of that nature, raising capital for deals. And now I’m doing my own deals, right. So that was kind of iteration on progression for me and my career started off as a financial advisor. At fidelity peddling a story is a story.

 

LP Equity & Co-GP with Darryl A. Cavitt, Sr.

LP Equity & Co-GP: “Successful people do what unsuccessful people are not willing to do. Don’t wish it were easier; wish you were better.” ― Jim Rohn

 

Brett:

You got to write your book, and getting the chapters it goes through. That’s amazing. So let’s dive right into the topic here. LP equity, and Co-GP. So when investment real estate professionals or even venture capitalists, they’re looking for equity, right? They’re maybe looking for a co-general partner. So how does your maybe give an actual deal up close, recently of what was the challenge and how did you come in and help bridge that gap?

Darryl:

So people throw these names around, and it’s a pretty simple man. Like the whole LP, the GP structure is pretty standard in the private equity world. And so our client, and even the answers that I gave they brought me in as a co GP, but I was no 5% it wasn’t a big, no big deal, but they may be part of the GP to this kind of incentivize me to kind of raise capital. And so what I was looking for, in that were LPs are limited partners. So typically, in your ordinary deal structure would have your limited partners will be the cash, right. And in this instance, in most instances I’ve dealt with is usually like, 80-20, split. So, in some pref return. And, and that’s a pretty simple model. So what that typically looks like is, okay, look, we’re gonna charge you guys, we’re expecting to get this type of return. And it might be a 15% internal rate of return. Before we get paid at all we’re gonna make sure you guys get at least 8%. So that’s your 8%. Okay, anything above and beyond that, that’s when we will start our split. might be it will be at 20. So you guys get a goes your way. 20 goes our way. And then typically you may see another hurdle, where it might be okay, once we hit that we’ll split it at 6040. And then maybe once we hit that hurdle may hit 5050 or what have you. And all that’s usually going to be disclosed in your private placement memorandum. But an example of a challenge, if you want to call it that way was the deal that we’re talking about. When when I was looking for the LP equity, this is right around COVID. Right. So this was, I mean, I was engaged in like December of 2009. Then we all knew COVID was going on, and whoo ha but we didn’t think it was no one knew at that time was going to be a global pandemic. You know, you heard whispers, but you never knew what was going to come on our shores. So it was kind of like me, I hear about it. And this is like a less Chinese thing. I wasn’t focusing I was doing my own thing here in America. And then you know, around February March with this bonus globe pandemic, right. So one of the biggest challenges that time is every Why was this scare? Right? Let me know if you recall, I mean, everything shut down, and who I was comparing it to the Spanish Flu 1918. What would happen around that time was over 100 years ago, right? So people were scared and you start seeing I was going to be another no 2008 type situation. And if you would call also in the fourth quarter of 2019, no, there was always I was always, there were always alarms out every economist working saw were pretty much telling us they were going to go into recession anywhere, regardless of what was going on in COVID. So that, I would say that at that time was the biggest challenge you know, everyone was just kind of like trying to figure it out on the sidelines. Initially, there were a few people that were trying to deploy capital in this instance, to my benefit, they were coming up on a 1031 exchange, and they basically have to deploy some capital. Now, they want to park it to wait out the recession and the global pandemic. All right, and no one really knew how long it would last. But you know, it was kind of hedging their bets and trying to update their risk models and things of that nature. So, initially, for me, I would say that would have been the problem we had a recession or a pending recession. And we also had a global pandemic. So it was a lot of uncertainty in the marketplace. So that usually will scare anybody’s money, right? institutional, our this a regular investor. So now people are starting to think about, okay, what we want to do, how we want to invest, how we want to reallocate our capital, where we want to risk on with God, how are we going to spread the risk across the way? I got around that with the type of investment about presented to the client, right, it was a look at some modern server investment, we have the government as kind of backing us you have a real economic floor there. And that was a guy already understood the investment, right, I had more trouble dealing with at that time caught more high net worth investors that weren’t institutional investors, mainly because they weren’t if you would call people wanting crazy returns, right at the time. I was like, that’s not enough money. I’m not really interested in that, right. I’m like, okay, right. So it was just one of those types of deals where the first thing you just have to identify who is it you know, the market for who the right audience and that’s kind of how I solve that particular problem. And I found one LP that deals.

Brett:

By the way, you can learn more about Darryl Cavitt, Sr. at genexcap.com. Darryl, we’re running out of time, are you ready for the lightning round?

Darryl:

Go for it, man.

 

LP Equity & Co-GP with Darryl A. Cavitt, Sr.

Brett:

All right, knowing what you know now, if you could tell yourself to read one book at the age of 25, what would that be?

Darryl:

Think and Grow Rich 

 

 

Brett:

What’s the one leadership quote or theme that you strive to live by?

Darryl:

Treat people the way you want to be treated. I’m big on the golden rule.

Brett:

That’s excellent. That’s a good one. What are you most curious about right now?

Darryl:

You know, honestly, I’m probably more curious about crypto. I was one of those people who are Yahoo’s and didn’t keep up with the crypto stuff. So I’m kind of behind, I kind of had a ball there. That would probably the part of the thing that I was curious about.

Brett:

For our listeners who want to get in touch with you, what’s the best place for them to find you?

Darryl:

They can just go on the website, genexcap.com to learn more about us. They can also look me up on LinkedIn, I’m probably more likely to respond that way. I will probably say those two easiest ways to reach me.

Brett:

Awesome. I want to thank you for being on the show, sharing a bit about your story, your expertise. And again, you can go to genexcap.com. And I want to encourage you to keep using the gifts of persevering, moving forward, thinking outside the box, connecting with people, and doing deals to help people create and preserve more wealth and do more deals. So with that being said, I also want to thank our listeners listen to the episode of Capital Gains Tax Solutions Podcast as always, we believe most high-net-worth individuals and those who help them they struggle with clarifying their capital gains tax deferral options. Not having a clear plan is the enemy and using the deferred sales trust is a proven strategy to defer capital gains tax on cryptocurrency, businesses, real estate, high-end primary homes, it can also save a failed 1031 exchange, go to capitalgainstaxsolutions.com. Learn more about that. That’s capitalgainstaxsolutions.com. Thanks so much for listening everybody. Have a great rest of your day.

 

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About Darryl A. Cavitt, Sr.

 

LP Equity & Co-GP with Darryl A. Cavitt, Sr.

Mr. Cavitt is an entrepreneur with expertise in business development, capital raising, and tax consultancy for ultra high net-worth and accredited investors. He primarily oversees the capital raising efforts for GenEx Cap and has raised over 250M+ across industrial, manufacturing homes, and public-private partnerships for VA clinics. Mr. Cavitt held his Series 7 & 66 licenses in his previous roles at Fidelity Investments and HD Vest Financial Services. He also founded Alpha Financial Group, a Dallas-Ft Worth-based tax and financial advisory firm to meet the needs of high net-worth individuals. Mr. Cavitt attended the University of North Texas, earning a BA in Economics and Political Science-Pre Law. Currently, he’s pursuing his MBA at the Cox School of Business and served in the 249th Signal Battalion in the Army National Guard.

 

 

 

 

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