A fertile source for undervalued ideas is identifying powerful consumer franchises hidden within a parent company with a boring or unrelated corporate name. The market often overlooks the strength of the underlying brand (e.g., Titleist golf clubs owned by Acushnet) due to this name dissociation.

Instead of scaling his ad agency, the founder saw that one client, Ridge, had more potential than the rest combined. He folded his agency's operations and team into Ridge in exchange for equity, transitioning from a service provider to an operator focused on a single, high-growth asset.

Monish Pabrai's successful Fiat investment reveals a powerful strategy: find hidden assets within a company. The market valued Fiat Chrysler as a single struggling automaker, but Pabrai saw that its Ferrari subsidiary was a gem being overlooked. By valuing Ferrari separately, he realized the core auto business was trading for almost nothing.

The best consolidation returns come from identifying a fragmented industry before it becomes a popular PE theme. Entering in the "first inning" avoids competing with dozens of other platforms, which inevitably drives up acquisition multiples for both platforms and add-ons, eroding returns.

Acquiring smaller companies at a 5-6x EBITDA multiple and integrating them to reach a larger scale allows you to sell the combined entity at a 10-12x multiple. This multiple expansion is a powerful, often overlooked financial driver of M&A strategies, creating value almost overnight.

Emanuel's agency, Endeavor, used its unique position representing global talent to identify undervalued sports and entertainment properties. By acquiring these localized assets (like UFC), they could apply their global infrastructure to unlock massive value that the original owners couldn't access, capturing 90% of the value instead of a 10% agent fee.

Ari Emanuel's core strategy was to identify localized companies or talent with global potential. By leveraging Endeavor's global platform, they could significantly increase an asset's value, allowing them to transition from a representation role to a more lucrative ownership position. This model focuses on unlocking latent global demand.

Tempur-Pedic was diluting its focus by expanding into chairs and shoe insoles. A consultant advised them to stop all ancillary projects and focus solely on being a mattress company. This singular focus on their core niche business was the catalyst for their massive growth.

When Front Office Sports realized an investor was a "buyer, not a strategic partner," they didn't wait. They proactively found a new, more aligned investor (Jeff Zucker's Redbird IMI) and engineered a deal to buy out the previous firm, providing them a return while freeing the company to pursue a more aggressive growth strategy.