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How to make a few billion dollars is the new best-seller by American entrepreneur Brad Jacobs. Jacobs, coincidentally, is a billionaire. He is known for having created industrial mergers such as XPO, GXO, RXO, United Rentals and United Waste.
His latest venture, QXO, may be his boldest bet yet. In recent months, QXO has raised more than $5 billion, including $900 million from Jacobs himself. More recently, this week, another big advance came from Donald Trump’s son-in-law, Jared Kushner. Jacobs wants to turn QXO into a platform for acquiring building products distributors, an industry he says is fragmented and ripe for consolidation.
His approach sounds like a special purpose acquisition company, or SPAC, but in reverse. Instead of launching an IPO of a cash-rich shell company and then acquiring a company, Jacobs has pumped the $5 billion of cash raised into a microcap company, SilverSun Technologies. To be clear, SilverSun’s existing business has no real future with Jacobs, who will, however, retain the small remainder. The infrastructure of an already publicly traded company is what he really wants.
Jacobs priced his investment at $4.57 a share. Other investors bought it for twice that amount, at $9.14. The rebranded SilverSun, now officially known as QXO, has 740 million shares outstanding, including warrants and convertible stock. But its listed stock price is now above $100 a share, meaning the $5 billion pot of cash has an equity value of nearly $100 billion.
Part of the disagreement may be a reliance on Jacobs to find big acquisitions at good prices so that the $5 billion turns into something much bigger over time.
But ultimately, QXO’s stock price is currently a meaningless signal. The former SilverSun shares number less than a million in total, but they are the only QXO shares actually trading; the institutional money that has come in is supposedly locked up contractually or de facto. QXO has not sold any new shares to the public, leaving ordinary investors who want exposure to Jacobs with only one option: chase those few SilverSun shares in circulation, which creates the massive imbalance between supply and demand.
In this way, Jacobs and the other institutional investors have theoretically made much more than a few billion dollars. However, QXO’s share price will only continue to fall as more transactions are made and more shares are freely traded.
This story has been modified to indicate that QXO has decided to retain the SilverSun operating business.