John Ruffolo on Growth Equity, Control, and When Rolling Equity Fails
- Kyle Winder
- Nov 4
- 6 min read
Discover how John Ruffolo redefines growth equity, control, and why traditional private equity structures are failing today.
About This Episode
If you’re considering your endgame, you’re probably looking at private equity. Most PE firms use a familiar formula: buy a majority stake and ask the owner to “roll equity”—re-invest part of the proceeds—into the newco they’re building.
The downside: you become a minority shareholder in a business you no longer control.
There’s another path: growth equity, which lets you take chips off the table via a secondary while maintaining control.
That’s the business John Ruffolo is in as Founder & Managing Partner at Maverix Private Equity (he also founded OMERS Ventures).
You discover how to:
contrast a majority recap (control shifts, leverage enters) with a minority growth deal that preserves control
decode pre- vs. post-money so a “$100M valuation” isn’t quietly post-money
structure primary vs. secondary—cash to the business vs. cash to you—without dulling execution
protect rollover equity from going to zero (debt loads, pref stacks, drag rights) with the right terms
choose capital wisely: when bank/mezz debt or customer financing beats equity—and when a minority partner is the right accelerant
model investor return math (e.g., 3× over 5–7 years ≈ 20%+ IRR) to negotiate from first principles
leverage employee buy-ins as a quiet, tax-efficient liquidity option
About Our Guest
John Ruffolo
John Ruffolo is the Founder and Managing Partner of Maverix Private Equity, a Toronto-based firm investing in growth-stage technology companies.
Before launching Maverix, he founded OMERS Ventures, where he led early investments in some of Canada’s most successful tech companies, including Shopify, Wattpad, Wave, and DuckDuckGo.
Over his career, John has become one of Canada’s most influential venture investors, known for backing visionary entrepreneurs and shaping the country’s innovation economy.
Definition of Terms
Accretive: By definition, in corporate finance, accretive acquisitions of assets or businesses must ultimately add more value to a company, than the expenditures associated with the acquisition. This can be due to the fact that the newly-acquired assets in question are purchased at a discount to their perceived current market value, or if the assets are expected to grow, as a direct result of the transaction.
Imagine you have a collection of stickers, and you get a new sticker to add to your collection. Your collection becomes more valuable because it has more stickers in it. In this example, adding a new sticker is “accretive” to the value of your collection.
In business or finance, when something is said to be “accretive,” it typically means that an action, like acquiring a new company or making an investment, is expected to increase the value of the company or investment per share.
For instance, if a company buys another company and this acquisition is “accretive to earnings,” it means that the purchase is expected to increase the company’s earnings per share. It’s like adding a valuable sticker to the collection, making the overall collection (or, in this case, the company) more valuable on a per-share basis.
Adjustments: These are modifications made to financial statements or projections to correct or allocate values appropriately, providing a more accurate depiction of a company’s financial health and operational performance.
Adjusted EBITDA: Earnings before interest, taxes, depreciation, and amortization, adjusted to reflect the profitability of your business in a buyer’s hands. Typical adjustments that may drive up reported EBITDA would be things like executive compensation (assuming you’re paying yourself more than it would cost to replace you with a general manager), personal travel, automobile expenses, one-time extraordinary expenses (such as a lawsuit), etc.
Anti-Dilution Clause: This provision protects an investor’s ownership percentage in a company from being diluted by additional share issuances, thereby maintaining their influence and value in the company.
Imagine you and three friends decide to start a lemonade stand together, and each of you owns an equal 25% share. But later, you all decide to bring in another friend to help, and you give the new friend some of the company’s shares. Now, everyone’s individual piece of the lemonade stand is smaller because you have to split it five ways instead of four. This is called “dilution.”
Now, let’s say you had an agreement or a “special rule” that if anyone new comes in, your piece of the lemonade stand stays the same, and only the others have to share their pieces with the new friend. This “special rule” would be like an anti-dilution clause in the business world.
An anti-dilution clause is a provision that protects an investor from having their ownership percentage decreased (or diluted) when new shares are issued in the future, like when the company raises more money or when employees exercise stock options. This means that the investor gets to keep a constant share of the company, and the dilution impacts the other shareholders, usually the founders or employees, who end up with a smaller piece of the company.
Convertible Note: This is a type of short-term debt that can be converted into equity, typically during a future financing round. It’s often used by startups when it’s too early to determine the company’s valuation. Imagine your friend is opening a lemonade stand and needs $10 to start it. You decide to lend them the $10 they need. But instead of just asking your friend to pay you back in money, you both agree that you can choose to get paid back with lemonades once the stand is up and running.
A convertible note works similarly in the business world. It is a form of short-term debt that converts into equity. In simpler terms, when you give money to a company using a convertible note, you’re initially lending money to the company, just like a loan. But, instead of getting paid back with money, you have the option to get paid back with shares in the company. So, if the company does really well, having shares might be more valuable than just getting your money back with interest.
In essence, a convertible note is like lending money to a friend’s lemonade stand with the option to choose lemonades over your money back in the future if you believe those lemonades will be worth more than your initial $10.
Liquidation Preference: Let’s say you’re at a party, and everyone at the party has chipped in to buy a pizza. But before the pizza arrives, the party gets cancelled. Now, you’d want to make sure you get your share of the money back that was collected for the pizza, right?
In the world of business, a “liquidation preference” is a bit like that. It’s a rule set in a contract that says who gets their money back first if the “party” (in this case, the company) has to shut down and sell off everything it owns.
Usually, this rule is set up to protect the people who took the biggest risk by investing money into the company. These folks usually own something called “preferred stock,” which is a special kind of ownership that comes with some extra privileges. One of those privileges is often a liquidation preference.
So, if the company goes under or is acquired, the people with the liquidation preference (usually the investors or preferred stockholders) get in the front of the line to get their money back. They get paid before anyone else, like employees who own regular shares (“common stock”) or lenders who the company owes money to.
In simple terms, a liquidation preference is like a VIP pass that ensures you get your money back first if a company has to shut down or gets acquired. It’s a way to protect the investment of people who put in money, often at the early stages when the company is most at risk.
Look-Back Provision: This provision in an insurance policy allows claims to be made for injuries or illnesses that occurred before the policy was purchased, based on the stipulation that the insured was unaware of the illness or injury at the time of purchase.
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