Understanding companies is a fundamental responsibility of an investor. The owner-operator business model is one of the most common and can be found across several industries like real estate, hospitality, gaming and entertainment etc. Here are 3 distinguishing factors between an owner and an operator.

Capital requirements

Operators are less capital intensive as they are not responsible for the provision of fixed assets. These are provided by the owners of the assets. Consequently, the balance sheet of operators tends to be very asset-light. Instead, operators are responsible for maintaining their staff base which allows them to operate the required assets. This allows for faster expansion as only additional staff and minor office overheads are required for them to expand. On the other hand, an owner who wishes to expand will have to acquire more fixed assets which is often a costly endeavour.

Downside risk

Operators are paid management fees by ......