This episode is brought to you by Boulay, the industry standard for Quality of Earnings, tax, and audit services, serving search fund entrepreneurs for 20+ years
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This episode is brought to you by Oberle Risk Strategies: Insurance Broker and Insurance Due Diligence Provider for Search Funds and Other Small-to-Medium-Sized Businesses
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My guest today is Collin Hathaway, the Founder of Skylight Capital, a micro-cap private equity firm that invests primarily within the home services ecosystem.
Collin got his start as an entrepreneur after acquiring a small plumbing company at the outset of the great financial crisis in 2008. Since then, he has acquired and operated several other home services companies operating within the plumbing, HVAC, and roofing verticals, to name just a few.
In our conversation today, we cover how the home services market has evolved since he first entered it in 2008, his views on organic versus inorganic growth theses within home services, whether the market is too competitive today, what he’s learned about the art (and science) of raising money, how he communicates bad news to investors, and what he learned from experiencing a heart attack at only 36 years old.
This episode is brought to you by Oberle Risk Strategies: Insurance Broker and Insurance Due Diligence Provider for Search Funds and Other Small-to-Medium-Sized Businesses
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This episode is brought to you by Boulay, the industry standard for Quality of Earnings, tax, and audit services, serving search fund entrepreneurs for 20+ years
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When evaluating a small business to acquire, to suggest that some form of concentration is common is likely an understatement. Indeed, in most cases, concentration of some variety is a borderline inevitability. Though this often takes the form of customer concentration (the focus of this blog post), it can take other forms as well, including key person concentration, supplier concentration, reseller concentration, and technology/platform concentration, among other forms.
The aim of this blog post is to discuss when customer concentration is acceptable (and when it is not), how to incorporate its associated risks into the transaction’s price and structure, how to diligence the likelihood of those risks manifesting, and the types of business models where the defection of large customers should be viewed as an expectation, and not as an improbable risk.
This episode is brought to you by Boulay, the industry standard for Quality of Earnings, tax, and audit services, serving search fund entrepreneurs for 20+ years
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This episode is brought to you by Oberle Risk Strategies: Insurance Broker and Insurance Due Diligence Provider for Search Funds and Other Small-to-Medium-Sized Businesses
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Today's guest, John Ratliff, is a lifelong entrepreneur who founded a call center company called Apple Tree Answers, which he scaled through 24 separate bolt-on acquisitions, growing it over 3,000% prior to selling to a strategic buyer in 2012. He then went on to become a partner at an investment bank, where he has advised on countless small business transactions. All told, he has sat in nearly every seat at the M&A table — as a founder, buyer, seller, and now advisor. In our conversation today, we cover:
Please enjoy!
This episode is brought to you by Oberle Risk Strategies: Insurance Broker and Insurance Due Diligence Provider for Search Funds and Other Small-to-Medium-Sized Businesses
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This episode is brought to you by Boulay, the industry standard for Quality of Earnings, tax, and audit services, serving search fund entrepreneurs for 20+ years
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If you have ever had to decide how to price a product or a service, or if you foresee yourself having to make such a decision one day, I implore you to listen to today’s episode, in no small part because of how many practical takeaways you’re likely to leave with.
I’m joined today by Casey Brown, the founder of Boost Pricing, a consulting company that helps their clients with all things pricing, including not just setting prices, but also the often overlooked tactical details of how to actually go about executing on pricing changes.
In addition to being the Founder of Boost pricing, Casey is also a prominent keynote speaker, having delivered a TEDx talk in 2015 with over 5 million views to-date. She has degrees in both Chemical Engineering and Business, and if you listen to our conversation today, you won’t be surprised to hear that Casey cares about three primary things when it comes to her clients: Being fearless about price increases, getting paid what they’re worth, and increasing profitability fast.
This episode is brought to you by Boulay, the industry standard for Quality of Earnings, tax, and audit services, serving search fund entrepreneurs for 20+ years
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This episode is brought to you by Oberle Risk Strategies: Insurance Broker and Insurance Due Diligence Provider for Search Funds and Other Small-to-Medium-Sized Businesses
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This week, I'm joined by Dr. Sherry Walling, a clinical psychologist, speaker, podcaster, and best-selling author. She is also the Founder of ZenFounder, which aims to help entrepreneurs and CEOs navigate issues of transition, rapid growth, loss, and any manner of complex human experience. She is also the host of the ZenFounder podcast, which has been called a “must listen” by both Forbes and Entrepreneur Magazine and has been downloaded more than 1M+ times.
Sherry first came onto my radar when she published her first book, the aptly named The Entrepreneur’s Guide to Keeping Your Sh*t Together, which discusses many of the topics that we’ve explored over the years in this podcast related to managing your psychology as an entrepreneur and CEO.
Her most recent book is titled Exit Strategy: The Entrepreneur’s Guide to Selling Your Business without Regret, which goes beyond purely commercial considerations, and explores the largely unexplored personal considerations specific to the largest transaction of most entrepreneurs’ lives.
This episode is brought to you by Oberle Risk Strategies: Insurance Broker and Insurance Due Diligence Provider for Search Funds and Other Small-to-Medium-Sized Businesses
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This episode is brought to you by Boulay, the industry standard for Quality of Earnings, tax, and audit services, serving search fund entrepreneurs for 20+ years
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One of the most common investment theses among acquisition entrepreneurs revolves around building an internal sales function where no such function has existed in the past. While this makes intuitive sense on the surface, just how easy is it to build a sales team from scratch? Do you hire the leader first, or do you hire an individual contributor first? Does it matter if your sales reps have experience in your particular industry? How do you evaluate the success of new hires if you have a long sales cycle? How do you change an incentive compensation plan in the middle of a fiscal year? Should lead generation be outsourced or brought in-house? How involved should a SMB CEO be in sales?
These are just some of the many questions that we explore with my guest this week, Dave Prusinksi. Dave is the Chief Revenue Officer at SafeAI, a hyper-growth silicon valley company in the autonomous vehicle space.
Prior to his current role, Dave spent 10 years as the Executive Vice President of Sales and Marketing at FleetComplete, a technology provider to fleet-owning businesses around the world. Under Dave's leadership, FleetComplete grew from $6M ARR to $150M in total revenue, achieving an average 50% revenue CAGR for 9 of his 10 years.
Dave played an integral role in the acquisition of 6 companies, leading the sales and marketing due diligence processes, and ultimately integrating the operations of the acquired businesses into that of FleetComplete. Dave was also a central member of the deal team helping to lead FleetComplete through multiple investment and acquisition rounds themselves, managing the sales & marketing due diligence processes in each instance.
Dave has served as a Revenue Coach to several SMBs, working directly with their CEOs and Heads of Sales to optimize their sales and revenue generation processes. All of the companies with whom Dave has worked thus far have now exited with great success.
This episode is brought to you by Boulay, the industry standard for Quality of Earnings, tax, and audit services, serving search fund entrepreneurs for 20+ years
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This episode is brought to you by Oberle Risk Strategies: Insurance Broker and Insurance Due Diligence Provider for Search Funds and Other Small-to-Medium-Sized Businesses
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This week, I attempt to educate listeners on several non-obvious considerations - highly specific to the enterprise software business model - that must form a core part of any diligence and deal structuring process.
Today’s episode will be broken into 3 segments:
In part 1, I will discuss several financial considerations that differentiate a software acquisition & diligence process from a more "traditional" one
In part 2, I discuss several product-specific considerations that prospective acquirors ought to pay particular attention to, especially those who are non-technical, with no prior software experience
Finally, in part 3, I outline 5 very different ways in which prospective acquirors can go about structuring the acquisition of a software company, because – as you’ll hear – not all software investment theses are created equally.
Please enjoy!
This episode is brought to you by Oberle Risk Strategies: Insurance Broker and Insurance Due Diligence Provider for Search Funds and Other Small-to-Medium-Sized Businesses
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This episode is brought to you by Boulay, the industry standard for Quality of Earnings, tax, and audit services, serving search fund entrepreneurs for 20+ years
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Today’s episode is all about Hiring, and we’ve managed to secure one of the world’s foremost experts on the subject.
Randy Street is the Vice Chairman of ghSMART, a global consulting firm that helps CEOs, boards, and investors build valuable companies specifically through hiring and developing world class leadership teams. Alonside ghSMART’s chairman and founder, Geoff Smart, Randy also co-authored Who: The A Method for Hiring, a book that I view as being required reading for all entrepreneurs and CEOs running SMBs. The very specific hiring method that they detail within this book ("Topgrading") changed the way that I made all of my hires across my entire company.
In our discussion today, we discuss how to evaluate people & teams that you haven’t personally hired, post-hire considerations, lessons from 30+ years of working with CEOs and management teams, compensation, and how to identify and address conflicts within leadership teams.
This episode is brought to you by Boulay, the industry standard for Quality of Earnings, tax, and audit services, serving search fund entrepreneurs for 20+ years
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This episode is brought to you by Oberle Risk Strategies: Insurance Broker and Insurance Due Diligence Provider for Search Funds and Other Small-to-Medium-Sized Businesses
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Across all known search funds since the inception of the model in the 1980s, ~63% of funds have gone on to acquire a company. However, since 2014, the acquisition rate has decreased, hovering around ~57% over the past 10 years.
Today I'm joined by three of the most experienced and respected investors within the search fund ecosystem to discuss A) Why the acquisition rate among search funds has fallen over the past 10 years; and B) Whether the rate of acquisition is likely to fall further in the years to come.
Joining me today are Jim Edmunds (Search Fund Partners), Badge Stone (WSC), and Kent Weaver (Granite Point Partners).
Today's episode revolves around the testing of 8 hypotheses, submitted to us via a survey of 1,000+ searchers & CEOs. Those hypotheses include:
Encroachment: PE moving further down market?
Capacity: Investors with too many searchers in their portfolios?
Competition: Too many search funds in the market?
Dilution of Talent/Commitment: Too many part-time searchers?
Valuation Expectations: Sellers no longer willing to transact at palatable multiples?
Cost of Capital: Search funds have a higher cost of capital relative to other buyers?
Searcher Fatigue: Sellers and intermediaries becoming disillusioned with the value proposition of search funds?
Email: Deliverability challenges too much to overcome?
Please enjoy!
This episode is brought to you byOberle Risk Strategies: Insurance Broker and Insurance Due Diligence Provider for Search Funds and Other Small-to-Medium-Sized Businesses
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This episode is brought to you byBoulay, the industry standard for Quality of Earnings, tax, and audit services, serving search fund entrepreneurs for 20+ years
*Raam Jani is one of the most experienced lawyers in the Search Fund ecosystem, and within the small business M&A ecosystem more broadly. In our discussion today, we cover some mechanics (including when one should begin the legal diligence process, how to avoid overwhelming sellers with too many information requests, and how he deals with situations where his legal counterpart is less experienced in matters of M&A). We cover frequent stumbling blocks within the M&A process (including how to evaluate the true extent of the key person risk that resides within any given seller, what areas of the purchase agreement tend to be most contentious, and why he advocates for rep & warranty insurance). And finally we conclude with some general market observations, including whether he thinks the lower middle market is as inefficient as it was 5-10 years ago.
This episode is brought to you by Boulay, the industry standard for Quality of Earnings, tax, and audit services, serving search fund entrepreneurs for 20+ years
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This episode is brought to you by Oberle Risk Strategies: Insurance Broker and Insurance Due Diligence Provider for Search Funds and Other Small-to-Medium-Sized Businesses
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As an American searcher, are you aware that you might be able to receive $10M+ of your exit proceeds completely free of federal tax? As a Canadian searcher, are you aware that you might be able to receive $1M+ of your exit proceeds completely free of federal tax? If you’re not, then you might want to give this episode a listen.
We split today’s episode into two parts: The first half will focus on US searchers and investors, and will explore the QSBS program (aka Section 1202) offered by the US federal government.
The second half (starting at the 47 minute mark) will focus on Canadian searchers and investors, and will focus on the CCPC program and the lifetime capital gains exemption offered by the Canadian federal government.
Both programs have the potential to be incredibly lucrative for searchers and investors alike, though both remain unfamiliar to many. I hope this episode plays a small role in changing that.
Timestamps
- USA: 0:00 - 47:00
- Canada: 47:00 - 1:11:00
This episode is brought to you by Oberle Risk Strategies: Insurance Broker and Insurance Due Diligence Provider for Search Funds and Other Small-to-Medium-Sized Businesses
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This episode is brought to you by Boulay, the industry standard for Quality of Earnings, tax, and audit services, serving search fund entrepreneurs for 20+ years
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Dr. Daniel Crosby is a behavioral finance expert, the Chief Behavioral Officer at Orion Advisor Solutions, a Clinical Psychologist, and a New York Times best-selling author. In our wide-ranging discussion today, we discuss meaning, purpose, fear of the unknown, when to continue vs. when to persist, why we tend to ignore simple solutions to complex problems, why pessimism sounds more intelligent than optimism, how to use our money to buy back time, and how to spend our money in ways that will maximize happiness and contentment.
This episode is brought to you by Boulay, the industry standard for Quality of Earnings, tax, and audit services, serving search fund entrepreneurs for 20+ years
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This episode is brought to you by Oberle Risk Strategies: Insurance Broker and Insurance Due Diligence Provider for Search Funds and Other Small-to-Medium-Sized Businesses
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The "long term hold” strategy is one that has received an increasing amount of attention within the acquisition entrepreneurship ecosystem of late. To further explore this thesis, I was joined by Zac Carman, CEO of ConsumerAffairs.com for 14+ years. In our discussion, we unpack Zac’s long-term-hold strategy and discuss the extent to which it was deliberate or emergent, how he has managed liquidity requirements for both himself and his investors, the commercial and personal reasons why a LTH strategy makes sense for him, and if he thinks it makes sense for an entrepreneur to target a LTH strategy before acquiring their first company.
This episode is brought to you by Oberle Risk Strategies: Insurance Broker and Insurance Due Diligence Provider for Search Funds and Other Small-to-Medium-Sized Businesses
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Archimedes said “Give me a lever long enough, and a place to stand, and I will move the earth.” Though the concept of leverage is most commonly associated with the use of debt to finance the acquisition or operations of a company, there are countless other forms of leverage that we ought to be aware of, given that all of us have to contend with the reality of finite time and resources. Instead of asking what else they should be doing to achieve their goals, entrepreneurs and investors might instead consider asking: “How can I magnify the impact of what I’m doing, without doing more of it?”. Today we explore 10 different forms of leverage, and provide a few ideas around practical application.
This episode is brought to you by Oberle Risk Strategies: Insurance Broker and Insurance Due Diligence Provider for Search Funds and Other Small-to-Medium-Sized Businesses
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Want to know what it's like to work with me as an investor? Check out our testimonials page here.
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Those who have never run a rapidly growing company are unlikely to appreciate the operational challenges associated with doing so. Indeed, while running my own company, I found our highest growth year to be the most difficult, both operationally and personally. We outgrew our systems, had to change our people, had to add entirely new departments, and I found that my own role as the CEO had to evolve both quickly and significantly.
To help us better understand the day-to-day realities associated with running a high-growth company, we're joined today by Anth Georgiades, co-Founder and CEO of Zumper, North America's largest apartment rental platform. Since it's founding in 2012, Zumper has grown revenue at triple-digit annual growth rates, and has raised over $150M in Venture Capital funding. Today, Zumper boasts over 250 employees, and 75 million active users.
This episode is brought to you by Oberle Risk Strategies: Insurance Broker and Insurance Due Diligence Provider for Search Funds and Other Small-to-Medium-Sized Businesses
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Want to know what it's like to work with me as an investor? Check out our testimonials page here.
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Franchise ownership is an entrepreneurial path that remains under-discussed and under-explored within the small business community. Yet, for the right person, it can represent a highly lucrative opportunity with several built-in risk mitigation mechanisms. My guest today, Michael Horowitz, acquired 7 Wingstop locations in 2018 and continued to grow his footprint over the next 5 years until a successful exit to a strategic acquirer in 2023. As we discuss in our conversation, the entrepreneurial gods don’t deduct any points for leveraging a business model that is proven to work.
This episode is brought to you by Oberle Risk Strategies: Insurance Broker and Insurance Due Diligence Provider for Search Funds and Other Small-to-Medium-Sized Businesses
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Want to know what it's like to work with me as an investor? Check out our testimonials page here.
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Back by popular demand today, for his second tour of duty on the podcast, is Brent Beshore. Brent is the Founder and CEO of Permanent Equity, a private investment firm that invests in Founder-owned small to medium sized businesses. Beyond his commercial acumen, one of the things that I most admire about Brent is how he takes a deeply personal approach to his work, utilizing tools and frameworks from disciplines like philosophy, psychology, and religion to inform how he thinks about conducting himself both personally and professionally. This is one of the reasons why a seemingly black and white conversation about investing went into domains like fear of failure, the source of our identities, and why young professionals ought to demonstrate more vulnerability, among other topics. My first conversation with Brent, published in November of 2022, was one of our most highly rated episodes, and something tells me that this one might even top it.
This episode is brought to you by Oberle Risk Strategies: Insurance Broker and Insurance Due Diligence Provider for Search Funds and Other Small-to-Medium-Sized Businesses
* This episode is brought to you by The Profit Line: The Outsourced Finance & Accounting Department for Small and Medium Sized Businesses
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Want to know what it's actually like to work with me as an investor? Check out our testimonials page here.
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Today's episode features five unrelated thoughts on how to lead and grow a healthy and vibrant company. None of them are long enough to justify a stand-alone blog post, but all of them are important enough to highlight for current and aspiring CEOs.
This episode is brought to you by The Profit Line: The Outsourced Finance & Accounting Department for Small and Medium Sized Businesses
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This episode is brought to you by Oberle Risk Strategies: Insurance Broker and Insurance Due Diligence Provider for Search Funds and Other Small-to-Medium-Sized Businesses
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Properly managing the relationship with the outgoing seller is likely to be among your most important tasks within your first 6 months as the new CEO. I say this because a non-functional (or worse, a toxic) relationship between the incoming and outgoing owners has the potential to damage a company more than customers leaving, employees quitting, or competitors fear-mongering ever could. To help us better understand the perspective of a selling Founder, I was joined this week by three founders, all of whom chose to sell their companies to a Search Fund within the past few years. Joining me today is Alicia Browner (Founder of Prelude), David Marshall (Founder of Performio), and Robert Day (Founder of Integrity Advocate).
This episode is brought to you by Oberle Risk Strategies: Insurance Broker and Insurance Due Diligence Provider for Search Funds and Other Small-to-Medium-Sized Businesses
* This episode is brought to you by The Profit Line: The Outsourced Finance & Accounting Department for Small and Medium Sized Businesses
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Rich Manders has done almost everything that an entrepreneur and CEO can conceivably do: He co-Founded a Massachusetts-based automation company and grew it to $90M in revenue. He sold that business to a Private Equity firm, then stayed on with the business to help them acquire 7 tuck-ins, growing the company by 6x and producing a 50% IRR. He has since started a coaching practice, and now works with SMB CEOs across North America. His story is the subject of a Harvard Business School case study, where he has also taught several courses and seminars.
Our discussion today covers how PE buyers are likely to evaluate your business, including internal systems, capital allocation, management team quality, pricing, and countless other variables.
