HoldCo Builders This Model Beats Private Equity Returns (30-50%+ IRR)
Jul 19, 2025
Discover the intriguing world of business acquisitions and how they can outpace traditional investment strategies. Learn the differences between self-funded and funded search methods, and uncover the importance of evaluating multiples over mere growth. Dive into the power of listening to customer feedback for sustained success and the psychological challenges of retaining ownership versus selling early. This conversation reveals a unique playbook for aspiring business owners looking to build lasting wealth through effective strategies.
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Two Paths in Search Funds
- There are two distinct search fund paths: funded, backed by investors and competing with private equity; and self-funded, focused on smaller businesses with less competition.
- Self-funded acquisitions offer lower purchase multiples and greater potential returns through conservative financing and equity build-up.
Magic in Multiples over Growth
- Buying businesses at low multiples is more important than growth for returns.
- Even without growth, paying 3-4x EBITDA can yield 50-70% annual returns through leverage and operational endurance.
Essential Business Acquisition Filters
- Prioritize acquiring businesses with recurring revenue, low customer/vendor concentration, low cyclicality, and where the owner isn't central.
- Ensure the business is manageable and fits your skills to avoid operational pain and burnout.
