Acquiring Minds How to Build a Holdco (4 Acquisitions So Far)
Jan 24, 2022
Justin Turner, co-founder and managing partner of Traction Capital, shares insights from his journey in building a permanent equity fund with four acquisitions since 2018. He discusses why $4-5M businesses can be easier to acquire than smaller ones and the unique benefits of holding companies long-term. Justin reveals the surprising appeal of paving companies as solid investments and emphasizes the importance of nurturing seller relationships. He also outlines strategies for successful acquisition processes and the significance of building a diversified business portfolio.
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Long-Term Holding Enables Compounding
- Traction Capital holds companies indefinitely to capture long-term compounding instead of flipping them in 3–5 years.
- Justin argues longer holds unlock more value if you can execute on growth strategies.
Why Traditional PE Rarely Holds Long
- Traditional PE lifecycle (10‑year fund, 3–5 year holds) is driven by LP return horizons and fundraising needs.
- That structure makes long‑term compounding uncommon among larger PE firms.
Buying And Scaling Sea Western
- Traction bought Sea Western in October 2018 from siblings of the founder; revenue was ~$15M at purchase.
- They expanded geographically and grew it to about $24–25M annually.