Buying in a Small Market, Building a Regional Powerhouse
Mar 3, 2025
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Jonathan Bournigal, President of Bunker, shares his journey of turning a small document storage operation in the Dominican Republic into a thriving enterprise. He discusses the nuances of acquiring family-run businesses, why multiples can be higher in smaller markets, and the importance of building local relationships. Bournigal contrasts growth equity with traditional buyouts and reveals strategies for market domination without incurring debt. His insights on adapting investment strategies to local dynamics make for a captivating listen!
Jonathan Bournigal's approach to acquiring businesses in the Dominican Republic was reshaped by the lack of retiring baby boomers compared to the U.S.
He focused on evaluating potential acquisitions based on their growth potential instead of adhering to traditional exit multiples and metrics.
Jonathan chose to lease his business premises instead of owning real estate, allowing him to concentrate on operational growth and efficiency.
His emphasis on networking and building relationships was crucial for generating deal flow in the Dominican Republic's tight-knit business ecosystem.
Deep dives
Exploring the Retirement Landscape in the Dominican Republic
The search for businesses to acquire in the Dominican Republic highlighted the absence of retiring baby boomers compared to trends seen in the U.S. Jonathan Bornigal initially anticipated an influx of opportunities similar to those in the States but discovered that this demographic was significantly less prevalent on the island. Consequently, he had to rethink his strategy, shifting the focus from conventional assumptions about business acquisitions to understanding the local landscape and its unique market dynamics. To navigate this new terrain, he leaned heavily on networking, which ultimately led him to find a small document storage business that would become the cornerstone of his entrepreneurial journey.
Transitioning to a Proven Business Model
Upon acquiring the document storage business, Jonathan aimed to revolutionize it and establish it as a leading provider in the Caribbean. He quickly realized that conventional metrics for evaluating businesses, such as the typical exit multiples, may not apply in his market. Rather than being anchored to a 3-4x multiple, he learned to evaluate the businesses based on their growth potential and the ability to create value through strategic reinvestments. By reframing his understanding of business valuation, Jonathan positioned himself to focus on businesses that had the potential for significant growth instead of merely adhering to established norms.
Adapting to the Real Estate Debate
Real estate has traditionally been an integral part of business acquisitions, especially in the context of an SBA loan where favorable terms can apply. However, Jonathan found a particular stance on whether to include real estate in a business acquisition, deciding that his focus should remain solely on the operational aspects of the business rather than becoming entangled in real estate complexities. He believed that owning real estate could distract from the business's core mission and lead to unnecessary complications. As a result, he opted to lease the space required for the document storage business, thus allowing himself and his team to concentrate on growth and operational efficiency.
Utilizing Growth Equity for Expansion
Jonathan implemented a growth equity model, contrasting significantly with the typical leveraged buyout structure prevalent in many search fund transactions. Instead of relying on debt for acquisitions, his approach emphasized reinvesting profits to fuel growth, creating a sustainable path forward for the business. This shift away from debt reduced financial pressures and allowed for flexibility in decision-making and scaling operations. Moreover, by focusing on organic growth through reinvestment, Jonathan fostered an environment conducive to expansion and innovation.
Harnessing Network Connections for Deal Flow
In establishing the document storage business, Jonathan relied extensively on networking as a means to generate deal flow in the Dominican Republic's small market. He tapped into his existing contacts and built new relationships during industry events, leveraging trust and personal connections to identify potential opportunities. Unlike more extensive markets where cold outreach may be effective, Jonathan understood that personal recommendations and face-to-face interactions would yield more fruitful results in such a condensed business landscape. This strategy paid off, as he successfully navigated the Dominican business ecosystem to secure acquisition prospects.
Building a Strong Management Team
Recognizing the need to grow the document storage business effectively, Jonathan focused on assembling a strong middle management team. He prioritized hiring talented individuals who could help manage operations and their own specific departments while empowering them to make decisions that would drive growth. By investing in human capital and creating a robust management structure, Jonathan facilitated the transformation of the company from a small operation into a market leader. The team continued to evolve with minimal turnover, demonstrating the effectiveness of fostering a positive and growth-oriented workplace culture.
Enhancing Client Relationships through Value Proposition
Jonathan understood the importance of robust client relationships for the success of the document storage business. Upon acquiring the company, he realized that many long-standing clients had limited interaction with the previous management, leading to potential vulnerabilities in these relationships. To remedy this, he sought to actively engage clients and reinforce the value of the services they received. By enhancing product offerings and transitioning to a just-in-time model, Jonathan differentiated the business and established stronger connections, ensuring that client needs were met more effectively.
