Search Party

In this engaging discussion, ETA veteran Chandos Mahon, Managing Partner at Castle Capital, reflects on his journey leading Castle Tire through multiple acquisitions, emphasizing the vital role of lenders like Conor Tidgwell from Avidbank. Anthony Walker from Next Coast Legacy adds insights on supporting searchers in lower middle-market acquisitions. The trio underscores the importance of treating lenders as strategic partners. Transparent communication and financial flexibility are highlighted as keys to navigating the complexities of debt structure and ensuring growth.

As a growing number of MBA students become interested in Entrepreneurship-Through-Acquisition (ETA), a proper understanding of the challenges involved in finding and running a business is essential, say Austin Fruchter and Rohit Datta, Co-Presidents of the Columbia Business School ETA Club.  The Columbia ETA Club provides students with exposure to the ETA process, connecting them with investors, operators, and service providers to better understand the search opportunity. “Search is a relatively lonely process,” says Datta, adding that the club also plays a crucial role in building a support network for students before and after they graduate. Over the past year, interest in Columbia’s ETA club has surged, with events doubling and more students engaging in the ecosystem.  In a candid interview with Search Party, Fruchter and Datta describe common traits among ETA-oriented MBA students. Many are drawn to the tangible nature of small business ownership, seeking to step away from high-level corporate roles in favor of hands-on leadership. However, misconceptions persist—particularly about the level of personal commitment and operational complexity involved. “Some students don’t realize how ‘dirty’ it can get,” says Fruchter. The co-presidents also highlight the robust investor ecosystem surrounding Columbia’s ETA program. Investor interest is high, and Columbia students are encouraged to engage with potential backers early. “You don’t want your first interaction with an investor to be, ‘Hey, I need money,’” says Datta.  Fruchter and Datta themselves plan to partner on a search fund after graduation, and they discuss the benefits of partnered search. “It’s incredibly impactful to have someone who pushes you and refines your thinking,” says Fruchter.  Datta, who previously co-founded a SaaS company, agrees, noting that the right partnership can mitigate individual weaknesses. Looking ahead, the Columbia ETA leaders see institutional capital increasingly moving into the space. But they hope the ETA community’s emphasis on people remains its defining trait. “The people in the business drive the value creation,” says Fruchter. “Taking care of employees and empowering your team is a major factor behind the success of search-acquired businesses.” Search Party Lead Sponsor: Next Coast Legacy [https://lnkd.in/eSAuRW5p] Search Party Sponsors: Avidbank [https://www.avidbank.com/] Boulay – Contact Boulay's Search Fund Team: [https://lnkd.in/eFF88SVf] Mayer Brown [https://lnkd.in/gU7sPPSg] Plexus Capital [https://plexuscap.com/] Search Party video-podcast website: [https://lnkd.in/efJEa6GV]

Katie Walker, Principal at Plexus Capital, discusses the financial challenges CEOs face in ETA deals, emphasizing that 'hope is not a strategy' for growth. Mark Mullins, a sales consultant, highlights the critical need for structured sales systems to optimize performance. Dustin Sellers, Managing Partner at Next Coast Legacy, shares insights on the urgency of operational improvements post-acquisition. Together, they explore how new CEOs must navigate the complexities of sales execution and growth in leveraged environments, urging realism over optimism.

Shortly after acquiring security-camera service ⁠EyeQ Monitoring⁠ nine years ago, Markus Scott had no way of knowing he’d eventually grow revenue by a factor of 24. He was too busy dealing with “a whole list of terrible things” that indicated the business was doomed. In an interview with Search Party, Scott says, before detailing these tribulations: “This is the place where I should be pouring bourbon.” Scott’s path to profitable growth is an Entrepreneurship-Through-Acquisition (ETA) success story, but it started as a looming failure. The day the acquisition closed, the first-time CEO learned an employee had been accused of sexual harassment. Then the company’s servers contracted a virus. Then the bookkeeper quit. Then the seller tried to start a competing business. Scott says the deep relationships he built with his workers ended up improving team culture, which impacted customer satisfaction. Scott grew up in a middle-class home in Gainesville, Florida. His father was a former San Diego Charger turned educator, with an entrepreneurial side business to supplement the family income. Scott says he, too, eventually wanted to build a lasting business. When he learned about the ETA model, Scott enrolled in business school at Kellogg, and eventually raised north of $300,000 for a two-year search.  After a “devastating” month-fourteen deal collapse, Scott eventually found a very small business in a great industry. His investors, including Next Coast Legacy, encouraged him to structure the deal like a growth equity investment. Scott was a walk-on linebacker and fullback at the University of Florida. While his time on the field was minimal, Scott says the discipline of daily, grueling workouts prepared him for the roughness of entrepreneurial life. Search Party Lead Sponsor: Next Coast Legacy⁠ https://lnkd.in/eSAuRW5p⁠ Search Party Sponsors: Avidbank ⁠https://www.avidbank.com/⁠ Boulay - Contact Boulay's Search Fund Team:⁠ https://lnkd.in/eFF88SVf⁠ Mayer Brown ⁠https://lnkd.in/gU7sPPSg⁠ Oberle Risk Strategies ⁠https://oberle-risk.com/⁠ Plexus Capital ⁠https://plexuscap.com/⁠ Search Party video-podcast website:⁠ https://lnkd.in/efJEa6GV⁠

An increasing supply of investor capital is chasing business-school students contemplating ETA as a career, and "search-curious" MBA candidates should know the risks involved are manifold, but well worth the journey, according to Matthew Conley and Daniel Lazier, Co-Presidents of the Kellogg School of Management's Entrepreneurship Through Acquisition Club. The Kellogg ETA Club was spun out of the school's private equity club in order to raise awareness of ETA, share best practices and help students self-reflect on whether their skills, personalities and life goals align with this non-traditional career path, say Conley and Lazier. In a frank discussion, the co-presidents discuss the growing popularity of ETA across MBA programs, and the personal qualities that Kellogg ETA club members tend to share, principally a desire to control their own destinies and pursue a more impactful form of business leadership. The search-curious at Kellogg tend to be "motivated by something different than money," notes Lazier. Conley says ETA tends to offer more "internal goods" than "external goods," meaning that while potential money and status may not be as stratespheric as one might find in private equity or investment banking, the intangible benefits of "seeing your fingerprints all over something" are possible in spades in an ETA career. In particular, having an impact on the lives of your employees and their families can be very gratifying, says Conley. The co-presidents describe the pleasantly "round-elbowed" ecosystem of the Kellogg ETA search ecosystem. The ETA club is a locus of activity at Kellogg, with potential investors sometimes visiting the campus several times per week. Lazier estimates that within the three-sided ETA market, demand from investors is highest, followed by interest from MBA students. The supply of available lower-middle-market businesses for sale, notes Lazier, is not increasing, and estimates that some 30% of searchers never find a business to acquire. Conley says that the ETA club aims to make clear the risks not only of not finding a business, but of being unable to successfully lead the business once acquired. That said, Conley notes that even searchers who do not ultimately become CEO of an ETA-backed business often find related positions in search-owned businesses and at investment firms in need of analytical and due diligence talent.   Search Party Lead Sponsor: Next Coast Legacy ⁠https://lnkd.in/eSAuRW5p ⁠ Search Party Sponsors: Avidbank ⁠https://www.avidbank.com/⁠ Boulay - Contact Boulay's Search Fund Team: https://lnkd.in/eFF88SVf⁠ Mayer Brown ⁠https://lnkd.in/gU7sPPSg⁠ Plexus Capital ⁠https://plexuscap.com/⁠ Search Party video-podcast website: ⁠https://lnkd.in/efJEa6GV⁠

Bob Boniface, an entrepreneur through acquisition, shares his journey in acquiring TransTech, a CDL training business. Joined by Anthony Walker, an ETA strategy expert, and Ryan Turbes from Boulay, they dive into the vital nature of quality of earnings during acquisitions. They discuss common misconceptions and the emotional dynamics of negotiations. The conversation reveals how crucial this process is in assessing true company value and managing seller relationships while educating clients on the complexities of financial metrics. A must-listen for future entrepreneurs!

In this engaging discussion, guests Anthony Walker and Dustin Sellers from Next Coast Legacy, along with Conor Tidgwell from Avidbank, dive into the intricacies of lower-middle-market transactions. They highlight how businesses acquired at single-digit multiples can be flipped for double digits through operational improvements. The conversation covers the growing demand for outsourcing in commercial services, the importance of customer retention, and the appeal of niche software investments. The trio shares insights on market trends and the critical nature of EBITDA in evaluating potential deals.

Women are making gains toward substantial representation in the Entrepreneurship-Through-Acquisition (ETA) community, and supporting each other along the way. In fact, 17% of ETA searchers in the market are now women. In a fascinating conversation, three ETA leaders compare notes about the appeal of the ETA search-fund career, the advantages women can have connecting with fellow entrepreneurs, and the challenges and misperceptions women confront in a male-dominated industry. This episode of Search Party includes Audrey Kohout, CEO of ETA company Luggage Forward, Tatiana Gaspar, Director at ETA private equity firm Next Coast Legacy and Katie Walker, a Principal at lower-middle-market capital provider Plexus Capital. Kohout tells the story of how her and co-searcher/co-CEO Jessica Palfrey looked all over the country for a lower-middle-market business to acquire and run before settling on a logistics company in Boston, owned by two men. A deal was struck due in part to shared values of hard work and humility that transcended gender. The experts also discussed the often-difficult balancing act of growing a business while also maintaining a personal life and, for women and men alike, growing a family. As Kohout puts it: "We're building our lives at the same time that we're building a company." Near the end of the conversation, the three compared stories of awkward moments that women can face when men assume they are not in positions of leadership.   Women's Search Network: https://www.womenssearchnetwork.com/   Search Party Lead Sponsor: Next Coast Legacy https://lnkd.in/eSAuRW5p Search Party Sponsors: Avidbank https://www.avidbank.com/ Boulay - Contact Boulay's Search Fund Team: https://lnkd.in/eFF88SVf Mayer Brown https://lnkd.in/gU7sPPSg Plexus Capital https://plexuscap.com/   Search Party website: https://lnkd.in/efJEa6GV

A career move to the Entrepreneurship-Through-Acquisition (ETA) search-fund market may result in any combination of bewilderment, disappointment, wealth creation and self-actualization, according to A. J. Wasserstein, a Senior Lecturer at the Yale School of Management. Wasserstein, himself the builder of two successful businesses, has made entrepreneurship and the search fund community the subject of his teaching and academic work. As Search Party learned in a fascinating conversation, Wasserstein has developed frameworks not only about the potential of an ETA career to pave a way to self-determination and wealth, but to personal fulfillment, what psychologist Abraham Maslow calls self-actualization. Wasserstein, together with Next Coast Legacy Managing Partners Dustin Sellers and Anthony Walker, discusses the growing awareness of the ETA career path among MBA students, the attributes necessary to embark on a high-risk professional journey. Making sure the entrepreneurial path dovetails with personal values and goals is important, says Wasserstein, because he doesn't want his students to end up "the richest divorced people, or the richest people estranged from their kids." At the center of the self-actualization possible for CEOs of lower-middle-market businesses is the ability to directly and positively impact the lives of employees and other stakeholders, to create an entity bigger than the personal ambitions of the ETA searcher.   Select works from A. J. Wasserstein: Exploring Search Fund Entrepreneur Economics https://yale.app.box.com/s/0mo483h9lmfd04bl1om9dkc7oz4xm2s6 Exploring Search Fund Entrepreneurship Using Maslow's Hierarchy of Needs as a Framework https://yale.app.box.com/s/gz48z3i3t55oxdzqbxk1ny32v6oq775o Including Employees in a Search Fund Waterfall https://yale.app.box.com/s/6ouw7vhe9eq6a24y63dy29mjz166o8ht   Search Party Lead Sponsor: Next Coast Legacy https://www.nextcoastlegacy.com/   Search Party Sponsors: Avidbank https://www.avidbank.com/ Boulay - Contact Boulay's Search Fund Team: https://lnkd.in/eFF88SVf Mayer Brown https://www.mayerbrown.com/en Plexus Capital https://plexuscap.com/

Dustin Sellers and Anthony Walker, Managing Partners at leading Entrepreneurship-Through-Acquisition (ETA) investment firm, Next Coast Legacy, share their personal career journeys through the finance industry to become leading practitioners of the ETA strategy, and comment on the exciting growth of the asset class, the attributes necessary for successful searchers, and the rigors of acquiring and running small- and medium-sized businesses. Dustin, who specializes in mentoring searchers and first-time CEOs, shares the attributes necessary for ETA success, including a willingness to "chew off your own arm" to avoid losing money. He describes the challenge of identifying the right acquisition target as akin to climbing Everest without oxygen, and the challenge of being a first-time CEO as akin to managing while underwater in a scuba suit. Anthony, a due diligence expert who became "disillusioned" making short-term investments at large hedge funds, talks about his light-bulb moment when he learned about the ETA opportunity for hands-on value creation at small- to medium-sized businesses.   About Search Party Search Party is a video-podcast created to elevate knowledge about the Entrepreneurship-Through-Acquisition (ETA) strategy. On a regular basis, the podcast will convene expert conversations about the best practices and opportunities in ETA, a model for business growth, career development and wealth creation that is becoming increasingly popular. Search Party is hosted by David Snow and produced by Elatromme.   Search Party Lead Sponsor Next Coast Legacy https://www.nextcoastlegacy.com/ Search Party Sponsors Avidbank https://www.avidbank.com/ Boulay - Contact Boulay's Search Fund Team: https://lnkd.in/eFF88SVf Mayer Brown https://www.mayerbrown.com/en Plexus Capital https://plexuscap.com/   Search Party podcast homepage: https://searchpartypodcast.com/