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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Dr. Daniel Crosby is a behavioral finance expert, the Chief Behavioral Officer at Orion Advisor Solutions, a Clinical

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:

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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:

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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:

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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.