My guests on this episode are Jay Davis and Jason Pananos. Jay and Jason acquired Vector Disease Control, which provides vector borne disease prevention and lake management services, in 2011. About 4 years after acquisition, they realized serial acquisitions complementary companies could be a powerful growth lever. And 14 acquisitions later, they sold the company in 2017 for a very successful outcome. Following the sale, they founded the Nashton Company where they've been mainstay search investors and the last few years holding company investors.

They're also co-founders of Compounding Labs, a partnership between Jay and Jason, Kent Weaver and Will Thorndike to invest in long-term holding companies. Our conversation covers their investing in holding companies, how they approached serial acquisition at Vector and how they advise other searchers in the strategy, sources of capital and deal pacing, and building deal teams and when to start that process within your serial acquisition or holding company cycle.

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Links:

Jay on LinkedIn

Jason on LinkedIn

Nashton Company

Compounding Labs

Stanford Search Fund Harvard Business Study 2022

Topics:

(3:17) - If you look at Vector as a play for acquisitions, how did it fit into your strategy?

(6:41) - What actions did you take to prepare yourself for rolling up other businesses and acquisitions?

(10:56) - What key roles need to be in tip-top shape before you begin acquisitions?

(14:39) - What were some best practices you developed over the process of 12 acquisitions?

(16:14) - How have your roles evolved over time?

(20:53) - Have you noticed folks things being easier for serial entrepreneurs if they have a partner?

(22:29) - What other types of investments have high returns in the early days outside of team-building?

(25:24) - Are there any misallocations of time entrepreneurs have in the early innings of a serial acquisition strategy?

(29:49) - Does the presence of Private Equity in a certain industry make it more attractive to you?

(33:10) - What are some factors you weigh when looking at industries to potentially invest in?

(35:27) - What characteristics do you look for in entrepreneurs?

(37:46) - How does pace increase factor into your path as the team grows?

(39:38) - How does the source of capital shift over time?

(42:38) - What are your thoughts on Long-term holding companies and their increased popularity?

(47:27) - How do you sus out whether an entrepreneur knows they’re in this for the long haul?

(50:51) - How do these long-term hold companies shift over time?

(54:02) - How do holding companies shift your role when investing compared to a traditional search fund?

(56:59) - What strongly held belief have you changed your mind on?

(58:43) - What’s the best business you’ve ever seen?