Disclaimer: Unless noted otherwise, views and analysis expressed here are the author's own and based on public sources. The article is intended for informational and entertainment purposes only. This is not financial advice. Please consult a professional for investment decisions.

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We've been running Serial Acquirer Summits for nearly 3 years now. During this time, we’ve witnessed attendance snowball as the European ETA community took off. To keep up, we've been constantly tweaking the format to deliver better content, higher impact networking - and above all, the nudge / inspiration to step out and do your thing. We've hosted an AI Rollup Summit. A UK-focused Summit. A (sold-out) DACH-focused Summit is around the corner. 

It was only a matter of time - and finding the right partner - before we added a US conference to the roster. That partner is Edwin Yun, the New York-based author of the Road To Carry newsletter.    

After months of planning, on 31 March, we hosted 160 current and prospective acquisition entrepreneurs and investors in Midtown Manhattan. Being sponsored by top investors like Reef Pass, Telos North, Pacenote and Broadtree is a huge vote of confidence in the community. 

But don't just take our word for it. 

Several multi-billion dollar LPs (Single Family Offices, endowments etc.) signalled to us their intentions to meaningfully increase allocation to this asset class. Because of that, we’re not building yet another Lower Mid Market conference. We’re building a community that spans the entire ETA spectrum. Everyone’s welcome: Search Funds, Independent Sponsors, HoldCos, Entrepreneur-in-Residence style incubators etc. 

Read on to discover what we discussed at the Conference:  

Before proceeding with the recap, a heartfelt thanks also to our vendor sponsors: Lockton (#1 independent insurance brokerage - the go-to guys for indemnity insurance!); Grata (the single source of truth for private market data); Michael Best (the law firm to help serial acquirers and growth-oriented platforms to execute and scale buy-and-build strategies) and, of course, TechCredit Partners (don't DIY debt - DM Linus!). 

The Conference’s opening act was Alex’s fireside chat with Bryan Rand. For those of you not familiar with Bryan, he’s the founder and CEO of Rand & Co Holdings - an Atlanta, Georgia, based HoldCo. 8 businesses with combined revenues of $400M. Sample investments: a commercial furniture distributor; a fuel distributor; and a Mexican restaurant chain in the Chicago metro area.    

The session’s title was “What It Really Takes to Build At Scale”. And in short… it takes a lot. Bryan did not mince his words. “Many of the folks coming out of Private Equity have never made a decision… They’ve made recommendations, without having to own the outcome”. Worse, PE-style “curated information” - high-quality QoE reports, management accounts etc. - often isn't available in Lower Mid Market transactions. Since everything looks easier in Excel than in real life, be humble and don't assume too many short-term wins. “When an SMB owner says they haven't invested in sales, there’s a reason for that. They’re not dumb, they’re generally not lazy.”

Next, we talked about shared services: a key value driver in PE-backed rollups, but challenging to deliver in a more makeshift setup. In Bryan’s experience, these services are a fairly minor part of the overall value creation. Therefore save your bullets: “[it is] not worth arguing with the PortCo CEO as to why the books didn't close… I can buy Accounting and IT Support much more cheaply than I can own them in-house”. Where Bryan has had traction, is on the Business Development front: “I have a bullpen of hungry folks who can make calls”. What else? Going to conferences. Updating the website. Setting up SEO.  

AI adoption is one of the few areas of Lower Mid Market where scale truly matters. Most smaller businesses, and their sponsors, are simply not resourced to “truly reward the iteration for the AI to really work”. Their AI efforts center on cost reduction and non-customer facing items (which don't necessarily moved the needle), as opposed to revenue generating initiatives (which do).    

We also discussed operator incentives. 

Bryan shared that: “Equity only really matters if it’s more than theoretical… Deleveraging is great but they don't take that currency at Kroger. You can't pay for your kids’ tuition with that”. Hence, offer the management a path to liquidity through dividends. It’s not as easy as it sounds. You’ll need a robust FP&A function to upstream cash in an expedient and tax-efficient manner. Also, lenders don't generally like dividends.  

Bryan has a penchant for hiring executives in their 40s and 50s with unambiguous track records to run his Portcos. He is less dogmatic when it comes to operator compensation. “You can see their comp and where they are in their life, and you can back into what a meaningful outcome will be for them”. He’s tried everything: salary only; cash bonuses; co-investment; and equity / MIP.          

Alex passed the baton to Edwin and Cameron Perkins, a Partner with Shore Search, a new-ish division of the celebrated Lower Mid Market Private Equity firm Shore Capital (top 1% returns across all PE with 6.6x average cash-on-cash returns). 

Cameron’s career began as an emergency medicine and critical care provider in North Carolina. He co-founded FastMed Urgent Care in 2001, which eventually grew into a leading national urgent care platform with several successful recapitalizations. 

Shore Search seeks to back acquisition entrepreneurs targeting $1-10M EBITDA businesses in industries with at least 500 targets. Their minimum check size is $5M, with a target equity commitment of $10-20M, including add-ons. A typical hold period is 5-8 years. 

Not going to lie: before the session, it was not immediately clear to us what a firm like Shore was looking to achieve in the cutthroat highly competitive Search Fund market. According to Cameron, Shore aims to “redefine excellence in Search”. Redefine how? By applying 3 pillars of excellence:  

One, Mastering the fundamentals. “Not making first-time mistakes over and over again accelerates results”. Searchers have access to the parent firm’s playbooks, scorecards, and 100-day plans.    

Two, Pattern recognition. Since inception, Shore Capital has founded 80+ platforms and made 1,300+ add-on acquisitions. That’s some serious institutional muscle memory 💪 

Three, Creating the compounding advantage through Board composition and network. As Cameron put it, “Federer had 5-7 people around him at all times, giving vantage points: hitting partners, physiotherapists, nutritionists, coaches”. Best Boards help CEOs become better at prioritisation and at decision making not by telling them what to do, but by continuously coaching them.  

As to the common pitfalls in Search, Cameron singled out post-merger integration. Two major failure points being: 1) financial processes built too slowly (Shore pushes to get visibility within the first 90 days to 6 months); and 2) overestimating management team bandwidth post-close. Solution? Hosting a “pre-close Board meeting”. 

Those of the Conference attendees that do want to go on for as long as possible, were rewarded with a presentation by Reef Pass Investors, an investment partnership that specializes in launching serial acquisition platforms - particularly of the Long-Term Hold variety.  

Robert Brown and Dan Millen from Reef Pass began their careers in public markets, investing through what they call a “long-term private equity approach”. Judging by the names they've picked and stuck with (Danaher, Constellation Software, TransDigm etc.), hell of a lucrative approach. 

Today, armed with a $125M fund, Robert, Dan & the team are busy hunting the next generation of 100-baggers, at seed-stage. Here some of their core principles for assessing new platforms: