8 acquisitions and $400M topline

Buyers and Builders,

What Serial Acquirers Know That Most Investors Don’t

I spent part of last week in New York at the Serial Acquirers Conference, and I left with the same feeling I get after the best conversations on the Buyers & Builders podcast: the most important ideas are usually simple, but they are only obvious after you’ve lived them.

Listening to four stories from the stage, I can say that serial acquisition is one of those fields that looks straightforward from a distance. Buy good businesses. Improve them. Use leverage carefully. Repeat…

But in person, seeing how people think about the deals, the fundraising, the execution (some being relaxed and pretty confident once they’ve sold the portfolio and generated many, many multiples of their invested capital)...

Again, in person, you can see the intensity of the people who’re doing it well.

It’s far from sitting in a nice office and is all about being an operator, recruiter, capital allocator, and strategic thinker…add being obsessive about the craft.

It’s the people who are willing to board a flight, sit with an owner in a bar to get the deal done, dig through references, role-play a founder conversation, or spend years paying down debt before the equity starts to matter.

The event had four panels, but today I will cover the lessons learned from Bryan Rand (to give you all the details, I will cover each panel discussion in separate newsletters).

Why listen to Bryan Rand?

A former partner at the lower middle market private equity firm Tritium Partners.

He founded and built the firm Rand & Co. Holdings, a HoldCo of 9 companies (legacy buyouts, each company having been around for at least 30 years, low-single-digit EBITDA), each with its own CEO, with the group doing $400 million in revenue.

Owning the outcome changes how you think.

As an owner-operator, when it’s your own capital at risk, the day-to-day and the analysis is different given the fact that you own the outcome and consequence of each decision. In many corners of finance, you can make a compelling case and set of assumptions. In ownership, you live with the outcome, whether the assumptions or rationale were right or not.

He wasn’t speaking like a portfolio manager. He was speaking as an owner… someone who owns the consequence.

- Underwriting people…only partnering with world-class individuals, “Guys who have done it before.” Have you displayed success in your prior roles?
- Debt and use of leverage…these are leveraged buyouts and post-close it usually takes 2-3 years to pay back debt.
- Holding periods when everyone talks about permanent holds? In Bryan’s case: “Give people a path to liquidity.” Sell if needed because there might be an even better home for the business.

Does he hold forever? “It’s all for sale. I’m a capitalist.” (This is where the whole audience started to laugh.) It’s on you to understand the capital markets environment you’re in.  

“I’ve also sold companies for a buck and chicken wings. Not all things have gone well.”

Bryan is extremely hands-on when it comes to portfolio companies and making decisions. He goes across the country if needed (as I said…willing to book a flight at a moment's notice; this was a common theme among all successful capital allocators on the stage - do the work!).

“Intense hands-on involvement with and together with our CEOs - pricing, GTM, machinery, everything.”

There are many great groups that you could sell your life's work to. Bryan / Rand & Co is one of those such groups. Bryan has the qualities we all desire in a partner: competitive, intense, hardworking, but also humble - he doesn't take himself too seriously. He's a true pro. Bryan and Rand & Co are worth keeping an eye on.

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Bet on your strengths.

Which takes me to the point of what Michel Del Buono, CIO of Andreessen Horowitz’s multi-family office Perennial, has learned most from its founders, Ben and Marc:

“The biggest lesson I’ve learned from Marc Andreessen and Ben Horowitz is about how to build a team and how to work with people.

When I first got here, they said something that really stood out to me: they don’t hire people because they have no flaws. They hire people for their skills. At first, I didn’t quite know what to make of that. For a long time, I worked at a large management consulting company, where reviews were all about fixing your flaws.

The things you did well were barely mentioned, if at all, and instead you’d get a long list of things you needed to improve. It was incredibly demoralizing, because the strengths you brought to the table didn’t seem to matter, and year after year you were told about all the things you had to fix to get to the next level.

Here, it’s the complete opposite. If you’re great at something, that gets recognized and celebrated. Of course, everyone has traits or habits that others might not love, but that’s part of being human.

The idea is that you learn to live with that, as long as the overall balance is strong. There’s a real appreciation here for the talents people have. And as a result, what has stunned me is that across every function in the firm, people are truly exceptional at what they do.

The level of talent in this firm is mind-blowing.”

When it comes to work and business, which are not hobbies, a game of tennis, or a side hustle, your family relies on you.

More people should rely on their strengths, or, to put it more directly, go all in on them and worry less about their flaws.

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Relying on your strengths brings me to this week’s podcast episode with Ram.

Ram’s strength has always been his ability to understand every detail of the cathodic protection business. He started as an employee and later became an owner-operator through a successful management buyout.

Himself local to Dubai, Ram's company, CTS, includes 10 companies operating across 8 countries and 3 regions.

Acquiring the company in 2003…who would have thought that paying down debt in three short years could lead to such stable, consistent, and meaningful annual dividends?

So strong and consistent that Ram was able to launch a fund of funds (Neeti Fund) backing exceptional public market investors.

Despite his success across both private and public markets, Ram remains remarkably humble. I hope you enjoy listening to our conversation as much as we enjoyed recording it: Apple podcasts, Spotify or YouTube.

That’s all for today.

Best,
Mike Markus / PrivateEquityGuy