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Unknown
You.

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Unknown
Welcome back to the magazine. I'm Gareth Watkins, CEO of Page Crunch. And today I'm thrilled to be joined by Luke Grubb and Tom fry, the co-founders of ELT Heritage Partners. They're a UK based traditional search fund focusing on acquiring and growing exceptional British businesses. Multiple one to start. Okay, I like to eat the elephant. Yeah. Luke brings an impressive operational pedigree to the table, having been a founding member and former VP of operations at HelloFresh.

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Unknown
Tom complements this with his own entrepreneurial and financial expertise. Together, they partner to build ELT Heritage Partners with a distinctive philosophy investing in UK SMEs with what they call care, integrity and ambition. What makes their approach particularly interesting is that their commitment is to being long term partners rather than financial engineers. They're not flipping businesses for quick returns.

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Unknown
They're looking to build lasting value in companies that deserve thoughtful stewardship and strategic growth. And in today's conversation, we're going to dive into their journey from successful careers to launching their own search acquisition vehicle and what they're looking for in their target businesses, how they're sourcing them, how they're positioning themselves differently to the crowded UK SMB acquisition market.

00:01:24:32 - 00:01:41:37
Unknown
And more insights from their careers and their journey so far. So, Luke. Tom, welcome to the meeting. Thanks for having us. Yeah, glad to be here. It's been a long time coming, gentlemen. It has. I think we first connected about a year ago when we were starting to plan our search. And obviously business crunch came top of the list.

00:01:41:42 - 00:01:59:00
Unknown
And you gave us lots of valuable tidbits with our fundraising journey through summer and end of last year. So it's. Yeah, it's well overdue. Yes. I mean, arguably we'll get to your fundraise, but, I watched with interest as you impressively ticked off all of the big names in the capital raising in the in the search space. So we'll get to that.

00:01:59:00 - 00:02:21:52
Unknown
But yes, you guys have been rather busy this last nine months. Getting this far. So, look, your background, as I mentioned, spans, finance, start ups, operations, and scaling fast growth businesses where you built two very successful businesses in your own right. Can you walk us through that journey and, and what those experiences taught you about running businesses under pressure?

00:02:21:57 - 00:02:45:28
Unknown
So I think, I, I cut my teeth in finance, spent gosh, a probably a good 6 or 7 years studying investment management, doing on my CFA so very much with, a good understanding of businesses from the numbers side and looking at spreadsheets that had little operations. And I think about, gosh, it was for me, six months into my investment banking career, I decided that my banking career was going to end.

00:02:45:28 - 00:03:23:18
Unknown
So 12 months after it started, it very quickly ended. And, I think I've always been quite entrepreneurial and I wanted to see tangible changes and movements. I think what really frustrated me in the financials was, you know, you can build pretty spreadsheets and make assumptions and the way you think a business is going. But unless the reality, you know, the realities on the ground where the hands are and I think, those ten years of scaling was where you really realize you're always kind of running the numbers next to the hands, but really understand the reality in the frontline of what's happening in the business enables you to plan that growth and the numbers

00:03:23:18 - 00:03:44:12
Unknown
better. So I think it came into it. Now we're in position to have a really great view of the analytical side. But also, you know, when customers are waiting, systems are breaking, teams are fatigued. You know, all of a sudden those spreadsheets go out the way and you've got to work out, how do we get these problems solved to achieve the kind of left hand side and, tactical device?

00:03:44:16 - 00:04:06:04
Unknown
Exactly. I think and I think often that's that's the big piece, right. We can look at a spreadsheet from Miles away, but you really need to be on the front line. And as closest proximity to reality, I think is, is what I would call it to know that, hey, if we think about a warehouse line, if you said, you know, some of our stages, we were growing two, 300%, you know, week on week.

00:04:06:09 - 00:04:26:02
Unknown
You know, I've already quite a big basement where 2 or 3 years in and and unless, you know, how many hands it takes about certain things and boxes and how many deliveries, we can see you on the ground, you actually can't necessarily achieve what's in the numbers on the spreadsheet. So I think that's where, the blend of bringing those together is really, you know, honed my skills, if that makes sense.

00:04:26:02 - 00:04:45:05
Unknown
And I think that's where we've got to a good point where we need to find that balance. So understanding the the minutia that the finite details, the things that make, difference between success and failure, but also being willing to kind of abandon, the kind of metrics for a moment and just get into solving the problems and, and, you know, dealing with the issues as they occur.

00:04:45:10 - 00:05:02:45
Unknown
Hey. Exactly, exactly. And I think one thing it's come to, we are well, for him, I am is it's still very much a data nerd and I love to we still measure every operation weekly. You know, we kind of know what our monthly target is. But I need to know where are we at week 2 or 3 into the month, so we know whether we're going to dial things up.

00:05:02:45 - 00:05:21:34
Unknown
We'll delay things down. We don't necessarily stress over the month to month results, because ultimately we need to be measuring quarters and yearly of that time. But at least for me, it's around trajectory. You know, if we if we've got things pointing in the right direction, great. They will go up and to the right of suddenly something or, you know, there's parts of businesses out to turn around.

00:05:21:45 - 00:05:37:30
Unknown
We need to apply our focus to get them going in the right direction. I think that's always been the piece. It's kind of it's the way we talk about stewardship a lot. It's about being kind of calm under that pressure and not panicking when 2 or 3 numbers aren't in the right direction. I think that's kind of been a big piece.

00:05:37:35 - 00:06:12:45
Unknown
Nice like that. Some really great universal truths there. I think. Tom, just as you're about to take a swig of water, I'm going to throw that one to you because you've had, a different path, but equally hands on. I think it's fair to say, with your consulting career, engineering operations, strategy, consulting, multiple geographies served. How did those experiences, particularly those where you've been out on factory floors and construction sites and, you know, helping customers at the coalface, by literally or figuratively, how they shaped your thinking about ownership and, stewardship of businesses today.

00:06:12:50 - 00:06:32:58
Unknown
Yeah, sure. So, maybe what I'll do is just give you a quick overview of my, my path to date, and, I'll try and pull out a couple of hopefully interesting learnings for, for yourself and some of our viewers. So, look, I started my career actually as mechanical engineer, so I spent seven years, doing engineering work and then moved into strategic consulting.

00:06:33:10 - 00:07:02:56
Unknown
I'll come back to that later. On the engineering side of things, I, as a maybe first story to my introduction to work and, engineering, I finished my undergrad in Cape Town and basically first job, in the Middle East, in Saudi Arabia, in the middle of the desert. So I, I land on a plane, I find myself in the airport there and pick up a car and start literally driving off in the desert.

00:07:02:56 - 00:07:22:43
Unknown
Really? No. Life was actually raining on that day. So it wasn't until it wasn't your typical decisions. Yeah. You brought the climate with you, you know? But, basically about two, three hours into the desert, we, I pulled into this basic construction site and there's a few shipping containers, accommodation with the shipping container offices were shipping container.

00:07:22:43 - 00:07:45:57
Unknown
I'm about a couple of hundred people inside at that point. And, you know, by the time I left that, job, we'd spent four years building a construction site, an aluminum smelter, a big port, a bunch of other facilities. There's a whole city. There exists, etc.. You build a city, built a city in the desert, and by the time you lived, about 10,000 people living there.

00:07:45:57 - 00:08:03:31
Unknown
I can't remember exact numbers. But, you know, there's a couple of things I learned from that. So one was, I think, just a lot of resilience, like working in those situations and conditions can be quite challenging. Like you're far from far from home for some families working with lots of people in very stressful situations in their lives as well.

00:08:03:36 - 00:08:30:25
Unknown
So, you know, already working out how to work best with everyone on site in those kind of situations. The second thing was we, you know, we obviously did a lot of very technical engineering work. So you're doing concrete floors at 3 a.m. all the way through to lifting 70 ton pieces of equipment into the air, and it was all the way from, you know, design, planning, supply chain construction, installations, testing, commissioning operations, etc., etc..

00:08:30:25 - 00:08:59:43
Unknown
Wow, what is so great? Multifaceted experience. Exactly. So we'll get into it a bit later. But that's, that's really, I think shaped and formed some of our theses on, on the search front, where I think all of those types of skill sets are very relevant in a lot of the UK companies still today, and we focus on some of those, but overall, I think was a great start to my journey and then spent a couple of years in, in the UK and Cambridge moved over here after that work for a fantastic engineering firm in, in Cambridge.

00:08:59:43 - 00:09:20:40
Unknown
And actually spent a lot of time designing hardware products, everything from sort of warehouse automation to industrial sensors to electric toothbrushes, you name it. It was a hell of a ride, very exciting. And we're just an incredible team. There's like lots of engineers, sort of engineering teams, sort of 5 to 10 people, etc.. I think a lot of learnings there as well.

00:09:20:40 - 00:09:39:54
Unknown
We can maybe come back to that. Yeah. The agility of a small team and, you know, how you divide the duties and bounce off each other and that kind of stuff? Yeah. I'll be interested to get into that if we have time. Yeah, definitely. And then. Yeah, finally last 6 or 7 years been at, working really strategy in business consulting.

00:09:39:59 - 00:10:03:40
Unknown
So very different from sort of hands on tactical engineering. But much more, focused on how do you actually work with large organizations, large teams, to really work out what strategically best for the company in the long run. How do you improve operations in the short term and in the long term, etc.? And yeah, so we've had some amazing times working with some good old people.

00:10:03:42 - 00:10:20:34
Unknown
So I'm clearly seen quite, quite a contrast or quite a sort of plethora of different sizes and scales and types and sectors of businesses on that, along that 20 years, maybe you look quite 20 years. I'm getting a bit gray in the, in the here. How long are we talking from start to finish here like around 15 years.

00:10:20:36 - 00:10:51:41
Unknown
15 years? Yeah. I think I always joke as well. I've got quite a few consultant friends, but Tom's always been one of my better consulting friends because he's, he's always worked on kind of 8 to 15 months kind of projects or actually they've had to do value creation through actually implementing and be on ground rather than just coming in and showing sexy dick and off after you go and hope they implemented, which I think again comes into where, you know, for us, when we think about that transition period is, you know, it's going to be I think it always is overlooked.

00:10:51:41 - 00:11:08:13
Unknown
It's one of the most critical areas when it comes to this kind of piece. And I think, again, for the last eight years, he's had to come into businesses and, the on the ground. Right. Exactly. Roll up sleeves, build trust and then actually work through implementing when often you're seen as the bad guy when you come into the office.

00:11:08:13 - 00:11:28:28
Unknown
Right. I think that's the sometimes. Yeah, exactly. So I think it again, it's amazing when we, I think when we first, started discussing this journey together, gosh, 18 months ago, we very quickly realized how different our paths had been, but how similar they had been in terms of preparing us to to move into a. Yeah. And you need the young and the young and you sort of, you know, relationships.

00:11:28:28 - 00:11:57:45
Unknown
Right? I mean, the, the search fund should have multiple operators. It should have people whose skills complement each other. So, yeah, I'm sure already, you know, finding the benefits of those, relevant experiences and how they interact and overlap. Great. Well, so I think it's fair to describe you both as operator investors rather than just regular financial investment buyers, which, I mean, I'm interested in what that will mean when you get your business over the line and, and how that will flesh out day to day.

00:11:57:50 - 00:12:11:13
Unknown
I assume, given the traditional search funds that you've chosen to go with, you guys are going to be in their day to day running the show. How are you going to split up the, the activities and the duties? Have you got a particular focus areas that you've already talked about, or is it going to adapt to the needs of the business?

00:12:11:18 - 00:12:25:08
Unknown
So I think it will adapt to the needs of the business. What we have been doing when we were first kind of fundraising, because we were getting these questions, we were starting to do kind of writing down ten things we both like doing and business, ten things we hated doing in business, matching up and being like, okay, here's some gaps.

00:12:25:08 - 00:12:46:53
Unknown
We know, what we like and dislike. And I think obviously we've got a good differentiation so far. I think we know where we're going to be working. But at the same time is every different is going to be business like every business is going to be different. And I think one thing we've even realized is, you know, if there's a single business owner, he might like me or Tom more or less.

00:12:46:53 - 00:13:09:12
Unknown
Right. And if all of a sudden we are going into an engineering kind of firm, the likelihood is Tom is going to be the son that he or she has never had versus me. So I think we're ready to kind of be quite adaptable in the roles we need to play. And I think when at least from both, of uses any management team, although we have CFOs and CEOs and things like that, I think we very much believe in quite a single unit.

00:13:09:12 - 00:13:31:26
Unknown
As a management team. We want to have visibility across the business rather than being siloed. And again, that's us to kind of build over time. Yeah, yeah, I know I think integrated SLT. Yeah exactly. Yeah I think that's great for transparency. And and if you were to implement something like, you know, the EOS system, you know, that accountability, that transparency, sharing each other's goals.

00:13:31:40 - 00:13:58:19
Unknown
Yeah, I'm very sure I do think we've been I think quite fortunate with trying with matching up our complementary skill sets, because when I look at it, Luke has a great background in really scaling and growing companies growing sales revenue, looking after finances, growing teams, HR and all those type of things. My side, I've obviously done a lot more, more technical and more strategic work as well.

00:13:58:24 - 00:14:19:31
Unknown
And a lot of sort of continuous operations improvement. So I do think we'll find a balance. But I think luckily we can both bring slightly different skill sets to the table. I think if we're looking at learnings for other people considering this journey, I would recommend that the right approach is, to have two people with the same exact skill sets.

00:14:19:31 - 00:14:43:58
Unknown
And in fact, we've heard some not great stories about that. So luckily we have very different solutions, which works well. It's also, we know from my time in kind of venture and most like, you know, one of the highest reasons of failure among startups, often founding partners or founders falling out, you know, 2 to 10 years in. And so one thing we have also, I think we're really quite conscious of is this is a relationship.

00:14:43:58 - 00:15:07:57
Unknown
We yeah, we doing retros twice a month, you know, we we want to build a really we need to be able to trust each other impeccably. And I think, you know, we have to we're realizing now we invest in wife and wife two basically because I think, you know, if, if, if, if Tom and I can get to an area where we are, you know, an ultimate operating duo, you know, I think we were able to tackle pretty much any business that we turn our kind of hands to.

00:15:07:58 - 00:15:25:33
Unknown
It's a great analogy, actually. The wife piece, the, the marriage, because this probably has greater financial penalty in you than the average marriage. Yeah, yeah. Good thing you were trying to get that with longer term endurance, I think. Yeah. And Luke, you're also active in some hospitality spaces, right. Since your exit you got a bit of a portfolio there.

00:15:25:33 - 00:15:42:09
Unknown
We've, we've done I guess coming from food. It was I've also I mean I've always loved food and wines and stuff, but we a couple of friends and I, refurbished an old pub in Dalston about 4 or 5 years ago, about a year before Covid. So timing, good timing. But again, what was one of those things?

00:15:42:09 - 00:16:05:00
Unknown
We set it up. And you were never really ever going to take money out of pubs. It was about kind of renovation. The nice thing is, we managed to work our way through Covid without having to fall over. And then we have a couple of restaurants here and there across London. I think hospitality is, at least in London, severely difficult because of rising business rates and cost of employees.

00:16:05:13 - 00:16:23:42
Unknown
It's wafer thin margins. So you've kind of, what I do like about it is you've really got to be quite you've got to mind your P's and q's. You can't just hope that it all works. Like I think some restaurant do. So I think it keeps you, it keeps me quite grounded, if that's probably a good way to describe it, that we need to know what's going on.

00:16:23:42 - 00:16:40:04
Unknown
We have to manage cash flow very carefully. At the same time, it can't eat up all of our time because it's not exactly a profit driver for life. And so they subsist. They need independent, outfits, but they do it more for the community impact. They sort the love of it, the the mission. And I think that that's it.

00:16:40:04 - 00:16:55:08
Unknown
So what we've seen in our and also, you know, this this was a abuse that's been there for over 100 years. It was quite derelict when we took it over, you know. Now it's you know, I think when we took it over it was doing about two and a half grand a week in revenue. We're up to about 15 or 20.

00:16:55:08 - 00:17:26:22
Unknown
So just shows how it I wish we own the freehold. We have about 16 years left on the lease, unfortunately. The price of the building, I think when the owner bought it was about 35,000 pounds. And now you can add quite a few zero still that cost. But I also think, again, what I love about prosperity is, is you've got a lot of useful if you think probably, you know, the average age of our team is, you know, probably 22, funnily enough, 80% of them, except for one all have, you know, university degrees.

00:17:26:27 - 00:17:42:20
Unknown
And I think what's really nice is we've it also helps us put time back into them of what they're doing next year. We've actually lost two staff recently because we, they've gone into actual formal roles where my, you know, I spend a lot of time helping them on interviews and how to get through them. So I think this it's also just keeping us on the ground.

00:17:42:21 - 00:17:55:30
Unknown
Right? I think that's you want to stay connected says a lot about your approach as an employer as well, that empowerment that let me let me help you be the best version of yourself. I know that in doing so, you're going to go off and, you know, spread your wings. But that's my mission. That's my role in your life.

00:17:55:35 - 00:18:11:10
Unknown
And in return, I ask for you to just, you know, do a good shift and, you know, contribute to the mission here. I love that is how you've entered this situation, because I've speak to so many business owners who lament, oh, I spent all this money training this person, and then they're off. Yes, but isn't that the point at what I mean?

00:18:11:10 - 00:18:36:39
Unknown
That's exactly the point. I think this is where we got it during. Was the fundraise right? I think both Tom and I come from these backgrounds where everyone thinks we work with these hugely intelligent people. The best of the best. But, you know, I can guarantee you, in every startup I've had the first two years, we're not able to afford the best of the best we can afford normally very kind of cheap young graduates who are smart, young, hungry and you have to develop them.

00:18:36:39 - 00:18:53:40
Unknown
You work a little bit harder to get them up, but what's really great is by the end of a 2 or 3 year period, the bad habits are kind of the bad habits you've given them so easy it's a matter of get yourself to blame. Yeah, but I but I do think it kind of feeds into this area, especially as we've come into the we're moving into kind of SMEs.

00:18:53:45 - 00:19:14:29
Unknown
I definitely, you know, Tom and I spend a lot of time thinking about recruitment. Right. It's not we're not going to be recruiting for BCG or hello fresh in freshener. We it could be you know a fire safety business in Lancashire. And I think what we're you know we know people are key to everything. And I think it's we spent time having to kind of, you know, nurture and I what I really am quite excited about.

00:19:14:29 - 00:19:34:19
Unknown
If we look at even now hiring interns, we had to switch off our or, LinkedIn post because I think within about an hour we had about 300 and, and we've, you know, I've had about 40 interviews, half an hour slots over the last kind of two weeks. And it's amazing how and I thought it was hard getting a job in 2008.

00:19:34:24 - 00:19:51:39
Unknown
I think it's even more difficult. So we one thing we are really good as we are is rendered a lot of people. Exactly. And so it made it more difficult for them to access these initial roles in these kind of exact opportunities. So for you to have already experienced, like just the wealth of talent that's out there, latent talent is quite profound.

00:19:51:41 - 00:20:09:36
Unknown
Exactly. And I think that's where with two of us, I think we know air and talent is going to be a core. I mean, I it's one thing I learned very quickly. My, my first hire is normally a VP of X or a VP of talent. Because again, if we can't get if we can get that right in and out of the business, I think it'll help in that long term success.

00:20:09:36 - 00:20:27:03
Unknown
Right. We always the values created in the messy middle. And that's, you know, it's going to be driven by the people that we can bring in. Yeah. 100%. Yeah. And for all that you may want to do with, automation and, you know, digital transformation of lack of stuff, it's all comes down to execution and having the right people in the right seats to, to do that.

00:20:27:03 - 00:20:49:59
Unknown
So I was going to build on that just quickly. So I think obviously hugely important to be able to recruit and build new talent. But I think one of the things we've also seen with a lot of the companies we've already been investigating is, actually a lot of these companies are quite specialist in their niches, whether you're doing services or maintenance or manufacturing or whatever it is.

00:20:50:04 - 00:21:17:36
Unknown
And there's a lot of very key people in these roles that we know there's a bit of a skill shortage in some of these roles and in the UK and particularly in the UK. But, I think a lot of these types of, you know, highly technical, highly skilled, people as well really got to double down on making sure we can build an environment and team and, and really shared objectives, etc. to make sure we can retain those people.

00:21:17:40 - 00:21:49:09
Unknown
Otherwise, I think you find yourself in huge trouble. Oh, hugely. Because you instantly attrition the the value in the operational feasibility of the business. Right. So you must retain that artisanal skill if you're going into a business that has that inside it. But also the create the journeyman apprentice kind of, opportunity wherein you've created a culture from just do your job to now share how you do your job and like, you know, reach down and bring the next person up behind you and understanding of that succession planning obligation that they have in that role.

00:21:49:13 - 00:22:10:19
Unknown
That's hard to curate and cultivate, frankly. Good. So you obviously we're having, you know, here you are, mid to late 30s. You don't mind me aging you like 30, 39. Okay. A wealth of a career already behind you. Some successful exits and some fantastic projects. And, you know, really, you guys are armed with the super toolkit to go out and really smash this?

00:22:10:21 - 00:22:30:34
Unknown
Yeah. As has probably been evident by, you know, how much you raised in your search phase and who you've got on your cap table, which will come to you in a minute. What drew you specifically to, acquisition entrepreneurship? But also the traditional search model within that, given your experience? I mean, some might look at you and I'm sure you've been asked this and you fundraise and say you don't need us.

00:22:30:34 - 00:22:47:56
Unknown
You don't you don't need the, you know, the equity get well, you don't need the investors. You can go out and do this by other means. So why what what what drew you to this space? The standard model. You start the why? I'm so why why don't you start with why easier? Because you've got a good, the linking through.

00:22:48:01 - 00:23:14:31
Unknown
I can do the traditional. Yeah. So. Well, I think a couple of things I am. Oh, a couple of things sort of lined up personally in my life. But at a time when, when we started looking at this and I actually knew a few people who had recently been down this approach, and they, you know, young, ambitious guys who were very keen to actually acquire a company and operate it and, and typically actually just move out of a very typical corporate career type job and did that.

00:23:14:36 - 00:23:36:12
Unknown
Yep. They did a great job. And then the the second thing was actually also new just through, through family that there's a lot of, I'd say people who are, you know, getting on in their, their careers now with it actually rather, rather retire or rather step back a bit, maybe spend a bit more time with family or a bit more time on holidays or whatever.

00:23:36:14 - 00:23:56:42
Unknown
So you became very aware of the service, you know, mix all the two scenarios sort of very clearly, and it sort of just became an obvious one. How do you how do you actually bridge that? Well, how do you make it work? And, those really are introduction to it to start with. And then fortunately, I started talking to Luc same time about your, your mind going there all the time afters, which you want to know is where we caught up.

00:23:56:43 - 00:24:15:25
Unknown
2024, October. November. Oh, yeah. Catching up over a beer as we do. And, Tom started talking about this and funnily enough, I'd been pulling this straight as well for about six months. And I think the main reason I've been putting it out, obviously, I'm a technologist and kind of start up my trade over the last kind of 15, 20 years.

00:24:15:25 - 00:24:34:53
Unknown
But for me, when I looked, I like to kind of build hypotheses of where do I believe industries are going over ten, 15 years and we kind of build into them. And I think what became two things came out one. One was, you know, who knows where technology will be next year, let alone in ten years time. So I think the the kind of startup piece was just it added too much opaqueness for me.

00:24:34:53 - 00:24:51:49
Unknown
And I think the then the second piece was the silver tsunami coming. You know, I think actually listening to one of etwas podcast modules where it was, you know, the GDP exposure over the next 20 years for, you know, businesses that need succession was something like 20 or 30% of GDP, which is just shows the size of the problem.

00:24:51:54 - 00:25:19:24
Unknown
And then the macro one, I think, you know, I knew I've led businesses. It's really fucking lonely and difficult. And I said, you know, it was really serendipitous that, normally, you know, people are deep in their careers or, you know, kids and marriages. But Tom was at that point where he was thinking about this. I was and I think, you know, that really kicked me off the edge being like, wow, being able to potentially work with a really close friend for the next 20 years and be wife two, what a dream.

00:25:19:33 - 00:25:32:25
Unknown
I think. I think that was that really, you know, because I think, this is not going to be easy. I think this search, you know, we've going through all the stages, but once you're in the business, that's going to be really difficult. I think having, you know, two heads is going to be far better than one.

00:25:32:25 - 00:25:52:12
Unknown
So being able to share a mission with key drivers. Yeah. And I know already. Right. I think we've started dovetailing well off each other. We've got different perspectives. And it's I think well we haven't had to you know, we're starting to build our own decision making kind of matrix together. We've only had a couple of, like arguments of a decision, but it's nice the more we argue it, as soon as the more we learn for the tougher decisions ahead.

00:25:52:12 - 00:26:16:31
Unknown
Just. I think that's for sure. What doesn't exactly. And then traditional, you know, we when we first decided to do this, the first thing we kind of kicked off was like, let's speak to as many searchers as possible. And I think we spoke to probably about 30 odd searchers across Europe, UK, US, failed, successful at different points. And I tend I mean, we say within within the first five calls we very quickly realize that's it.

00:26:16:33 - 00:26:42:31
Unknown
Tom and I, you know, we don't have traditional low mid-market private equity experience. And it became very abundantly clear that in this kind of level, there's huge information gaps and lots of fragments. There is so much pattern recognition that we said, you know, for us, for this first one, we need, we love we're curious learners anyway, but we need to give ourselves the best possible chance to make this first one to success.

00:26:42:36 - 00:26:57:23
Unknown
And we thought by having a really strong cap table of, you know, you've got I would I quite love about the search community. You've got the old guard. You've kind of had it for the last 25 years. You've got a really great cohort of New Guard coming through, and then you've obviously got the family offices and private operators.

00:26:57:23 - 00:27:22:39
Unknown
And I think we from what we've built, I'm, I'm quite excited. But we've already learned more in the last six months. And I think we've learned just reading all of the Stanford and you know. Oh yeah docs. Yeah. You got to apply it. Exactly. So then you can see all of the kind of nuances, play out and yeah, the that the Stanford Handbook, if you will, the primer is great, but it's going to get you so far is actually you've got to you know, you've got to get it amongst it.

00:27:22:44 - 00:27:54:54
Unknown
So just this, we just drill down on something that I observed that you've just highlighted there. About your cap table. You have got representatives for all those three different kind of categories, if you will, the the great and the good, the the guys that have been there since day dot, you know, you've got, Von Zio, you've got spectra, Ithaca, moon base, more recently, then you've got some of the real newly minted funds, like you've got, Josh at second X, you've got, Victoria Murphy, one of the legacy legacy, lineage as well.

00:27:54:59 - 00:28:13:57
Unknown
Yeah. So you've got, you've got a, you know, a real, showcase of and of course, you res was quite significant, right? Over half a million. Over half a million. Yes. Okay. So I mean, that must have been no mean feat to assemble all of those I think. Yeah, it was I mean, we have to be honest, the search community.

00:28:13:57 - 00:28:33:12
Unknown
One thing I was really blown away around is how connected it is. Yes. There is no collaborative collaborated. And there's no, you know, the amounts of investors we don't have at our cap table. Who introduced us to other investors happily. And, you know, I think that was really quite, it was really quite, quite nice. And to be honest, it was really, it was it's quite strange to see.

00:28:33:16 - 00:28:48:28
Unknown
Yeah. And that was just because you were asking for it, you know, I mean, for you. But could you give me some. I mean, of course we all have. But I think one thing, Tom wouldn't have saved. Like, if you don't ask, you don't get. So we've, I've got in trouble a few times for asking things that are not meant to have been asking, but I think we've kind of got two things.

00:28:48:37 - 00:29:05:09
Unknown
We need to kind of break some eggs and push the boundaries a little bit to get to where we want to, to get to, and also to get some, you know, ultimately we're here with our cap table. Obviously, we are there to get the deal across and help us get the best possible deal, but for Tom and I is to learn and upskill ourselves.

00:29:05:09 - 00:29:24:01
Unknown
Can we become experts in the search space in the next 12 to 18 months? So, you know, once we have our first business under the belts and we decide while we finally have maybe enough time or capital, you know, we know we can get better at, when we hopefully look for number two and three. Yeah, learning as quickly as possible.

00:29:24:01 - 00:29:42:59
Unknown
I think the other thing to add on the traditional search approach is, you know, I think we do have an amazing pool of investors so that we've been very fortunate in that sense. 100%. We have knowledge gaps that we think they can help us with. Is that a big driver? Yeah, very, very much so. So how do you structure the right deal?

00:29:42:59 - 00:30:01:54
Unknown
How do you make sure you don't make any mistakes. Because this will be your first acquisition. Did you acquire anything? Nothing. Nothing, nothing. Nothing of the sort we involved in any acquisitions in your BCG? In consulting? I mean, and project based, which not post post acquisition integration time, but also a much, much larger company. Okay.

00:30:01:58 - 00:30:21:27
Unknown
Yeah. So so navigating your first deal. Yeah. That that so so so never have too many, supporters. Yeah, exactly. Well, so certainly navigating the first deal. But I think the other thing that I've noticed at least the last couple of months is there's a huge amount of competition out there, like, let's not kid ourselves, you know, there's lots and lots of people trying to acquire these companies.

00:30:21:32 - 00:30:39:24
Unknown
And if it's a good company, the competition is going to be really heated. If it's a maybe less, there's more average company on the side and and maybe less competitive. But the thing I've noticed is to even be exposed to these good deals. You know, you have to have the right to play and actually have capital in place.

00:30:39:28 - 00:30:59:58
Unknown
And, you know, we also do searches or self-funded searches. So we I mean, I can't speak for them, but I imagine it is hugely, hugely tricky trying to even find the right deals. If you aren't able to show that you have good capital and funding in place. And I think that will help us get, closer to, to the right opportunities.

00:30:59:58 - 00:31:16:35
Unknown
But I think it already has rights and our broker relationships. It's given us more credibility. I think, you know, we hopefully our backgrounds in this credibility. But I certainly think having the likes of an orca on it's definitely given it's opened up more doors for these discussions because they're. Yeah we're right. It's it's apparent to some brokers. So yeah.

00:31:16:35 - 00:31:38:42
Unknown
So you land cliffs and people like that that understand the search space and realize, you know what a good investor in behind you. What difference I can make and what one looks like versus, you know, an anonymous one over here. So I would imagine, though, that a lot of the mainstream brokers, blissfully unaware of, you know, the differentiators between the earphones out on the one hand and the family office on the other.

00:31:38:42 - 00:31:56:20
Unknown
You've had some good like it's only a few brokers. You've actually you kind of ask about this because I think what we when we, we kicked off the broker kind of our outbound of, of connecting with brokers, we were kind of concerned that search had a bit of a bad name. And I think it's, it gets, it gets tarnished with, you know, other, other areas.

00:31:56:33 - 00:32:14:06
Unknown
Exactly. And I think you've had a few with this, the think recent you said they were like, well, you know, we've had 1 or 2 deals go through and we're starting to understand the differentiation of traditional versus. But that's when you go very much, I think, reason I mean, it was recently the a lot of the people we've spoken to is something much more familiar with the model.

00:32:14:06 - 00:32:34:04
Unknown
Yeah. So being able to explain, you know, exactly what we're doing and what our cap table is, etc., gives, gives. I think, brokers and intermediaries, corporate finance teams, etc. but also, the vendors ultimately a lot more confidence in, you know, us, we're very serious about this and, and making it happen to make it work.

00:32:34:13 - 00:32:51:56
Unknown
And so it isn't an edge case anymore. It's not it's not something esoteric that, you know, people are, you know, not coming up against frequently. I would argue that, you know, most brokers have had a searcher in their little black book join their mailing list in the last sort of, you know, 12, 18 months because it's become it's come of age has no really it's good validation in that sense.

00:32:52:01 - 00:33:10:46
Unknown
Great. You have said, you know, pretty kind of conversations that succession and continuity matter more than growth at all costs. Unpack that for me, because when I originally kind of heard that from you, I must admit, I had to take a sharp intake of breath because surely it's all about the growth. But but tell me about the continuities.

00:33:10:50 - 00:33:30:30
Unknown
Is, is this is this something that you say specifically for the sellers? Is it is that the story that you want them to hear or not? I think it's also for the team. I think for for growth, for me as being I have to be on it. For me, growth. And what I've seen for teams growth is heron for for kind of teams.

00:33:30:30 - 00:33:47:38
Unknown
If that makes sense. Right. If, if you're doing your day to day and as you say, every month or every year, we just suddenly everything's going up and to the right. It makes it a lot easier to manage teams and psychology. And I get I've had to go through some really big turnarounds, and half of it is actually just the psychology of the team to come and go.

00:33:47:38 - 00:34:05:40
Unknown
So or the common enemy or whatever it is that we've all got to pull together in the same direction when they get a feel for it. And they start to see the rewards of it. The most certainly it is, addictive and self-reinforcing. Assuming you were talking about heroin as a good thing. Yeah. Yeah. Sorry. Yeah, yeah.

00:34:05:45 - 00:34:20:47
Unknown
But I think, when I, when I separate the two of growth, I think when we first come in, I. And I think it's going to be overlooked. I feel like it's overlooked a lot is, you know, you need to search. And they, we say, you know, it's the first six months is transition, which I, you know, for me I think is is bullshit.

00:34:20:47 - 00:34:37:53
Unknown
I think it's 2 to 3 years is transition to really you know when it comes to culture. Culture is similar to trust. You know, it takes years to build, seconds to lose. And for us, you know, it's big. One is, you know, we don't want to. The aim is to kind of embed ourselves in the culture, not change it.

00:34:37:53 - 00:34:55:27
Unknown
We're there to evolve it over time. And I think focusing on, ensuring that the team, whatever team we inherit and hopefully we have the seller with us for a year or two as well, I think that's quite important. But the for us, we, we, you know, how do we ensure, you know, to me I don't think teams need new vision.

00:34:55:31 - 00:35:14:43
Unknown
You know ultimately they're they're not that bothered about that. They need to just sit and see. I think that's the big thing is like, do I still have my job? Where are we going? How do we reduce the uncertainty of an acquisition for a business? Right. For as much as possible, the team, and therefore that focus on, you know, ultimately the business we acquire should be a good business, right?

00:35:14:43 - 00:35:49:10
Unknown
We shouldn't have to change anything. It should be doing what? We should be evolving it over time. And that's where I think where it comes. It's when we come in, it's about transition, understanding stability. Not coming in, being like growth, growth, growth, growth. Because I think that then puts pressure onto the team. So I think for us it's about or for me at least is very much around the being patient with how we psychologically integrate with the teams, no matter the size, and start to begin to overlay the growth story over time rather than in the first 100 days, you know, six months.

00:35:49:10 - 00:36:13:53
Unknown
So people, first people, culture, and then creating a culture wherein growth is part of the, the shared mission that comes from that culture. Okay. So, I mean, I'll build on that as well. I think obviously growth is great. And Malcolm, we're all aiming for that. But the, it shouldn't come at the expense of any say, people culture, but also sort of quality, safety, reliability, all that kind of thing.

00:36:13:53 - 00:36:33:55
Unknown
And whether you're making a product or providing a service or whatever it is, you don't want to risk corroding your, clients and your suppliers. No, you're not in a hurry to break anything. I mean, you guys are on a fun cycle. I assume you've got some, investors that are going to expect a return in seven years.

00:36:33:55 - 00:36:53:49
Unknown
I guess I expect that, yeah. Yeah. So. So, you know, it's not it's not a long term patient capital in the sort of longest term sense that you can just buy your time over a decade or so. Yeah. But you will have a couple of years of sort of soft learn mode and then kind of, you know, adapt and evolve the business, curate the business from there.

00:36:53:54 - 00:37:12:23
Unknown
There's that kind of timeline where you're thinking is sort of pull the trigger on growth, maybe year three and onwards. So, yeah, I mean, I think if I look at like the traditional kind of trajectory of what I have is in that year, for me, when I look at years one, 1 to 3 is about embedding, understanding and understanding the reality of the business.

00:37:12:23 - 00:37:30:58
Unknown
I think really, you know, to when I talk about when we come to business, we'd like to shadow every role, you know, no matter what, to really understand what's going on. But I think is 1 to 3 is embedding years four and five is where you starting to implement and get the pieces into the business. And kind of six, 7 or 8 is when actually you can turn on the taps and everything's working.

00:37:31:03 - 00:37:59:52
Unknown
And I think obviously that's quite a, you know, elongated timeline. I think ideally we want to kind of shorten it as much as possible, but we know we can't rush it. I think there's also, you know, you've got a lot of like macroeconomic pieces that come in. We've got to be ready for those speed bumps. But I think it's you know, I, I do believe whenever we speak to these founders that, you know, no matter how simple the businesses in our mind, you know, we we're really trying to build guardrails being like, you know, it's going to take a year for us to really understand how do we get everything out of this founder's

00:37:59:52 - 00:38:16:30
Unknown
head? You know, depending on the size business, if could all 90% be sitting in someone's head, it's going to take a year and a half to get the answer that I should have that be slightly more established, like given the enterprise value that you're going to be. But I should hope that there will be a lot more institutional memory and less, concentration risk around the, around this, and I would hope so.

00:38:16:30 - 00:38:37:19
Unknown
Yeah. So let's get into that. Because, you know, you've come from a unicorn and you've come from advising corporations. And here you are in the lower mid-market looking at, you know, maybe, mom and pop businesses that have grown to a certain sort of certain scale, enterprise value 10 to 20 million, something like that. Yeah. What makes, a high quality business in your eyes?

00:38:37:19 - 00:38:57:07
Unknown
What what characteristics of a company are a strong fit with your thesis? Could you unpack some of that for us? You inside? Yeah. Go for it. Okay. I think, I think we've gotten a lot of the traditional, parts of, of kind of this low mid mid-market. What we're looking for businesses, quality of earnings, the customer concentration pieces I think.

00:38:57:07 - 00:39:13:26
Unknown
Yeah I think I think there's an app for us. For me and this I think this is a big piece is, is, what does the actual seller or business owner, you know, we've spoken to a few already and we've really, you know, a couple have said, you know, we work hard, work hard, be nice and straight away.

00:39:13:26 - 00:39:30:18
Unknown
That's a big tick because we were like, wow, that's, you know, that's someone who cares. So one is very much the seller psychology and therefore what kind of culture of the business that they run, how do they run their teams? And then team is a big piece, I think, you know, we can look and do due diligence with paper and commercial side.

00:39:30:18 - 00:39:56:15
Unknown
I think there's a lot of it that is needs to be on the ground where we, you know, the last thing we want to do is take of a business where actually cultures there is no culture, no matter how sexy the business looks, it could be a complete disaster. So I think, we are trying to lean on, on the, you know, I guess the more personality, psychological side of, of teams and owners, and then the peripherals around, core financial metrics and what the business does.

00:39:56:20 - 00:40:17:55
Unknown
Okay. So getting people first, culture first. Yeah. I've, I got a foundation I can build on here, not just the financial one. Yeah, interesting. It's a that'll differentiate you from quite a lot of acquirers that are coming at this from just a purely financial what we hope. Right. And I think the typical proprietary deal flow and finding things that maybe on on market haven't been exit readied if you will, by by an advisor.

00:40:18:00 - 00:40:42:25
Unknown
That human piece is going to be absolutely critical, I think. Well, yeah, I think we, obviously you have to have some decent financials, but we know we have to get a little bit creative in terms of what a perfect business might look like. And we probably have a lot more flexibility in, you know, being able to to take some of the goods and some of the things that maybe we need to refine a bit further.

00:40:42:30 - 00:41:12:41
Unknown
More, we've got more flexibility to do that than some of the SAP firms and that type of thing. So yeah, we we need decent financials, but we can definitely also, you know, we need to focus on the team also just things like operations hopefully the bottom very smooth operations. But the I mean, the thing is, I think the thing that's going to be most interesting for me is there's there's these ones that, you know, should take all the boxes and for example, if we look at something like defense ability, so like what is you know, the typical thing is what is the motor on this business.

00:41:12:41 - 00:41:32:40
Unknown
How is it to differentiate from other companies. So you start looking at like very niche skill sets and that type of thing. But then on the other hand you find these other fantastic companies that actually is not ready. It's basically almost a commodity. But they've just got incredible customer relationships and a critical team that somehow they've been doing it really well and really better than anyone else.

00:41:32:45 - 00:41:49:10
Unknown
So I think we're going to have to be quite flexible in terms of maybe it doesn't take all these boxes perfectly. But actually we can see the overall vision for how this company might work quite well. We do have some we we've been we've got quite clear investment principles, especially for this first one, I think you know, this one.

00:41:49:15 - 00:42:12:55
Unknown
Don't multiply by zero. You know, this is an important one. We're very much focused on kind of, non-digital moats. You know, again, I think we call it the kind of cyborg area era era for the next five, ten years where actually it's going to be humans and machines working together. And we want to focus on non-digital modes where actually we know there's still going to be requirement for people to be doing these things.

00:42:12:55 - 00:42:38:15
Unknown
And hopefully technology will make them more efficient. But we don't want to be playing in that technology space purely things. Is that, yeah, it's over a seven year period that a lot can change in technology, and you don't know what the landscape will be like, by the time you need to exit. Yeah. So having something that is, you know, a combination of artisanal human skill, you know, proprietary design and, some automation for efficiencies.

00:42:38:25 - 00:43:03:59
Unknown
That's a that's a beautiful overlap. If you can find them. Yeah, exactly. And so on, on the finding. Tell us about your, your, your sourcing approach at the moment. I think I'm going to start with just, I just take my hats off to any traditional or self-funded search that does it solo because I think, you know, setting up a search engine is, is no easy task.

00:43:03:59 - 00:43:18:40
Unknown
And I think, you know, Tom and I are not afraid of work and like to eat a lot of work, but it's amazing how, you know, we've done a lot in the last 4 or 5 weeks. But, you know, we could, you know, could have had another two of us and still to still not be anywhere where we needed to be.

00:43:18:45 - 00:43:43:18
Unknown
And that is that on the outreach side or someone responding to you, I think both right responses you've got, you know, we're building our thesis on certain waves and in kind of a wide net right now, we've we divide and conquer where, I'm building on a proprietary engine. Tom is building on our broker engine. I think, you know, we know in a in an advanced market like the UK, and the likelihood of us getting a proprietary deal is relatively low.

00:43:43:22 - 00:44:04:31
Unknown
So we know we've got to kick hard on to the brokers as early as possible. What we're hoping is, you know, we proprietary right now we're running a jewel. Our aim is to get to about 8500 businesses by the end of Q1. I personally this this month, and the last three weeks, I've manually reviewed about 4500 businesses and cut that down to about 1500.

00:44:04:31 - 00:44:24:20
Unknown
Again, we believe, you know, we like to do the work ourselves before we've got interns and team starting next week. But, you know, we need to understand it before we are someone else to do it. And I think for, you know, multiple for outbound is going across obviously letter email LinkedIn. We're then going to refine that, you know, building our ocean smaller and smaller and smaller and ideally hopefully February.

00:44:24:25 - 00:44:40:48
Unknown
Tomorrow we'll start on the cold calling and getting into actual in front of businesses. And then in March, actually just getting a B2B person start kind of reaching out cold calling. So I think the big piece when it comes to proprietary is this just it's heavy lift. We're just trying to roll up our sleeves and do the work and trying to differentiate because.

00:44:41:02 - 00:44:59:25
Unknown
So with technology now, it's easy to set up and send a thousand emails within reason. I mean, we've we've tried to, alleviate some of the gotchas of that process and make it even more trivial than it has gradually become over time. But still. Yeah. Like you say, the consequence of that is that there's more people doing it.

00:44:59:25 - 00:45:24:24
Unknown
So standing out in the inbox is more difficult. And you have to have these multifaceted approaches, you know, just just sending an email is I'm going to do it. Letters certainly help turn heads LinkedIn as well. Guy. This guy really wants to speak to me, having a call. Yeah. This is this is all useful stuff. But, like, you say, there's a lot of serendipity to it, but proprietary deal sourcing is about right place, right time, right conversation, right spark of relationship.

00:45:24:28 - 00:45:38:49
Unknown
Maybe a referral is goes a long way. And getting that I think one thing we're so we're quite focused we call it kind of war mode these first six months. We're actually we're going to we want to go as hard as we can on proprietary and fill the funnel. Because once we get to six months, we can probably dial it back down.

00:45:38:49 - 00:45:56:30
Unknown
It's also not cheap. But what's nice is that we've already built out a network of probably close to 250 odd brokers. We're starting to grow at white light, and but we're getting ahead of the broker relationships. So when we're kind of six months into the flow, we will probably swing back across harder to brokers so we can get deals across the line.

00:45:56:34 - 00:46:16:31
Unknown
But I also believe our proprietary, you know, we're going to do this work now. What I'm really hoping is the proprietary deal flow we build now hopefully, you know, let's say in six months we come up with maybe 300 relationships, one of those 300 relations maybe right now. But in 5 or 7 years time, it lines us up and we can start to build that rather than trying to build in six months.

00:46:16:36 - 00:46:40:55
Unknown
I think the broker side's been fascinating as well as we. Yeah, I think the, the thing we learned very quickly is the UK does have a incredibly mature broker. Markets mature. Yeah very mature. So there's lots of excellent brokerage firms out there. And a lot of these corporate finance houses out there that, you know, they're also reaching out to build out their pipelines and that type of thing as well.

00:46:41:00 - 00:47:02:20
Unknown
So we realized that very early on and has spent huge amount of time making sure that we, you know, we just front of mind speaking to the right, you know, the right individuals that, you know, when these opportunities start coming up and actually, you can really start seeing sort of Q2, Q3 where people are starting to to line up, businesses that might be coming to market.

00:47:02:25 - 00:47:19:03
Unknown
Yeah. Nice with you in mind as well. Yeah. This is and then it's sort of a heads up exactly in a soft I mean, I just got to remember, you know, that was a business interesting to us. Let's make sure we get back to those people at the right time. So, hopefully, hopefully spend a lot of time, you know, person with them and that type of thing as well.

00:47:19:03 - 00:47:31:13
Unknown
The in-person thing, I mean, maybe not so much for the broker. That kind of comes a bit later when you've got the gatekeepers on the proprietary, you know, that just that first email, that first call, that first letter, they don't wanna ring you up and say, yeah, hey, here's my price. Now, I'd love to sell you my business.

00:47:31:13 - 00:48:00:15
Unknown
You know that that actually is, you know, there's lots of, hesitation and uncertainty and trepidation. And certainly if they're not, deep into a process or haven't been in a process with somebody else, they're unprepared. Right. But they might be fleetingly thinking, I want to sell my business. So you've got to really cultivate the relationship there harder than you would with the brokered deal, because, you know, it's it's about making sure that they stay intent on selling once they get down that road, and that you're the people that they feel a kinship with enough to want to go through that process.

00:48:00:15 - 00:48:15:01
Unknown
So I think it's I mean, we've we've spoken to a fair few so far about what we're, as you've heard, as we kind of the differentiation is around us stepping in and operating and what we're hoping is that differentiable. You know what I keep on saying, Tom? I want us to nick a deal off of P, you know.

00:48:15:14 - 00:48:35:30
Unknown
Well, we might not be able to for the bit, you know, we get selected because we're going to be on the ground. You touched on it earlier and the competition. Yeah. And the really good business is at the right level of of EBITDA. You know, you are going to be up against P. And so there has to be a genuine desire not to sell to P, because they probably going to have the bigger multiple to offer than than maybe you are.

00:48:35:34 - 00:49:02:03
Unknown
But I mean I mean the thing is we there's all the stories about search and why search is a great model or easier is a great model compared to B and actually, from these first conversations we're having with a lot of sellers, it does seem to resonate and true that, you know, a lot of these owners are very interested and not interested if they want to 100% maintain their brand, maintain their teams, maintain the company's legacy heritage, etc..

00:49:02:07 - 00:49:20:31
Unknown
Which in some cases with P deals doesn't it's not always the case. We are trying hopefully as well to it's going to be kind of like soft education as well as some of the cities are saying, you know, we're stepping in, but also ideally in a hopefully trying to position softer deals where, you know, we want you to stay along for us, with us for the next two years.

00:49:20:31 - 00:49:37:53
Unknown
But, you know, we spoke to the majestic boat boat maker in Scotland and unfortunately we love the business of the founder. But you know, he ultimately he doesn't want it. He loves designing boats. Right now. He's still obviously very hands on making sure the building product is met with like that. If you come, we stay with us for a couple of years.

00:49:37:53 - 00:49:57:51
Unknown
We design boats. Do you do the stuff you love? We will take away all the heavy stuff, and I think that we're trying to work out a software of education where actually owners can stay in the business, work on things that they love, and still hopefully start step out gently rather than an aggressive private equity, saying, Gareth, you need to hit 20% year on year of next five.

00:49:57:52 - 00:50:12:46
Unknown
Oh yeah, they don't want to become a they want to end up working for somebody else, run their own show for so long. They don't wanna be a slave to the exit. Exactly. They want to, just as you say, concentrate. Double down on what they enjoy doing. It's almost feels like, equity release in a house, right? Yeah.

00:50:12:50 - 00:50:29:36
Unknown
It feels like here is some financial relief and the opportunity to be unburdened. Yeah. And, you know, to focus on just the bits you enjoy doing, until you're happy to just sort of, you know, go back to Wales. Although I would add, it's surprising how quickly, even though they say I want to be around once I have the money in the pocket.

00:50:29:36 - 00:50:52:58
Unknown
You know, the psychology is what needs to be a way more. And I need to enjoy my life number. So yeah, what might sound good now might not actually be what turns out in two years time, but true, true. I always we've been reading a lot about, I guess in terms of structuring deals, because we would really like to have it be, I think we'd ultimately a dream for us would be to have the owner around for a year or two, I think, just to be able to absorb.

00:50:53:11 - 00:51:09:01
Unknown
But we've been looking at how to structure these deals, whether it is kind of rollover equity. It's a as it's separation. Yeah. And but also separating kind of the actual acquisition agreement to kind of a consulting agreement to really kind of make sure it all doesn't get tangled up in the messiness as well. Something that we're trying to think about.

00:51:09:02 - 00:51:30:38
Unknown
Obviously each deal is going to be different, but trying to how we in how we do incentivize and how do we manage them as well, not roll over equity is also a very capital efficient way. Exactly. I mean, you might be at a punch a bit higher in terms of EV. I think so now as well. I think also with with adding on the approaching sellers etc., and how, how, how to be successful that we mentioned as well.

00:51:30:43 - 00:51:39:20
Unknown
You made fun of us a few times early on about also middle aged use, but I look at glass houses.

00:51:39:25 - 00:52:12:37
Unknown
But, I do think we, you know, we're quite fortunate in all that we put a bit later in our careers, got a lot of experience and hopefully some credibility. And that's certainly been helping when we actually start speaking to sellers initially. And it's maybe one thought for any anyone who's listening to this podcast a lot on a ride or whatever, is that actually, I think having built up some experience in the past and some learnings and actually have, you know, some actual hands on, experience to draw from, we'll put you in a much better position when I speak to sellers, but also when you actually have to go in and run an

00:52:12:37 - 00:52:32:02
Unknown
operator's business here, here. Yeah. Know that that maturity of mind. And I don't mean maturity. This just aging you again, but just the, the things that come with being in the trenches and, and the experience that you got in Scotland know and I think that's it. Yeah. And then with with battle scars enables you to keep calm under pressure moving forward.

00:52:32:02 - 00:53:01:36
Unknown
And I think that's one thing if I look at my early 20s, now I'm making decisions far too quickly. Not really. And could you also at that stage you kind of you trying to make decisions with not all the information. And I think it's definitely happened the last 5 or 6 years, no matter what's going on, the ability to just take it slow, you know, I've, I've been in quite a few burning houses in the last five years as businesses and rooms are falling apart, boards are falling apart and you've got to be able to just take it slow and steady and be calm.

00:53:01:40 - 00:53:38:44
Unknown
Which is kind of the only way to navigate these pieces, right? If you haven't been through it and you fall apart quickly, the big difference between success and failure, particularly when it's high stakes, can be how well you make quality decisions under pressure. Whether you feel you just need to knee jerk into a decision or whether you're willing to buy your time, you know, see how things play out, not rush to a decision and that statesmanlike kind of way that you handle interpersonal things, or, you know, large kind of career financial implications that actually has a greater likelihood of success if you don't, knee jerk into doing anything.

00:53:38:49 - 00:54:00:36
Unknown
So, I mean, it's everything's a lot easier when everything is going smoothly and according to plan. It's how do you how do you react when when something goes wrong? Yeah. The the punch in a place, punch in the face. So you don't have to use those jerk reactions you need or I have to be honest, I think when it, when things are going well, what I've been writing this is when I actually panic because I'm like, there's no surely you know what?

00:54:00:36 - 00:54:23:58
Unknown
We've had a month where there hasn't been a red, positive paranoia. Yeah, exactly. Yeah. We, we need to wrap up, and, leave some takeaways for our aspiring researchers here that are listening to you intently. I'm sure they'd love to hear a bit about, what you've learned from the challenges on your journey so far, perhaps in sourcing, perhaps in fundraising, perhaps in making the decision to go this route in the first place?

00:54:23:58 - 00:54:46:07
Unknown
Where where have you been slapped in the face? What might people want to make sure that they are specifically preparing themselves for? I think you've said to me, Tom, that, you know, operational experience is is beneficial and, you know, don't dive into something that you're unprepared for. But what specifically from your journey, we should not be able to take away from today's conversation?

00:54:46:12 - 00:55:05:51
Unknown
Yeah. I mean, definitely from my side. I think the it's a huge, hugely important to make sure that you've, hopefully have some background or some experience, in these types of companies because one, you can for me personally, and I think it's very much the same that we want to make sure we can add value. Hopefully, I think most people in the world are like that.

00:55:05:51 - 00:55:22:51
Unknown
And if you're coming to something that is completely unknown to you, I think it's a lot harder to do that. So 100%, one of my learnings is I want to find something that we can have value in. I don't know if, for example, in SAS businesses, they've probably not going to go to closest businesses. That's one of my things.

00:55:22:51 - 00:55:56:13
Unknown
I think the other thing is we, you know, we very we're very focused on making sure we have the right sort of teaming cultures and those types of things of businesses and we've both worked in situations where, where sometimes, you know, culture can corrode about what the team can, dynamics break down a little bit. And, I think the more we can make sure that we bring those, those things to the forefront and focus on those things, the better will be because, as I said, I think most people want to most people want to succeed and prove themselves in life.

00:55:56:18 - 00:56:20:28
Unknown
And if you if you set the right, ideas and vision and mission and that type of thing. Jesus sounds very consulting, but if you do that and you can give people and all people and give them the autonomy to be successful, that's the kind of thing we're looking for in the future, for sure. Yeah. I think as I for my side is, two passing because I think we got it a few times was fundraising with everyone.

00:56:20:29 - 00:56:36:03
Unknown
If people were thinking, thinking that, we thought ETA would be easier than starting a business. And I think in our minds we think it's going to be where my mind would be. So I think it's going to be more difficult. You know, if you start a business, you start from zero. Trust builds from zero. Everything starts from zero.

00:56:36:18 - 00:56:58:35
Unknown
When you say you're coming in to replace previous relationships, operating cultures, etc., etc. so I think I genuinely believe this is going to be more difficult than it's going to be starting a business when we do acquire finally, I definitely think in for this go hard, go early. I think building our pipeline, we've been really aggressive in ourselves.

00:56:58:35 - 00:57:13:10
Unknown
And, you know, we're month one in, we're doing our first investor reports, you know, this weekend. And I started looking and I'm like, wow, you know, I need to double this. If we are really good. It's a numbers game. We're in this kind of competitive market. So I think it's going hard early and speak to as many people as possible.

00:57:13:10 - 00:57:33:05
Unknown
I think it's really been lovely as everyone's been quite happy to carve out half an hour, and we've learned so many little tidbits from searches, investors, brokers, lawyers, etc. yourself, when it comes to kind of outbound. So I definitely tap into the network as much as possible. And my 30 minute call, you can learn heaps. Yes. Yeah.

00:57:33:07 - 00:57:54:32
Unknown
And there's only so many 30 minutes that you can yeah. There though down the road. For listeners that are considering ETA but they're coming maybe from a more finance oriented background. What would you say in addition to some of those human, conscious skills? And the maybe operational experience that maybe can't be replaced. You have to just go and dive in and get it.

00:57:54:46 - 00:58:14:42
Unknown
What are the traits do you think they should really come armed with to make a success of this? I mean, make sure you've got strong EBITDA. I think if you haven't operated before, make sure I would. I would definitely make sure I'm buying a business with north of 1,520%. As we said, it gives it just insulation. Insulating gives it gives you protection from when things potentially do go wrong.

00:58:14:42 - 00:58:40:08
Unknown
I mean I know that's quite a strong you know, that's a strong piece for us as well. Just making sure we we've got space for gaps. I would you know I think never on whatever you think the operational complexity is going to be double and triple it. I think that's always, you know, every time we look at any some of these business and we think they're really simple, we know straight away that we've got to force out the problems.

00:58:40:08 - 00:59:12:22
Unknown
And I think the problems will be, my, my mantras like expected to be bigger. Expect it to be harder. So we're not surprised when it comes up. But I think if you haven't had that operational experience, it's, it's quite scary, right? If you've suddenly, you know, it's 3 a.m. and you've got really specific customers to go out and operations falling over, it's on you if you've, you know, if suddenly there is a balance and you've got to pay staff these operational emotional stresses that come, I think are the big ones that just need to be conscious about rather than flipping on a spreadsheet and hoping things go out into the right.

00:59:12:27 - 00:59:34:43
Unknown
And so if they haven't had direct operational experience, should they be even considering this path, or are there ways in which they can almost like, simulate and acquaint themselves with the likely challenges? I mean, I think the main one for me is, as in many facets of life, if you come into it humble, yeah, lose the ego, then most things you can learn.

00:59:34:48 - 00:59:58:19
Unknown
So I think I've been fortunate in the over the last 10 or 15 years. I've had a lot of people that I've learned from and, you know, I know some incredible rockstar finance guys or prefer everyday guys who don't have operational experience. But, if you come in, I think with the wrong mindset you really to limit your chances.

00:59:58:19 - 01:00:14:22
Unknown
But if you come in humble, keen, eager to learn, I think you ready? Yeah. You've got a good chance. So listen to them. Yeah, love that. I think there will be lots of people taking something positive from from that. Just as we wrap up then your, your early in your search phase, you're having closed your, your fundraise.

01:00:14:36 - 01:00:31:23
Unknown
Not a quarter ago. You I guess you typically you're giving being granted a couple of years to go and get a deal over the line. What's your personal ambition? And if we checked in with you in 12 months time, where do you think you might want to be? In 12 months time? I would love to be in a business.

01:00:31:28 - 01:00:47:13
Unknown
I think if we, You know, the one thing you've got two years. But the quicker we can get into a business, the better. You know, it saves another year of us getting going. So we want to, you know, success for us is trying to get a deal done within 12 months or at least be at the final stages of that.

01:00:47:13 - 01:01:15:00
Unknown
And that's why we want to work hard in the next six months. That would be my kind of high level is can we get through enough volume to get that kind of deal across the line? I think, you know, it is within reason, a bit of a numbers game. You know, if we think about our funnel, 15,000 businesses or 20,000 businesses plus thousands of brokers, you know, if we can get enough through there in an eight month period, we should be able to find at least one needle in the haystack that we can, operate.

01:01:15:05 - 01:01:34:46
Unknown
I think the only thing I'd add on that is we, 100%. We want to get a better deal as soon as possible, but in 12 months, I. You know, I hope we're still really enjoying the process. And, I mean, so far, I'm loving it all the time. Speaking to incredible people made a huge amount of amazing people learning a huge amount as we go through it.

01:01:34:46 - 01:01:55:58
Unknown
So I'm just, you know, I hope by the time we get 12 months out, we've got a good deal in the pipeline. But also still feeling, you know, energized, passionate. Our personal lives are going well. You you will you will get a business done. You are you've got exactly the right approach. Background thesis. So I'm fully, fully aware, believe that you are the right home for numerous businesses.

01:01:55:58 - 01:02:13:08
Unknown
However, that there will be some there will be some smacks in the face where you just didn't quite get there, or someone else pipped you to it. And it's, picking yourself up and dusting yourself off after those disappointments. I've seen so many people kind of, you know, roadkill on this journey because they just they run out of love with it.

01:02:13:08 - 01:02:36:38
Unknown
They fell out of love with it because they lost 4 or 5 businesses on the bounce. To other people, it is a competitive process. If you're still yourself for that, you'll be fine. I think that's also the joy of having two of us. I don't think it's a Tom came back from from holidays, and I'd spent my two weeks grinding through spreadsheets, manually going through websites, thousands of websites and company sales, and I could feel my energy really low.

01:02:36:43 - 01:02:54:41
Unknown
And Tom came into the office on the Monday Tuesday, and he was able to lift me back out and find the joy in it. And I think I think that's also if you if you are doing this by yourself, find a small group of people that you can help, as you say, because we're going to get slapped on the face loads when when deep in the data room, just make sure to take him to the pub.

01:02:54:55 - 01:03:02:06
Unknown
Yeah, I was about to say it does help that the offices above a pub. Yes.

01:03:02:11 - 01:03:22:26
Unknown
Super. Well, guys, what absolute pleasure talking to you. And, just know I'm sure the the positivity and the professionalism is palpable. Through this, through this episode. So with the love charting your journey and seeing how you succeed, how do people keep track of you? I mean, where are you on socials? Is there a nice, spangly website?

01:03:22:26 - 01:03:42:41
Unknown
How do you like people to reach out? There's a spangly, sexy website that, I now get. I took a lot of flak from from both my wives, because I decided to vibe coded and it took some time. But yes lt lt Heritage Partners, Dot. Co.Uk and LinkedIn. We have not moved into any other real socials as we focus on search, but you'll find us there.

01:03:42:41 - 01:04:02:42
Unknown
And again, I think, we're really happy to. The community has given us a lot already over the last six months. So, we're often speaking to exploring searches and current searches. We're really happy to, to carve out time to share knowledge. So please feel free. Mighty gentlemanly of you chaps. Thank you so much. Anything to add to that, Tom?

01:04:02:47 - 01:04:17:18
Unknown
No. Well, good. Thanks for having us. Thank you very much for having us. Yeah. And thank you for, onboarding us to this crunch, because it's been a huge help to get all proprietary engine. Yeah. Glad to hear that. Glad to hear that. Well, let's let's try and get you a few, viable candidates to get over the line.

01:04:17:18 - 01:04:53:01
Unknown
And it would be lovely to see you guys some securing a business and becoming the next owners of a business you found through prescription. It was actually helped make me very happy. Yeah. So, guys, thanks again for sharing your insights today. Really, really useful insights for the listeners. What strikes me most about your approach is this intentionality that you've got this, this process, this deliberate, approach that you have so great to see that you're not just acquiring a business, you're actually focusing on building the relationships, both with the founders and thinking forward about the relationships with the staff once they're under your, your, your direction.

01:04:53:06 - 01:05:14:10
Unknown
You're kind of respectful of the fact that these people have poured their lives into these companies. And I think that comes through, and that will definitely speak volumes in how you interact and the relationships you cultivate with these, with the sellers. So well done. You know, a lot of searchers say that they are about honoring legacy. And it's it's actually baked into, you know, the heritage is baked into your title.

01:05:14:15 - 01:05:36:54
Unknown
You're really living the values of this. So it's fabulous to see. So listeners, if you're considering, an acquisition and making that leap into entrepreneurship, for acquisition, you will find, I'm sure, some great learnings in charting the journey of ELT Heritage Partners. And if you'd like to hear more, interviews, then do, like and subscribe to stay tuned to the magazine.

01:05:36:54 - 01:05:46:48
Unknown
We've got more, acquisition entrepreneurs at various different stages of their journey, sharing their insights with us over the coming weeks. So thanks very much for tuning in. And till next time, keep on crunching.