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Weekly Highlights

My most insightful news of calendar week 52 that caught my eye.

• I listened to Invest Like the Best with Patrick O’Shaughnessy’s podcast with Justin Ishbia - Lessions from Acquiring 586 Comapnies:

  • "Main street, not wall street”: last ineffiencent part of the private market is the micro-cap space with companies <10m in EBITDA

  • “The system is the star”: comprehensive documentation and processes of investment hypotheses, deal sourcing, deal strcutures, and value creation levers allow scalability

  • Today Shore Capital manages $7bn AUM 

  • Typical deal size is $3.5m EBITDA, $8-10m revenue, 80-100 employees, sectors with consolidation as main value creation lever

  • Investment into 59 platforms with an average deal size of $12m

  • 5-25% of capital for an investment hypothesis is invested in platforms, the rest is reserved for addons

  • Returns of 14 platform exits: average 7x Gross CoC and 72% IRR (no deal with <3x CoC (!)), median 5.5 Gross CoC and 51% IRR

  • “It takes 18 months to learn 90% of an industry and 5 years to learn the remaining 10%”

  • Shore Capital’s moat: number of deals, operational excellence, early career energy of first time CEOs (80% of platform CEOs are first time CEOs), board composition (7 members on average with best-in-class industry veterans, incentivized with 0 cash but 250k equity in base case at 3x CoC), center of excellence (“lift and shift” processes, learning, reportings etc. from one platform to another and constantly improve it)

  • Justin’s promise to his LPs is increasing the odds of success - cannot guarantee the outcome but the process

  • Over 15 years, none of his 259 employees has quit the company; create an environment in which people want to stay their entire career and pay a little above market compensation - “people don’t quit their friends”

• I read Winterberg Group’s investment hypothesis on the TIC market:

  • Europe leads in TIC sector mergers and acquisitions, with 48% of global targets located there in the last decade

  • Strategies like buy and build have driven growth as private equity and trade consolidators leverage scale and synergies. Key examples include acquisitions by SOCOTEC Group, Warburg Pincus, and Oakley Capital

  • Deep dive Swiss market: Switzerland’s TIC market remains highly fragmented, dominated by SMEs focusing on niche and specialized services

• I read Cape May Wealth’s blog post on Enterpreneurship Through Acquisition (ETA):

  • Over 70% of ETA entrepreneurs held equity worth more than $1M (!) at the point of exit (n = 66 ETA transactions)

  • On median, it takes 20 months from raising a search fund to a subsequent acquisition

Career Opportunities

Want to break into the world of private equity, search fund, holdco or rollup? Here are the latest carrer opportunities for you.

• 🇬🇧: Head of M&A - London (apply)

• 🇩🇪: M&A Manager - Hamburg/Munich (apply)

• 🇩🇪: M&A Manager - Frankfurt (apply)

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