Josh Skelly, Cavan Legacy Capital
Cavan Legacy Capital, Current Searcher, Self-Funded
Survey completed September 17, 2020.
Why did you choose your model? Would you make the same choice again?
(1) Ability to acquire smaller companies than traditional search increasing likelihood of closing an acquisition and ability to use an SBA loan (important given my geographic focus); (2) for larger transactions requiring outside equity, having time to form a relationship with investors during the LOI phase to vet the investor’s view on the relationship / partnership aspect going forward (vs. 1-2 meetings during fund raising for traditional); (3) I believed there was some misalignment of interests in the traditional model and hope that self-funding the search will provide the ability to slightly alter the structure to create better alignment with investors.
Are you searching with a partner? If so, why did you choose them? How did you find them? If not, why did you choose to search solo?
No. I considered it and spoke with a friend and former classmate about it but we had different ideas of what we should look for in a business and he ultimately wasn’t too serious about leaving his $500k+ a year income.
When is the right time to start speaking with investors? How did you select your search and/or acquisition investors?
As a self-funded searcher, I’ve spoken with a few potential investors to set the groundwork for when I do find a deal but I’m not sure if it is necessary as I’ve yet to go under exclusivity.
Did you get an MBA before searching? If so, where and why?
Yes, Columbia. I did not get it for the search, I worked in consulting and was sponsored but saw it as an opportunity to potentially switch careers into PE or at worst return at a higher level to my consulting job with my MBA paid for. Ultimately, I landed a job in PE.
What is your work experience prior to searching?
Management consulting across a variety of industries and functions and private equity focused on the lower middle market.
What industries and sizes of companies are you pursuing?
$500k+ EBITDA/SDE and open to most industries other than retail/restaurants/bars/construction.
Are you doing a geographically focused search? If so, where?
Yes, Southern California.
How long have you been searching?
What systems do you use? (CRM, Email Manager, etc)
CRM – Hubspot, Asana – Task Management / Pipeline Management, File Mgmt – Google Drive, Klenty – Email Automation, I started with Zoho Mail and wasted a lot of time with it and eventually switched to Gsuite
How do you organize your day?
I use Asana to figure out what I need to get done each day but I do not have specific structure for each day.
How do you identify prospects to acquire? Do you use only brokers, only direct outreach, or both?
Both; mainly brokers thus far as my direct outreach has not been incredibly fruitful.
Approximately how many direct outreach calls and emails have you made to owners?
How do you find company lists?
LinkedIn, ReferenceUSA, CapIQ, Mergent, Google
Do you subscribe to broker deal lists? Which ones?
Yes, several – bizbuysell, DealForce, WoodBridge.
Do you use interns? If so, how many? What do you have them do?
Yes, 6. Initial Deal Review, projects, industry research and list building.
Approximately how many deals have you reviewed?
How many companies have you gotten to the LOI stage with? How long before your first one?
1 LOI submitted. 3 months.
What has been the most challenging part of your search? What was harder/easier than you expected?
Early on getting tech set up correctly, website, email, etc. + direct outreach has been relatively unsuccessful so far.
What articles, books, and resources were most helpful to you in preparing to search?
So many. Searchfunder, Alex’s Podcast, Polsky ETA Podcast, HBR Guide to Buying a Small Business, SF Primer, Paul Thomson SF Manifesto, Buy then Build
What do you wish you knew prior to searching?
Not to waste too much time finding the perfect tech tools while also being cheap. Pick some and go with it.
What single piece of advice would you share with prospective searchers?
Figure out what you want to get out of the process and which model best suits you (Self funded vs. traditional, etc.), spend a little time figuring out your process then just start doing it and fix it as you go.