Buying a business is challenging, even when you know the right steps to follow. But what really helps get your head around the process are anecdotes and personal context from people who have done it. So we are going to be presenting more one-on-one interviews of individuals with experience to share.
If you happened to catch my first interview of Mason Barrett, you know he already had a stellar resume (Navy, McKinsey consultant, director of product development for iFly Indoor Skydiving, Harvard MBA) when he decided to pursue Entrepreneurship Through Acquisition (ETA). He became what the industry calls an “independent sponsor,” in other words, a one-man private equity shop. He left his job (his wife kept hers, more on that later), hired some interns, and—without experience in private equity or investment banking—devoted himself to a full-time search for a business to buy and run.
As my new interview with Mason shows, this risk paid off. He is now the owner and president of HurtVet Subcontracting, which works with the U.S. government and military as a service-disabled, veteran-owned small business (https://hurtvet.com/). But it wasn’t easy. In the two years between our two interviews, he sifted thousands of companies before settling on and acquiring HurtVet.
You don’t go through a journey like that without learning things worth sharing, which I have condensed below.
Lessons from Mason’s Search and Acquisition Phase
- Grow a Thick Skin: Searching for a business to buy is not quick or easy. Expect to encounter many rejections along the way. And if you are an independent sponsor, they will all fall directly on you. If you let that wreck your confidence or diminish your persistence, you will never get to the final “yes” that makes it all worth it.
- Hone Your Pitch: Unless you have been through this process before, don’t expect your pitch skills to be solid gold from the start. But what matters more than anything is authenticity. Don’t pretend to be something you’re not, or to have a firm behind you when you don’t. As an independent sponsor, your advantage can be showing respect for the business owner and the work they have put into building a company that may now provide an opportunity for you. A “deep care” about the legacy and existing employees can help you stand out from the typical high-pressure, numbers-centric PE firm approach. And what wins the owner’s trust will usually win a sale.
- Raise Capital: Seeking funding will probably feel uncomfortable if you’ve haven’t done it before. Going to potential creditors or investors with hat in hand can be a humbling experience. But Mason believes that if you have done the work to identify and understand a truly good deal, raising the needed funds will ultimately not be an obstacle.
Lessons from Mason’s Post-Acquisition Phase
- Handle the Announcement and Introduction: The announcement of the transition to the existing employees, and your introduction to them, can be incredibly delicate. The need to control information flow during the acquisition has to be balanced against the employees possibly feeling blindsided. Afterwards, one of the first jobs will be soothing any hurt feelings and addressing concerns about the future, in order to keep everyone pulling in the same direction.
- Lengthen Your Time Horizon: At least in Mason’s case, the post-acquisition phase began very differently than most PE-firm deals. Instead of a detailed plan for a frenetic first 100 days of operational improvement, he started his tenure as a slow burn, taking time to get acclimated and understand the nuances of the business and its people before making big changes. By approaching his ownership as a marathon rather than a sprint, he was able to make more thoughtful and impactful decisions within a culture of communication and collaboration.
- Keep Your Network Close: We talk about how important a network is in a private equity search, and this is especially true for an independent sponsor. But the need continues even after acquiring a business. Having a small group of trusted contacts to consult with, “an unofficial advisory board,” helped Mason navigate the post-acquisition phase with fewer mis-steps and more assurance. When you’re new at something, being able to outsource confidence is a huge advantage.
Now well ensconced as HurtVet’s owner and CEO, One difference Mason has found is that he is more invested—literally and figuratively—in his work. “The highs are higher and the lows lower,” he says. “You live and die by your own decisions,” which span the entire business rather than one silo. That can be scary, as anyone with the entrepreneurial bug knows, but also thrilling.
With his work now in a somewhat more settled phase, I love how Mason and his wife continue to play a game of “You’re It” with their professional lives. Having provided the financial predictability needed during Mason’s search, now it’s his wife’s turn to follow a path of enhanced risk and reward. She’s decided to do that by beginning her own search for a business to acquire, making ETA a family thing.
Relevant Links: