@AlexanderNadtochiy recently posted an article on this site, "ETA Is Worth It — But the Fit is Narrower Than I Once Thought" I thought it was one of the best written articles I've read here. I was also impressed by the quantity and quality of remarks I read. This is a very engaged community willing to learn. Congratulations to @LukeTatone and @MarkYaun and @KarenSpencer for creating SeachFunder.com. His piece caused me to reflect on my own path that spanned Wall Street, consulting, a startup, being part of a platform, running a platform, and everything I learned along the way. How It Began I began my career at Morgan Stanley in the Mergers and Acquisitions Department after graduating from the Wharton School with a Bachelor's of Science in Economics at the University of Pennsylvania. After an Analyst stint in New York and London, I earned an MBA from The University of Chicago Graduate School of Business (it wasn't Booth then) and then worked for McKinsey & Co. in their Chicago office in the Financial Institutions Group. I left McKinsey to do a startup. This led to me partnering with a private equity firm in Chicago and investing in a trades school, that I sourced, in Birmingham, AL and becoming the CFO. We exited in four and half years. I then led my own platform, buying a trades school in El Paso. Eventually, we had nine locations in four states, and I ran the platform for 15 years. Now I am running redacted and I have my hands in a bunch of things. Why I Pursued Business Ownership I had a visceral and emotional desire to own and run a business. My father was an entrepreneur, so I grew up with an entrepreneur as a role model. He got to build something rather than simply managing someone else's business. While he took the risks of being his own boss, he also got the rewards. I knew he loved what he did. He was full of clichés, one of which was “If you love what you do, you will never work a day in your life.” I also felt like it fed his not modest ego of being the Big Boss Man (in the immortal words of Elvis Presley). My dad bought a trade school in northern Baltimore, Maryland in 1969 when he exited the US Air Force after having served a tour of duty in Viet Nam. He expanded to southern Baltimore and then eventually opened a third campus in a northern suburb of Washington, DC. He unfortunately died of a heart attack, but had a great run and built a terrific business. A rock star of the ETA world, Codie Sanchez, provides a well-stated motivation for owning and running a company that upon reflection applied to me. She says people want to own a company because they want true autonomy: the power to control their own time, money, and standards instead of letting an employer dictate to them. Without ownership, she argues, you are renting your life to someone else. Here is a link to a podcast where she is interviewed by Harvard Business School professor, Arthur Brooks, one of my favorite thought leaders in the world of business: How to Live Your Life Like a Start-Up with Codie Sanchez. What is Your Competitive Advantage in Acquiring a Company? It is very competitive to buy a business and being industry agnostic makes it harder. Everyone has similar investment thesis (e.g., high margin, low customer concentration, recurring revenue, etc.). Business owners in those industries frequently field calls from searchers and brokers asking if they are interested in selling their businesses. As such, one needs a competitive advantage in buying a company. For example: ● Take advantage of direct industry experience In lieu of that, ● partner with a seasoned executive ● if coming out of consulting or investment banking, leverage any industry concentration ● use your family’s professions or businesses When I left McKinsey, I had not worked in industry. However, I went down the trade school path and leveraged my dad's relationships to enter this industry. I pursued acquisitions in trade schools beginning inredactedHe passed away inredactedMany people still remembered him. He was very active in the industry and was well respected. It was nice to be known as Jack Tolbert's son. How I Fell Into ETA When I left McKinsey, I left to launch a startup, not to buy a company. The company that I started provided tuition financing for students that went to trade schools. It was like medical school loans for a different segment of the market with the same theory that education changes an individual's credit profile. It was also before the dawn of the internet (yes, such a time existed, about the time dinosaurs went extinct). While doing this, I attended a private trade school industry event where I met an owner of a trade school who shared with me that if he had access to growth capital, he would be able to grow his company. He had campuses in Birmingham and Huntsville, Alabama and wanted to open additional campuses. I introduced him to a private equity firm, Prospect Partners, that was just raising its first fund in Chicago (former McKinsey guys). They ended up investing in his company, and I joined the company as its Chief Financial Officer and the junior partner. I call those years as the CFO my "apprenticeship years." While I worked for two prestigious companies and went to two top tier schools, I didn't know much about how to run a company. My two partners, the CEO and COO, taught me how. We were very successful. We took a company with $9.5 million of revenue to $55 million of revenue in four and half years and had a very nice exit. Operator Versus Deal Maker During those years in the bowels of an organization, I still didn't consider myself an operator. While I managed an accounting department, there was a great deal I didn't do that an operator does. While I was part of a management team that created a budget for the organization, I didn't create the budget. I knew the math, but I didn't have the intuitive feel for what drove the numbers. I didn't deal with the ongoing HR issues that operators deal with (e.g., non-performing employees, employee squabbles, etc.). I didn't deal with negotiating with suppliers. I didn't deal with a lead funnel and conversion rates and the myriad of other issues that operators deal with. I was more the strategy and transaction guy. So, when I embarked on actually buying a company, I was honest with myself: I knew I needed to partner with an experienced operator. During this period, I found several operators who were interested in being my partner. For one reason or another, each of them fell by the wayside. The story has a happy ending, because the company I ended up buying had a wonderful operator who was the founder and was my partner post-close. The Search The search was long and hard. I tapped the industry brokers. I tapped my personal-professional network. I tapped the industry advisors - accountants, lawyers, bankers, etc. We went deep a couple of times on due diligence and wisely walked away from some deals. Ultimately, we found the perfect deal, albeit on the smaller side, proving the old saying, patience is a virtue. The deal was attractive because: it was clean from a compliance perspective (we didn’t want to step into a highly regulated industry and have to put out fires day one); it had several licenses that gave us options to grow the business; it had already been around for 25 years so had a solid reputation in the community; and it had a solid team. All of these combined to give us a good platform to grow from. I came across this opportunity the way I came across the first one. I bought a company that wasn’t for sale. I was in the right place at the right time because I was embedded in the industry. The owner/founder was someone I met years earlier. I met her when I was with my first platform. We had approached her to buy her company and she had turned us down. When I came back to her and told her how our first deal turned out, she was very interested in being a part of something like that. Obviously, telling about a successful outcome carries a lot more weight than a pitch about a theoretical outcome. We closed on the deal a year after I began my search. My search came a year after I secured a capital partner. The process from beginning to acquisition took me two years. Running a Company for 15 Years So finally, I was where I had worked so hard to be for so long: the CEO of a platform with a meaningful equity stake. I was not the majority shareholder, but I did not need to be. My ambitions far outweighed my personal balance sheet, and I did not have to make any personal guarantees. So began an incredible fifteen-year odyssey that someday Christopher Nolan will make a movie about. Bottom line, I could not have been more fortunate in that I followed the dream I set out for. I had a blank canvas to use my creativity to build a business for the benefit of me and my family, my investors, my employees, our students, and the communities we were in. My original partner eventually decided to leave the company because the environment and culture she created over 25 years was not the company we needed to take it to the next level. Other members of the original team also did not transition as we grew the company. We grew an initial acquisition with $3.5 million of revenue to nearly $100 million of revenue. The team that had been successful at a smaller company, and that we could afford, could not necessarily be successful at a much larger company. That was a key lesson learned: the people who get you off the ground are not always the people who can scale with you, and reconciling loyalty with what the business needs is one of the hardest parts of the job of the leader. My Role as CEO We built our trade schools company with a combination of acquisitions (limited) and organic growth. Organic growth consisted of opening locations, launching new programs, and increasing enrollments. One of my primary responsibilities was to lead the strategy to grow the company. We were a highly regulated industry and as CEO, I had to ensure we had the infrastructure and culture in place to maintain compliance. I was also responsible for the culture of the company. As a finance and strategy geek, this was not my strong suit, but I enjoyed reading and learning about it and investing in it. For example, someone on my team introduced me to Simon Sinek’s work. I worked hard to define my company's Why. We eventually defined our Why as "We Create Opportunities - for our students, our employees, the employers who hire our students, and the communities where we have campuses." One thing I am particularly proud of was giving back to the communities where we had campuses. We gave tens of thousands of dollars to local charities including The American Heart Association and Boys and Girls Clubs. We also graduated around 25,000 individuals in communities that did not provide career education in the fields we offered. I am thrilled this is my legacy. I had several visions for my company. One was that I wanted to become the Starbucks of Trades Education — Howard Schultz was one of my heroes. The other was that I wanted to be listed on the NYSE. This was my BHAG (Google that). How It Ended We did not list on the NYSE. In fact, we shut the company down. Several things converged at once. The first was Covid. That was hard to predict. We had to shut all our campuses down. Hands on trades education doesn’t translate well in a virtual environment. Second, the interest in our sector by PE had died down years earlier. This was caused by adverse regulation of our industry by federal and state regulators during the Obama administration. Third was a systemic weakening in demand for higher education nationally and across sectors. Finally was the reduction in leads from our primary lead source, direct response TV, due in part to the great "cable cutting of America." My PE partner, who had been incredibly patient with us over 15 years, finally threw in the towel. Again, despite the way it ended, I wouldn't have traded that experience for anything in the world. I am also proud of the way we walked away and have nothing to apologize for and nothing to be ashamed of. We left with no payroll liability – we closed at the end of a payroll period. We followed Department of Education requirements for a close out audit. We went through an orderly court supervised wind down of the entity. We facilitated the transfer of as many students as possible to other institutions to finish their education. Finally, none of the officers of directors were left with legal or financial liabilities. Again, we operated with the highest levels of integrity and compliance under all circumstances. Here is a link to an interview I did with a TV station in one of the markets where we had a campus: Founder, former CEO of Vista College explains what led up to school's closure. What I'm Doing Today I am active in a variety of endeavors where I am putting my experience to good use. First, I am the Founder and Managing Director of ExecCap Advisors (redacted. I look to partner with experienced executives who know an industry, have a network, and are backable. They know how to make money in an industry they have expertise in and have a reasonable idea of how to find acquisition candidates. I help them through the acquisition process and raising capital. ExecCap Advisors has a robust internship program. I've partnered with @EemaanKhan who, in addition to being the Managing Director of Strategy, oversees the Internship Program. We are giving many younger professionals the opportunity to get real deal experience who otherwise might be struggling to get it on their own. We have received more than 400 applications for our Spring/Summer cohort representing undergraduate and graduate programs from around the US and Canada. At the same time, we built what we believe is one of the most rigorous ETA training programs in the industry, designed not simply to teach the mechanics of acquiring a business, but to develop the judgment, analytical discipline, and operating instincts required to actually do it. I am working with a university to launch an ETA program. Many universities have launched these around the country, and I hope I can help provide both academic and real life experience to help this university do the same. If you’re an academic or part of a university’s entrepreneurship ecosystem, please let me know if I can be helpful to you. A Few Conversations Along the Way Over time, I have been a guest on podcasts. For those that are interested, here is a sampling: Bob Gibbons — youtube.com/watch?v=LHcJgy6D52k Raju Mahajan — Google Drive recording Julio Gonzalez — youtu.be/ojO5A4DV-c8 Jessi Beyer — Entrepreneurship Through Acquisition & Ethical Growth I am also thrilled to speak with aspiring entrepreneurs. Please contact me at redacted if I can be of any assistance.