Zach Whitt retweeted
A good broker or LMM IB is who sellers need to talk to about NWC expectations
Accountants are great. We work with a ton of them for QoEs, tax planning with sellers, confirming accruals, etc, but unless they’re directly involved in transactions or valuations, most offer little in the way of NWC advice and its affect on pricing
Zach Whitt retweeted
Last night me and my kiddos were frustrated out 4th of July plans would be spoiled by rain.
Today I’m counting my blessings and praying for the families affected by the awful flooding down in Kerrville.
texasmonthly.com/news-politi…
Zach Whitt retweeted
10 hours is pushing it, but people who have owned a small business know how true this can be.
For the sake of argument, let’s say it’s 20 hours a week. 20 hours of real work can easily mean an entire week or years or decades of stress. Tons of business owners are in this boat.
1) the owner, not the biz is on autopilot, he puts out fires when he needs to, but there’s no real growth, no working *on* the business.
2) he’s only needed for the most critical escalations, but he’s the *only* person who can resolve them; 20 hours of actual work is 60 hours of on call.
3) he hasn’t taken a vacation in 20 years without a driver threatening to quit, or a GC who says they can’t pay, or a customer who says an employee took a piss break in her back yard and she has it on camera.
4) 60% of the owner’s net worth is in the business, but his kids are about to graduate college and they aren’t coming back to town, so he’s thinking about moving, he wants a change.
5) the other 40% is in real estate and it’s gone quite well, he’s at a point in life where he can make larger investments for lower returns, and he’s got friends to invest with.
5) the owner has never hired an executive level manager, and he’s never going to; he didn’t start his own business because he plays nicely with others, it just isn’t going to happen.
So, before you label a seller a lier, maybe ask a few more questions and get to the root of the decision, as well as the truth of the weekly workload.
We ask a ton of clarifying questions too, but we still sometimes get it wrong. The most common response to “how much do you work?” Is “ah not really that much.”
In reality, it might be less than he used to, but he’s still the linchpin of the operation. The most critically important part time employee in history!
Zach Whitt retweeted
We closed our first deal as an independent sponsor a few weeks ago. It’s a nice service business with good margins in a niche corner of the market. We’re in at a fair price with reasonable incentives for everyone involved. If we execute, we’ll do well. You might think that I’d write a thread espousing all the tips and tricks that we used to execute this acquisition.
That’s not this thread.
We’ve been at this for 3.5 years and just closed our first deal. Here are all the things I wish I’d known as a non-PE guy co-founding an IS firm. I have a small audience on X, but hopefully this is valuable to a handful of folks. If not, writing this was a good exercise for me to reflect through.
Sorry in advance. No sunshine and rainbows here.
Zach Whitt retweeted
I have no problem with hourly billing.
In fact, I want my lawyers incentivized to triple check every single clause that might come back to hurt me.
But I'm with you on 2 & 3. The issue I see is inability to be creative to find alternative options when there are fundamental differences.
Zach Whitt retweeted
I don't think I can influence global politics.
I don't think I can influence national politics.
I can influence my four little kids!
I can produce work I'm proud of!
Here's my best argument for becoming happier by just logging off:
