SBA Acquisition to $9m Cash Exit in 5 Years

I got it up here on screen. Andy, what, what are your kind. Yeah, what are your own takeaways from your own self funded search investing over these last 3ish years?

Yeah. So you know, to orient the listeners who are only listening at home, we have a, you know, a large Excel sheet which has anonymized industry types but it has geography, initial invested capital put in current MOIC as I value it and then cash has actually been kicked out along with the entry multiples, entry revenue and then the last 12 months EBITDA and revenue as well. So this is something…

So those were businesses where almost immediately after acquisition a major issue was identified with the business. Either fraud on the seller's part in one case or major industry tailwind that was going to be a problem the entire time. Of those other five investments, one was a 27X which was a sort of hit type business, sort of more of a VC outcome.

Unusual. You had two, four times and two, three times. Those are actively exited businesses. So ones that I put in the cash and they've already received the full cash out as the business is exited.

Other deals that are currently active, which are the other 19 deals you see, I think pretty consistently cash is very rarely returned at all before two years after the acquisition. So I think a lot of prospective searchers model it as if their IRRs would be driven by returning initial capital very quickly instead of going towards debt pay down or. Or towards other capital capital uses.

I also see that my investing is pretty clustered geographically. So I live in Colorado. I'm much more heavily weighted towards Colorado than you would expect on average.

I'm also weighted towards the coasts, so towards the west coast and east coast and spring, especially the Southeast and Texas. Nothing at all though in the Midwest. So I think a it's sort of interesting that as a search investor your.

Your investor network will probably weigh you pretty heavily towards your geography and then the geography of the type of people you invest in, which for me is much more focused around HBS grads and those people tend to move to the coast instead of moving to the Midwest. Some other things I find is that I find.

Let me jump in with this point about geography. All these Colorado investments. Did you meet all of those searchers in person?

Some of them. I've never met them in person, which is sort of funny for I've just had the same phone call. But once you are known as somebody in the area to have coffee with or have a call with, I think the hurdle is easier of having had that initial intro searcher call when they moved out to Denver and they said hey, I know you're a successful searcher who lives in the area. Can you take 30…

And they're more likely to do that with somebody who lives in the same geography and someone who lives in a different geography. And when they get to the point where they have a deal under Alli, then you're obviously on the list of someone for them to call as well for a investment.