In The Trenches

Are Search Funds Moving Up Market?

This episode is brought to you by⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Boulay, the industry standard for Quality of Earnings, tax, and audit services, serving search fund entrepreneurs for 20+ years⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ [https://boulaygroup.com/services/search-funds/] * This episode is brought to you by ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Oberle Risk Strategies⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠: Insurance Broker and Insurance Due Diligence Provider for Search Funds and Other Small-to-Medium-Sized Businesses⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ [https://oberle-risk.com/in-the-trenches/]     *   Click Here to Subscribe to the In The Trenches YouTube Channel [https://www.youtube.com/@InTheTrenchesSMBPodcast] * Over the past few months, I’ve been presented with five separate opportunities that contemplated the acquisition of a company with $7M or more of EBITDA (this compares to the Search Fund average of $2.2M for the 2022-2023 cohort of Searchers). While I acknowledge that five data points don’t constitute a trend, at the very least this has piqued my curiosity. While the Search Fund ecosystem has worried – seemingly for over a decade now – about the possibility of middle-market Private Equity firms moving down market, it’s interesting to ask whether the inverse may now be happening, at least to a certain extent: Are Search Funds moving up market?

The Four Stages of Leadership Maturity: Why the CEO Must Change Before the Company Can

This episode is brought to you by ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Oberle Risk Strategies⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠: Insurance Broker and Insurance Due Diligence Provider for Search Funds and Other Small-to-Medium-Sized Businesses⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ [https://oberle-risk.com/landing-page/in-the-trenches/] * This episode is brought to you by ⁠⁠⁠⁠⁠B⁠⁠⁠⁠⁠⁠⁠⁠⁠oulay, the industry standard for Quality of Earnings, tax, and audit services, serving search fund entrepreneurs for 20+ years⁠ [https://boulaygroup.com/services/search-funds/]⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ * In the acquisition entrepreneurship ecosystem, it’s well understood that the companies that we acquire often undergo change, maturation, and evolution under the watchful eye of the new CEO. What I think we tend to under appreciate, however, is the change, maturation and evolution required of the CEO herself. When I think back to the CEO that I was in year 6 of my own hold period, that person is almost unrecognizable relative to the CEO that I was in my first 6-12 months at the helm… and that evolution wasn’t just specific to commercial considerations, though there were plenty of examples of those. A lot of it concerned the personal, psychological, and emotional realities of being both a leader and an entrepreneur. My guest today, Jennifer Garvey Berger, is the Author of Changing on the Job (among several other books), and has introduced a framework that shows what she thinks are the four rather predictable stages of leadership maturity. In our discussion today, we discuss what those stages are, what fundamentally changes from one stage to the next, why it’s important for a leader to know which of the 4 stages that they’re currently in, how to self-diagnose, where she most commonly sees high-performing executives or new leaders get “stuck”, and whether leadership maturity is simply a function of the passage of time.

“Don’t F*ck It Up": Les Trachtman on Avoiding Post-Close Founder Succession Mistakes

This episode is brought to you by⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Boulay, the industry standard for Quality of Earnings, tax, and audit services, serving search fund entrepreneurs for 20+ years⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ [https://boulaygroup.com/services/search-funds/] * This episode is brought to you by ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Oberle Risk Strategies⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠: Insurance Broker and Insurance Due Diligence Provider for Search Funds and Other Small-to-Medium-Sized Businesses⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ [https://oberle-risk.com/in-the-trenches/]     *   When assuming the leadership role of a company that was previously held by its original Founder, new CEOs are often surprised at how difficult it can be to properly manage that relationship. A non-functional relationship between the incoming and outgoing owners can divide the employee base, create confusion about who to approach with problems and opportunities, and can limit critical transfers of knowledge and relationships that incoming CEOs typically require. Incoming owners often themselves in a bit of an awkward position during their first few months on the job: On one hand, they've likely just spent many months slogging through a protracted purchase process with the seller that was likely filled with contentious negotiations and several emotional disagreements. Yet on the other hand, almost immediately upon the closing of that acquisition, new CEOs will likely find themselves meaningfully in need of the help, knowledge and experience that only the person from whom they purchased the business can provide. In other words: Upon closing, what the seller wants from the buyer (mostly transaction proceeds) has already been received. What the buyer wants of the seller (help, knowledge transfer, introductions, and so on), hasn’t even yet begun. To help us better understand how to manage this critical hand off process, I was joined this week by Les Trachtman, Author of “Don't F**k It Up: How Founders and Their Successors Can Avoid the Clichés That Inhibit Growth [https://www.amazon.ca/Dont-Up-Founders-Successors-Clich%C3%A9s/dp/1632991292]”. Les is a seasoned entrepreneur, educator, and author with over four decades of entrepreneurial experience. He is also an adjunct instructor at the Johns Hopkins University Carey Business School, and is a frequent guest lecturer at Harvard Business School, MIT and other academic institutions, where he often talks to students about the unappreciated nuances of Founder succession.

Why Most Incentive Plans Fail—and How Thoughtful CEOs Get Them Right

I suspect that the CEOs in our audience are likely to agree that crafting a truly effective incentive compensation plan is simultaneously one of the most difficult, and one of the most important, tasks that a small business CEO will face. Charlie Munger is famous for saying “Never, ever think about something else when you should be thinking about the power of incentives.” He's also said “I think I’ve been in the top 5% of my age cohort, all my life, in understanding the power of incentives, and all my life I’ve underestimated them.” But why is it so difficult to craft a truly effective incentive plan? Based on many years of experience putting them together myself, here are just a few of the challenges that I faced: 1. Avoiding unintended consequences and people "gaming" the system 2. How to balance individual goals vs. company goals vs. departmental goals 3. How to incent people on company goals when the achievement of those goals falls largely outside of their control 4. If or how to change a comp plan if circumstances change materially within any given year 5. How to manage changes in goals & targets across any two given years 6. The balance between simplicity & detail 7. How to handle inherited employees whose salaries may fall outside of company-wide pay bands To help me untangle each of these challenges, this week I'm joined by Stacey Carroll. Stacey has spent substantially her entire career leading HR organizations across a wide array of companies, with a specific focus on compensation & benefits. She has also spent the past 14 years leading HR Experts on Call, a company she founded where she acts as an interim HR leader for small and medium-sized businesses.

Installing an Operating System in Your Business: Lessons from Real EOS Implementations

This episode is brought to you by ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Boulay, the industry standard for Quality of Earnings, tax, and audit services, serving search fund entrepreneurs for 20+ years⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ [https://boulaygroup.com/] * This episode is brought to you by ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Oberle Risk Strategies⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠: Insurance Broker and Insurance Due Diligence Provider for Search Funds and Other Small-to-Medium-Sized Businesses⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ [https://oberle-risk.com/in-the-trenches/]     *   Over the past handful of years, there has been substantial growth in the number of companies who have decided to implement formal “operating systems” to govern certain strategic and operational decisions within their businesses. I implemented EOS (short for “the Entrepreneurial Operating System”) in my own company beginning in 2015, and we continued to operate under its various principles and structures until successfully selling the company in late 2020. Based on that first-hand experience, I thought it would be worthwhile to dig into a number of recurring FAQs that I often receive from other CEOs who are considering implementing an operating system within their own companies. To help me work through these FAQs, I was joined by Alex Hodgkin. In addition to being an entrepreneur and CEO himself, Alex also co-founded the Entrepreneurship Through Acquisition program at the University of Chicago’s Booth School of Business. Currently, Alex runs his own business specifically to help small business CEOs implement the Entrepreneurial Operating System.