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In this episode, Drew shares his favorite resources and private equity investment contacts.
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EXCLUSIVE RESOURCE: Prefer to read rather than listen? the text transcribe from this episode.
Highlights
A few names to file away and pull-out when you're looking to sell
Links / Resources
Brian Colton, Brooklyn-Equity
Carson Biederman, Digital Fuel Capital
Tom Clark, Comvest
Dominic Ang, Turn/River Capital
Kingswood Partners
Me
Chris Yates, Rhodium Weekend
Empire Flippers,  Justin Cooke
Quiet Light Podcast, Episodes two and eight
Transcript
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Read The Transcript:
Hey, everybody. It's Drew Sanocki with the Nerd Marketing Podcast. We are talking about buying and selling businesses in this short web series if you will. This one, this episode, is the final one. Here I kind of want to open up my contacts to you and walk you through some people who are doing some interesting buying of businesses like yours, so these are ... Just file it away. If you hope to sell someday, these are some of the people who may be interested in buying your business, whether you run a SaaS company or a direct-to-consumer brand.
I'm going to give you some resources here, and also just want to make it clear that it's not what you know; it's who you know. Part of fetching a good valuation and being able to sell your business or raise money for your business is knowing the kind of people who would love to own your business, right? Because these buyers, these funds come in a million different flavors. What we want to focus on here is not Robert Smith and Vista Capital. He's going for the billion-dollar SaaS companies. I want to talk about people who are playing in our space, direct-to-consumer and for smaller companies.
First up is a friend of mine over in Brooklyn. His name's Brian Colton. He runs Brooklyn Equities. Brooklyn Equities is his vehicle for buying just solid, good direct-to-consumer brands. He owns one called Sherrill Tree that I want to say he bought back when it was doing about $1 million in revenue and is now at $40 million in revenue. I mean, he's just had a couple big success stories. Those numbers, don't quote me on them. I'm just trying to give you a sense of what he buys. His typical checks are typically $5 to $15 million, so he writes checks that size in return for which he wants majority ownership of the company. He'll take a board seat. He's targeting growth-ready companies that are doing under $5 million in EBITDA.
I would also say I've seen him go after companies that are high in recurring revenue, often from B2B, so it could be an e-commerce company with a strong B2B play. I mentioned Sherrill Tree, so they do arborist equipment, so again, lots of B2B buyers, which means high recurring revenue, which means lower risk in the business as I went over a couple of episodes ago. So, his name's Brian. He's at brooklyn-equity.com. I am an operating partner with him on his funds, so feel free to reach out to me with any questions about Brooklyn Equities.
Number two would be Carson Biederman at Digital Fuel Capital. Carson's up in Boston, another friend of mine. Great photographer and great ... just really sharp digital marketing mind. Again, probably goes after deals of the same size. I would say Carson a little bit more likes companies with passionate customers where content can play really well. He's got ski.com. He's got a couple sports apparel companies where there's a passionate user base. He sees that as a differentiator versus Amazon. He also owns Vermont Teddy Bear, which is a brand a lot of us are familiar with. I've certainly heard of them, growing up in the Northeast. Carson's operation is a little bit different at Digital Fuel Capital because he is growing an internal team of operators and marketers,
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00:00:08everybody is too salty nerd marketing podcast we are talking about buying and selling businesses in this short web series if you will this one this episode is the final one and here I kind of want to open up my contacts to you and walk you through some people
00:00:29who are doing some interesting buying of businesses like yours so that's a these are you know just filed away if you hope to sell some day these are some of the people are who may be interested in buying your business are whether you run a sass company or
00:00:46a %HESITATION in a direct consumer brand and up to give you some resources here and also just want to make it clear that it's it's kind of it's not what you know it's who you know right like part of fetching a good valuation being able to sell your
00:01:04business to raise money for your business is knowing the kind of people who would love to own your business right because these buyers these funds come in a million different flavors %HESITATION what we want to focus on here is not up Robert Smith invested capital on he's going
00:01:23for the billion dollar companies I want to talk about people who are playing in our space direct to consumer and %HESITATION for smaller companies so number one first stop is a friend of mine over Brooklyn his name's Bryan Colton and he runs Brooklyn equities so Brooklyn equities is
00:01:47his vehicle for buying just solid good direct to consumer brands he he owns one called Cheryl tree that I want to say he bought back when it was doing about a million of revenue and is now at forty million a revenue I mean it's he's just had a
00:02:04couple big success stories %HESITATION though those numbers dot don't quote me on them I'm just trying to give you a sense of what he he buys his typical checks are typically five to fifteen million so he wrote you know you you write strikes that size in return for
00:02:21which she wants majority ownership of the company I'll take a board board seat and %HESITATION you know he he's targeting growth ready companies that are doing under five million in the data and I would I would also say I've seen him go after companies that are high in
00:02:40recurring revenue often from BDD so it could be any commerce company with a strong beat to be play I mention Cheryl trees so they do arborist equipment so again lots of the buyers which means high recurring revenue which means lower risk in the business as I went over
00:02:56a couple episodes ago so since Brian is a Brooklyn dosh equity equity dot com and I am an operating partner with him on his farm so you'll feel free to reach out to me many questions about Brooklyn equities number two would be Carson betterment and digital fuel capital
00:03:17Carson's up in Boston another friend of mine great photographer %HESITATION in great in out just really sharp digital marketing mind %HESITATION again probably goes after deals of the same size and it's a curse and a little bit more likes companies with passionate customers were content can play really
00:03:37well so he's got a ski dot com's knowledgeable sports apparel companies with is a passionate user base he sees that as a as a differentiator obverses Amazon also owns like god Vermont teddy bear the brand a lot of us are familiar with I've certainly heard of them growing
00:03:55up in the northeast Carson's operation is a little bit different additional fuel capital because he is growing in internal team of of operators of marketers the idea being that he can you can get synergies are among his portfolio if he buys a company does a lot of marketing
00:04:13for them so he's a digital feel capital dot com and reach out anytime about Carson again I consider him a really close colleague and let's move on to another Peck Tom Clark at contests so Tom and I been working together for one say five or six years Tom
00:04:34I'm I'm an operating partner at Comcast or work with them on a couple different deals that's were karmaloop came from caught Tom runs a bigger fund so his check sizes larger so say like fifty million up contest like likes to refer to rot to write checks of that
00:04:50size in return you know the by the company his his investment thesis is kind of interesting he feels that bigger family run businesses are often inefficient especially on the digital side because you you know they've got cousin Joey running accounting and cousin Steve is running operations and cousin
00:05:10Susie is running marketing and it's not always the most efficient use of well human human capital right so %HESITATION he likes those businesses %HESITATION they're often offline businesses within under optimized online element and I worked with him on that discount mugs deal so they ended up by buying
00:05:32out discount mugs dot com that's been a big success story for them Robbins brothers dot coms another one old time pottery all all brands that I've I've worked on and %HESITATION Sir just another another flavor of private equity investor %HESITATION and obviously very different from Carson very different
00:05:51from Brian %HESITATION you know just to put this you know just to sort of paint a picture for you Brian operates out of a coffee shop in Brooklyn and he does not have a fund so what Brian needs money for a deal he raises money from any number
00:06:08of passive investors he has he has no problem raising those kind of checks where as Tom and contest is located in a you know an apartment building S. aren't perfect in a out in an office building in west Palm Beach and you know they have raised formal funds
00:06:24so they've got axe billion dollars under management they don't need to raise money for deal by deal they already gotten the fund so just enough to to data points as far as what these people to look like %HESITATION another one I I worked with quite a bit I
00:06:41was I was up operating wrote a venture partner with his fund for about a year is is Dominic ang act turn river capital in the bay area dom is one of the smartest guys I know and his focuses on sass I have watched as don has started with
00:06:59the I think he started out with fifty thousand dollar acquisitions so kind of piecing things together maybe not often slip up but but close to it and out today he's on his third funds this one I want to say is a hundred fifty million dollars he raised in
00:07:15his deal sizes gone way up he writes now fifty seventy million dollar checks and %HESITATION is mostly interested in sass so software companies he is very bullish on high velocity sales teams so his thesis is you know a lot of this size companies are under optimized on the
00:07:35on the sell side you will acquire them get the sales team cranking get revenue up and often we merchandise them %HESITATION and sell them to a higher valuation to the big players in the bay area so while I worked with him on this company security which is a
00:07:54a word press virus security system software we optimize their company in and turn reversal that to to go Daddy %HESITATION book fresh to square in the center number he's been very successful so yeah you know you got it you don't know what these people do because you wouldn't
00:08:14you wouldn't pitch a direct to consumer retail brand to %HESITATION to Dominic he's only interested in sass and only a certain size and conversely you probably wouldn't go to Bryan Colton with this ask me so out you know this is the kind of homework you gotta do before
00:08:30you think about raising money or trying to sell your business you wanna you wanna make sure you bring the right buyer to the table let's let's see who else we've gotta kings would partners so I I bought %HESITATION auto anything through kings with partners or with king kings
00:08:46would part or on behalf of kings were partners more accurately kings would is a couple people in Los Angeles and they are former service guys they're very value focused so just like a value in a growth stock if you think of that kings would focuses on value place
00:09:07so they like to get a great price on an asset you know that the dream deal for Cerberus are sorry for kings would would be finding you know the the company that has more cash and inventory than the deal price you know it in so that that that
00:09:25happens very it even happens in the public markets that are there are companies trading for below the amount of cash they have in the bank you know that that's the dream value deal %HESITATION value investing is great investing it's boring investing because you're not it's the opposite of
00:09:42venture capital you know they're not buying social networks they're just buying you know kind of these being down companies that have a very low valuation the auto anything dealers is sort of indicative because this was a diverse divestiture also AutoZone wanted to get rid of this asset or
00:10:02divest itself of this asset when that happens you often get you know if you're in the right place at the right time you can get a good price so %HESITATION that's kings what and I and I would mention me as a as a private equity investor you might
00:10:15want to know obviously those listening to this list now that I've done a couple deals %HESITATION myself and you know I am I do not have a formal fund I am probably more what %HESITATION if you want to get into the game yourself what you might want to
00:10:34model because it's for me it's about you know if I find the right deal %HESITATION I can try to raise capital for that deal and I did that to be a lot less onerous than raising a fund the fund is hard and there are a lot of legal
00:10:51requirements around it so it's not something I'm as interested in art for me it's much more opportunistic and I want to support my lifestyle but you know if I find the right brand I'm excited about alarm I'm not averse to you know owning it and and or or
00:11:08trying up to buy that asset so those are a couple names you might want to know %HESITATION and so I'm just I throw myself out there I am by no means the veteran a private equity investor as those I've named in this %HESITATION it in this podcast but
00:11:25you know if you want to run a deal by me or or have something that looks interesting Hey I'm all yours I'd love to take a look at it so well reach out any time during our marketing dot com now those are some names of people who sort
00:11:38of play in direct to consumer and I think our next I would like to just give you some resources so the first resource I I've I met this guy Chris Yates maybe six months ago he run your runs rhodium weekend and it's kind of like this mastermind community
00:11:59around buying and selling businesses arm he's just a really nice honest good guy and sometime talking to him and I haven't been to is of that but you know he's got an online community and it's it's a bunch of people sort of swapping stories about buying and selling
00:12:19companies and %HESITATION you know he's you might wanna just check out rhodium weekend I'll put a link in the the show notes to it Chris Yates is the name of the guy who runs it and if you're thinking of getting into getting into the game game of buying
00:12:33and selling companies rhodium rhodium weekend would be a nice a nice thing to to check out %HESITATION empire flippers Justin Kirk of also no Justin for number years you know he originally started flipping outward sites and I think he's moved on to bigger things bigger bigger businesses %HESITATION
00:12:56he's reruns empire flippers I think it's an empire flippers dot com but again another resource in both Chris and Justin and this idiot they're just examples of where you can start today without a lot of personal capital mean you're not gonna be putting together ten million dollar deals
00:13:13or how to million dollar deals but how about a thousand dollar deal or five five thousand dollar deal our companies you can buy for that and %HESITATION both Chris and Justin would know a lot more about that %HESITATION great resources you know the brokerage sites are a really
00:13:29good it I've I've been enjoying the quiet life brokerage podcast so quiet light does a lot of E. commerce work and in particular their episodes too in eight as I as I bring up the show notes for to an eight in both episodes they highlight individuals who are
00:13:50building their own little private equity empire of say five years starting with five figure businesses moving up to like seven figure businesses but in other chipping away at it you're doing a one by one they're doing they're they're using the cash flow for their initial purchases to fun
00:14:09latter purchases so I just I love the model and %HESITATION you know it takes some components but I think once you get your head around it it's a great way to lever up your time and effort so I encourage you to check out their episodes to an eight
00:14:26if one is called how to buy multiple businesses without going insane in quietly talks to this entrepreneur she killed prasada who is just bought one business after the next in four years I think he's got a company's all self financed so really impressive what he's done and then
00:14:47the other episode is called building a portfolio of sass businesses the right way and there they talked to a guy named Kevin who started out with a three hundred dollars content site selling tattoos and he's just moved on from there to to own a portfolio of sass so
00:15:03it can be done it can be done at all levels are you don't need access to some of the people I discussed in this podcast to get started and dumb you know just to kind of wrap up these few episodes on private equity I started out by telling
00:15:19a story about how I sold my first business and %HESITATION it kind of convinced me that buying and selling businesses where you accumulate the most wealth as an entrepreneur at least for that kind of entrepreneurship I plan and as I've gotten more than of senior slash older in
00:15:39my career I'm I'm in my mid forties now this is this is entrepreneurship in my forties and fifties arm I know what I have a family and no longer want to work seven days a week cracking on you know fixing a Facebook out or trying to get my
00:15:55sight back up like I could do that but I but I feel like this is just a much provides a much better lifestyle if you buy an asset that has cash flow in customers you can make the decision proactively when you want to work on that %HESITATION in
00:16:13when you want to kind of let it let it sit for awhile and maybe move on to to purchase the next one so %HESITATION interest it's just a nice nice play for the next couple of years and I I encourage you to consider it I hope I've given
00:16:28you a nice overview of some of what goes into that process how you might get started on how you might increase your valuation in these last few podcasts you can find out more and listen to the whole webisode series at nerd marketing dot com slash private equity give
00:16:47it a listen and I've enjoyed conduct during this overview and I were going to go from here I'd like to you know to get back in the marketing and start drilling down on some of the things we're doing it auto anything to to increase our profitability there so
00:17:04that that's to come but for now I hope you've enjoyed this %HESITATION this detour into the world of private equity as always leave any comments and I'd love to hear from you as far as actions might have helped in any way means truce and argue this is the
00:17:21nerve marketing podcast thanks for listening

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