Two operators bought peer companies in fragmented sectors like HVAC and managed IT, grew to $80M revenue without PE interference, then brought in PE capital while keeping control. Weeks argues sellers should identify operator-buyers over checkbook buyers and plan for what happens after the sale.
If you own a business and you're scared of private equity, this is the most important 8 minutes you're gonna watch this year. 2 operators were so scared of PE, they did something almost nobody does. They became the buyer. And the way they did it is a playbook you can copy. Here, my friends, is exactly how it works. Let me describe a phone call. See if this sounds familiar to any of you. You built something real. Maybe it's $10 million in revenue. Maybe it's $2 million. It really doesn't matter. And once a month, your phone rings. Someone's calling. Somebody you've never met wants to buy what you built so they can optimize it. You know what optimize means? It means the people who've been with you for 15 years get a new org chart. It means the way you take care of customers gets replaced by a process. It means The thing stops being yours before the ink is even dry. One founder I talked to put it this way: We don't like PE; we actually hate them. So let's talk about that. The guy that brought this up on a call—he ran a managed IT company, started it back in 2010. Grew it to about 75 people and $12 million a year. Major success, like awesome stuff. Great business, real business. And every month, that phone call. Most owners do one of two things with that fear. They ignore it or eventually they cave to it. This guy picked door number 3. He stopped Being the target and he became the buyer. Found another founder in the same boat, a guy running a $25 million shop, getting the same type of phone calls. Instead of waiting to get bought, they started buying on their own dime at first. No fund, no institutional money. Just 2 operators acquiring companies run by people exactly like them. Where are they now? These guys are north of $80 million in rev, 300+ people on the payroll, 10, 10 acquisitions deep. And here, my friends, is their acquisition playbook. playbook, because this is the part worth writing down. Buy good companies and leave them the hell alone. Everything the customer touches stays exactly where it is— same texts, same phone number, same person answering it. The only thing that merges is the boring stuff in the back— one accounting system, One HR system. Nobody shows up with a clipboard and a reorg. You know, that 28-year-old MBA. And I can talk to it because I am an MBA, not 28. That's it. That's the playbook. It sounds too simple. And it works precisely because every other buyer can't resist doing the exact opposite. Now, you, you might be thinking, good for them. That's one story. It's not one story. It's the wave. Last year, 466 managed IT companies got bought in North America. That's up 20% year over year. And private equity was involved in roughly 7 out of every 10 of those deals. This is happening in IT services. It's happening in HVAC, in landscaping, in accounting firms, in vet clinics. If you own a good business in a fragmented industry, the wave is coming to your beach. The only question is whether you're standing on the board or you're standing in front of the wave. Here's why the story or where the story turns. And this is the single most important idea in this video. After, after years of buying with their own money, these 2 guys finally took outside capital. And you know where it came from? PE. That's right. Private equity money. The same money they swore they hated. Contradiction? No, because of what the capital partner said to them. Here's the quote from PE partner: We don't understand your space like you do. We're going to give you the capital. You keep running it the way you run it. Stop and look at what exactly happened there. They never hated private equity's money. Money is green. They hated private equity's control. And it turns out those are 2 very separate and distinct things. You can negotiate separately. Almost nobody knows that. That money is not the enemy. The 28-year-old with a spreadsheet and a mandate to find efficiencies, that, my friends, that's the fucking enemy. Most founders bundle the 2 together, call it selling out. And walk away from capital they could have taken on their own terms. Take the money, keep the controls. Reminds me of the Godfather scene. Anyways, take the money, man, keep the controls. That is the real lesson here. Now, the part that costs them real money to learn, so you can learn it now for free. This costs them money, but you, my friends, again, can learn it for free. Their original plan Buy and leave alone. It broke not because it was dumb, because of something nobody warns you about. The day a founder sells, they start checking out. Even the ones who swear they're staying, even the ones who actually mean it. Here's how these 2 guys figured it out. One of his acquired owners came to him proud as could be and said, Got to be honest with you. I'm taking a 2-week vacation. It's the first one since I started the business. Now, most buyers would smile and say, you know what, buddy? Good for you. What this guy heard was, I'm done. And the numbers, the numbers backed him up. Performance, it slid after moments just like that. So, they built a real integration team. And stopped pretending the seller's heart stays in it forever. They plan for the checkout now instead of getting surprised by it. If you are a seller, seriously flip that and use it. The buyer who plans for you to disengage, that's the honest buyer. The buyer whose model needs you. Fired up and aggressive as you used to be for 5 more years is selling a fantasy. And when you cool off, you become the problem in your own earnout. Scary stuff, man. Think about it. You're the problem in your own earnout. Not a good scenario. One more story here because it tells you who you actually want across the table. It's my stand-up desk. Across my stand-up desk. Big industry conference, right? The hall where every acquirer has a booth. A seller walks up to this founder and asks him point blank, why would I sell to you instead of all these other people? His answer? Everybody you've talked to in this room was hired to stand here And pitch you. I'm one of the owners, man. I started one of these companies too. You want to talk about which antivirus you're running? I'll sit down. We can have a beer and talk antivirus. Nobody else here, nobody else here is going to do that. Operator versus rep. That, my friends, is the whole decision. And most sellers never even realize It's on the menu. Last thing, the money after the money. A lot of his sellers don't take 100% cash. They roll some equity into the combined company and ride the next sale because this guy very soon is going to cash out to who he hates, PE. If the operators are good, that second bite can be more than the first check. Second bite. The quiet fortune is in that second bite. The number at close gets all the attention. The second bite is where the quiet fortunes get made, if and only if you pick the right people to bet on. So here's your homework, and it takes 10 minutes. Tomorrow morning, whenever you see this the next morning, make a list of every likely buyer for your business. You know who they are. Next to each name, write one word: operator or checkbook. That one column will teach you more about your exit than a year of waiting for that damn phone to ring. Do me a favor. Tell me what you find In the comments, and if you if you want the deeper version of this, the actual contract terms where founders lose control without realizing it, that's in this week's Weeks Weekly Newsletter. The link will be in the show description. I'm Ed Weeks Jr. I appreciate you watching. I'll see you soon in the next one. Peace.
