The Ledger
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Beshore: Traditional PE outbids others via heavy leverage and slashing staff
“And they, by the way, they can pay more because they're loading it up with a tremendous amount of non-recourse debt. They're going to slash and burn the team. They're going to treat people for a short period of time while they own it terribly, right? Well, of …”
Beshore: Competitors inflate bids by 30-40% with no intent to close
“Oftentimes we'll lose deals because other groups will come in and throw out a valuation that's 30, 40% higher than ours. They have no intention of ever closing. And on top of that, if you're a fundless sponsor, you don't even raise the capital yet. You haven't…”
Beshore: 80% of lower middle market deals fail after LOI
“The status thrown around sometimes like 20% of deals close after letter of intent in our area of the market. Well, why is that the case? 80% of deals after you've already come to material deal terms don't close.”
Beshore: Wealth is almost always built through family businesses
“Wealth is built Almost always through family businesses. That's how wealth's built. So if you look at every wealthy family, it came from them. Somebody started a business. They were an entrepreneur. They grew that business potentially over generations, and it …”
Beshore: Private equity cannot make 5 to 10 year investments
“One of our favorite questions to ask is what are investments we could make today that wouldn't show up for five or 10 years? Private equity just can't ask that question.”
Beshore: Adventur.es operates as a marketing and manufacturing firm, not private equity
“We don't think of ourselves as being a private equity firm. So we're not a partner led partner driven private equity model. We think of ourselves more as being a marketing firm, right? That's getting the word out about what we're doing, how we're doing it, try…”
Beshore: Baby boomer business ownership transition wave has not yet hit
“The baby boomer ownership wave hasn't really hit yet, which is kind of surprised a lot of people, but I think it totally makes sense. You know, older demographics are getting older, but people are living longer and the health into old age feels like people are…”
Beshore: Anyone under 50 writing a book is somewhat fraudulent
“In fact, I consider really anybody under the age of 50 who writes a book to be somewhat of a fraud, I think.”
Beshore: Fund managers constantly rewrite narratives rather than admit investment mistakes
“So redrawing the bullseye around the arrow after it's already hit is, is something that I pretty frequently see in the investing world. It seems like I read investor letters. Oftentimes there's sometimes is a very good justification for why the numbers maybe d…”
Beshore: Event marketing is a flawed model due to labor intensity and poor scalability
“So if you look at the event marketing business, it's heavy labor and scalability is really challenging. It's location dependent. And for the most part, it's a, what I call a devalued service.”
Beshore: Services perceived as easy are poorly compensated despite actual difficulty
“So it has weird optics associated with it that anything that's not valued as being difficult is not going to be highly compensated. And so you have an interesting combination where it's a really difficult business to perform and it's just not that well paid.”
Beshore: Small business owners frequently destroy value reinvesting excess cash poorly
“By the way, this is the challenge that most small business owners get into is there's not really that high return opportunities for the cashflow generated. So you're generating a lot more cash flow than you are opportunities to deploy that cash flow, and so wh…”
Beshore: Adventur.es defaults to accumulating cash until exceptional opportunities arise
“And, you know, our default is not to do anything. We're fine just building cash. We're fine sitting on our hands, but then you have these opportunities that come along that you want to have the highest opportunity cost in the world.”
Beshore: Adventur.es offers a distinct acquisition product from PE and search funds
“So what we do today is we try to consistently express our opinions about what we're looking for, about how we work, about why we're going after certain segments. We try to make our value proposition incredibly clear in the marketplace of we're offering a diffe…”
Beshore: Search funds are down-market PE with built-in operating partners
“I think that search funds more closely resemble private equity. It seems like sort of combination of down market private equity with operating partner that's already built in is kind of how I think about search funds.”
Beshore: Adventur.es avoids competitive auctions to prevent overpaying
“We typically, with very rare exception, don't participate in auctions. We just subscribe to the winner of an auction is the biggest loser, sort of by definition, you pay the highest price.”
Beshore: Adventur.es is the wrong buyer for 90% of sellers
“90% of the time we're the wrong buyer. 90% of the time a seller just wants the most cash at close, the least risk, and it's a pure financial decision.”
Beshore: Adventur.es conducts diligence in-house unlike traditional private equity
“What makes ad ventures very unusual is that we do almost all of our diligence in-house. So this is very unusual in private equity. Most of it's outsourced, both legal and financial due diligence is outsourced. They're even going to bring in Consultants to do p…”
Beshore: Small business sellers routinely falsely claim they are not needed
“Every single seller has this strange tension between saying that they're irrelevant to the business. They're not needed at all. And when you dig in, they're making all the decisions.”
Beshore: SMB owners treat accounting as retroactive scorekeeping, ignoring data
“Most of these people look at accounting as being sort of the scorekeeping that happens after the game is played. So play the game and then watch the tape. That's accounting. They don't look at accounting or sort of the financial data infrastructure as being a …”
Beshore: Aerospace acquisition candidate generated $3M owner earnings versus $8M EBITDA
“So we looked at an aerospace company where it was doing seven, eight million dollars of EBITDA. But when you got through all of the reinvestments and all of the dynamics in the industry, really the business was doing about three million dollars in true owner e…”
Beshore: Businesses must be valued on cash remaining after maintenance reinvestment
“The ideal thing is you want to value a business on after everything has been paid to kind of keep it on its current trajectory, right? And you have investments in leadership being made that scale with the company as it increases in size and heft. That takes mo…”
Beshore: Adventur.es avoids lowballing and enters deal talks near final price
“We don't do the whole, we're going to low ball you so that you high ball so that we meet in the middle thing. We typically, you know, if we're gonna use a football analogy of a hundred yards, we try to come in on the 40 yard line going to the 50 yard line, rig…”
Beshore: Some LPs passed because Adventur.es charged zero management fees
“And investors, to be frank, some of them didn't invest in our first fund because we didn't have a management fee.”
Beshore: Adventur.es fund requires 75% LP vote to remove him
“And I think how we structured the fund, it's a true blind pool. There's no control. I mean, I think you know, the only control that the investors have is they have to 75% vote, I think. I think that's what it is. 75% level have to vote to remove me, and I'm 15…”
Adventur.es closed its last two acquisitions without senior debt
“The last two deals we've done with no senior lender involved. We've done all equity with a combination of equity and seller debt.”
Beshore: Adventur.es targets companies with $3M to $8M in free cash flow
“Our kind of target market these days is three to eight million in, in free cashflow is kind of where we are, which is right on the cusp, kind of a little bit below private equity and a little bit above search funds.”
Beshore: Adventur.es conducts deep diligence on about 15% of inbound deals
“In terms of real work, I would say probably 15% of the businesses that come through, we take a really close look at.”
Beshore: Personally invested 15% into Adventur.es permanent capital fund
“I'm a heavy investor. I'm a 15% investor in the fund. That's a lot of skin in the game.”
Adventur.es Created Its Own Book Imprint Over Publisher Economics
“The idea that we do all the work and they do some editing and have control, and then we'd go out and sell the book and they would take 70 to 90% of the proceeds just didn't sit well with us. So we created our own imprint. The imprint is called boring books.”