In The Trenches Steve Divitkos

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During my ~10 years as a searcher and CEO, I had an endless number of commercial problems and opportunities that required my attention at any given time. However, it was often the personal considerations that kept me up at night: I rarely lost sleep over whether to raise prices by 5% or 15%, but instead was kept awake by the idea that even asking the question suggested that I didn’t truly know what I was doing. I wasn’t anxious about what mix of equity and debt to include in a letter of intent, but was instead anxious about the prospect of not finding a company to acquire at all after spending two years in pursuit of one.





For this reason, I thought it might be helpful to compile some of the lessons that I’ve learned over the years that cover the “human side” of acquisition entrepreneurship. I hope at least one of them provides you with a reason to reflect on your own situation, and perhaps make a change for the better in the process.

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Based on my own experience as a software CEO, I think that Product Management is one of the most important - and one of the lest well understood - ingredients to building a successful software company. Many software businesses (particularly mature ones still led by their original Founders) don't have any product management function at all. While this may be tenable under the Founder's leadership, it is almost never tenable when the company is acquired and led by a CEO with minimal industry experience.





It is also my experience that many problems that seem to be attributable to the engineering group (technical debt, high levels of customization, regularly missing deadlines, etc.) are actually product management problems masquerading as development problems. This episode, originally published in 2021, is as applicable today as it was then.



My guest today is Rich Mironov, who is North America's preeminent Product Management thought leader. He has spent 40 years in the software industry in numerous capacities, and currently acts as a Coach, Consultant, and Interim Executive for CEOs and Heads of Product across Canada and the United States, advising them on a diverse range of issues spanning product, marketing, engineering, and sales. Rich has led Product Management at six software companies, and has now consulted for more than 170 technology businesses of all sizes. He is the author of "Product Bytes", a hugely popular and long-running blog on software, start-ups, product strategies, Silicon Valley, and the inner life of product managers. Our conversation covers hiring a Product leader and Product team, how to think about prioritizing products/features/functions, how Product should interface with Sales and other internal departments, how involved CEOs should be in Product, and what fatal mistakes he’s seen Product Managers make.

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Though it is correct to suggest that all acquisitions are funded through some combination of cash-on-hand, debt, or equity, it’s also a bit of an oversimplification. Indeed, the financing options available to prospective acquirors are numerous, and in today’s blog post, I focus specifically on debt, and evaluate the four most common sources of leverage used to finance the purchase of small and medium-sized businesses. These include bank debt, mezzanine debt, seller financing, and SBA loans.

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I recently published a blog post, Why You May Want to Reconsider Your Industry Roll-up Strategy, within which I detailed many of the ways in which consolidation strategies can go wrong. In today’s episode, I want to look at the opposite side of that coin and dig deeply into an instance where a consolidation strategy went very right.



I'm joined today by Jay Davis & Jason Pananos, who, after graduating from business school in 2008, acquired Vector Disease Control, a company that they grew from ~$7M to ~$50M in revenue in ~7 years through successfully executing on 14 bolt-on acquisitions.

This episode is brought to you by ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠The Profit Line: The Outsourced Finance & Accounting Department for Small and Medium Sized Businesses⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠




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Today’s episode is all about participating in brokered transactions, and working with brokers more broadly (by "brokers", I am referring to investment banks, accounting firms, business brokers, or any other sell-side advisor whose job it is to help clients sell their companies). To inform our discussion today, I’m joined by Ryan Farkas, a Partner, Managing Director and the Practice Leader in M&A and Capital Markets at BDO, who has successfully closed countless sell-side advisory transactions spanning dozens of industries.

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This episode is brought to you by ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠The Profit Line: The Outsourced Finance & Accounting Department for Small and Medium Sized Businesses⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠



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Though pursuing the consolidation of an industry is not necessarily a new thesis within the search fund ecosystem, I have observed that it has become increasingly popular over the past few years among prospective searchers. Though there have been, and will continue to be, many consolidation success stories within the search fund ecosystem, I suspect there will be an equal number of failures, though this latter outcome will surely be much less publicized. Though I’m not against consolidation theses in and of themselves, I do find myself more skeptical than most when presented with one. In today’s blog post, I’ll attempt to explain why