Learn from Britain's savviest HoldCo builders. Last call for Baltic Family Capital!

Few things excite us as much as hearing from acquisition entrepreneurs on how their first deal went. How did they pick the industry? What outreach sequences did they use? How much cold hard cash did they put in? And ultimately, how's it going? 

And that's exactly how we spent last Thursday afternoon: in a room with 100 founders, investors and advisors. Even though the event was targeted at UK serial acquirers, it attracted a surprising number of Spanish, Czech, Italian and German HoldCo builders and family offices hungry for a piece of action. 

Why did they all come? Because the SME succession opportunity isn't limited to the UK. Across EU 27 + the UK there are 1.8 MILLION small and medium enterprises. 

Most of the things that were said were sensitive and will remain for the benefit of those who attended. However, we are happy to share some nuggets.   

Before we dive in: last call for investors in Baltic Family Capital! 

What is Baltic Family Capital? 

• A permanent home for high quality SMEs in Estonia, Latvia and Lithuania

• We will acquire profitable businesses with €1,000,000-€10,000,000 in revenue; sticky, diversified customer bases; and capital-efficient business models 

• Like Lifco, but at an early stage (side note: the Scandi serial acquirers are largely absent from the Baltics)

• Alex is the CEO 😄

• We are closing in on the €10,000,000 equity fundraising target and the M&A pipeline is looking really good

Interested in becoming a shareholder? Hit reply and Alex will get in touch with you!

Alright - back to the UK Serial Acquirer Summit. 

We kicked off with a panel on deal origination. Jamil Anakkar, a paramedic-turned consultant-turned acquisition entrepreneur walked us through his experience with Preventr - a fire safety rollup.

How did Jamil form conviction around fire safety? Two things: 

• An industry that is both highly fragmented and recession-resistant

• So many things up in the air after the recent UK election (e.g. the rumoured CGT hike). Not health and safety regulations - a rollback is highly unlikely under any regime 

How did Jamil source his first deal?

He started with a database for mission critical service industries such as drainage, waste management and life systems (which include fire safety). The 4,000 letters he sent (snail mail for the win!) yielded in a 1% response rate. Jamil also talked about a really clever scheme to extract trapped cash in the business… but you have to ask him directly how did it! 

In our second panel, Sam Turner from Advantos and Mark Wharrier from Scientific Partners discussed their playbooks for running HoldCos. 

Advantos is a rollup of mechanical and electrical contractors and facilities management companies. Less than 3 years in, it produces revenue of £30m revenue across 5 businesses. All 5 deals were done on a deal-by-deal basis, limiting risk of cross-contamination (more on that later).

The 6th deal is nearly done. However, Sam's ambitions do not stop here: he has a £150M revenue target in his sights. 

Similarly to many acquisition entrepreneurs we spoke to on the day, Sam has been able to structure deals in an equity-efficient manner, through instruments such as bullet loans and vendor loans, as well as using invoice finance. It is essential to pick industries and businesses that appeal to debt providers, not only equity investors. 

Mark’s investment syndicate has a dozen partners and no outside capital. Scientific Partners seeks small industrial businesses that are IP-rich and have c.£1m EBITDA: too small for private equity but too big for the incumbent management to do an MBO. So far they have acquired 2 businesses:  a manufacturer of electromagnetic compatibility (EMC) testing equipment and a vibration testing business. 

Scientific is a decentralised HoldCo, with 3 people at the TopCo level focused on monitoring and M&A. A 3-month cash flow forecast is paramount.  

Which functions should be centralised in a HoldCo? In Sam’s opinion, these 3:

• Technology - many SMEs are under-invested → eye-watering marginal returns on targeted initiatives, like updating a website

• People

• ESG  

The Advantos operating playbook is loosely based on the EOS model. Many acquisition entrepreneurs use EOS. If you are interested in learning more, please reach out to Rob Liddiard, an experienced EOS implementer.   

We concluded the summit with the “Lessons from the Battlefield” panel featuring Iryna and Sameer from RDCP and Hans-Cornelius Koelln from Alvia Capital.

Sameer and Iryna set up RDCP when they were really young: after 1 year of investment banking. They pulled together £2M in funds from the family and 9 years later… RDCP is on track to hit $400M turnover by YE 2024 (read our deep dive here). 

RDCP's bias towards freehold healthcare is due to the industry's cash-rich properties and the secular trend of ageing society. RDCP is careful to structure all investments as standalone SPVs to avoid cross-default. Building trust with a panel of high lenders like Investec, Barclays and AIB has been key to ramping up activity. 

Hans-Cornelius came from a private equity background having spent time at BID Equity, a prolific German software buy-and-build investor. BID happened to own a VMS for the social care sector. That's how Hans-Cornelius and his partner Max came to found Alvia in 2019: a consolidator of outpatient and part-time care businesses. Then came Covid. Then came a near-doubling of sector minimum wages. There was a silver lining in the ensuing all-out war for labour as Alvia found itself in the staffing business. They survived, and thrived. Second acquisition done and the third is within sight. 

Bottom line: care of any kind may appear like a regulatory minefield, but it is an essential service that most governments will loathe to cut back on. People get old. They need help. People that run such businesses too need help, to transition out. It's an opportunity that Sameer, Iryna and Hans-Cornelius have seized with gusto, but there are many more like these.