If you run a home service company (or aspire to someday), you need to read this. Here is why I am launching a newsletter on June 1 (subscribe in comments): Countless entrepreneurs are wanting to dive deeper into what it takes to scale beyond $100M… without raising capital. - how to blend “high performance” with a purpose driven culture - how to lead the way in technology artificial intelligence - where to invest… and what to avoid - how we design systems & processes to drive improvements in targeted KPIs - how we approach acquisitions our post-closing integration work - how I think about competing - and WINNING - in the face of intensifying competition from large consolidators - how we leverage our long term orientation to outperform our peers - how I think about working with family members to include my dad and brother - how we finance our business & investing activities … and many more tactical strategic insights. Grateful for my founding sponsors… really excited to share exclusive content in collaboration with category leaders across software, AI, financing, and more.

For those who run EOS -- What is your one most important lesson learned?

New Inspired Or Acquired episode with Ben Tiggelaar is live. We discuss how he acquired an amazing IT services business, additional acquisitions, if he’d sell, and why he’s enjoying his career more now than ever. Full episode link in bio. @bentigg @ClintFiore

To all "Self-Funded Search" stakeholders, stop calling it a "step-up". It's not a step-up, it's a step-down. When we use the term "step-up", it sounds like investors are getting an unfair deal. I assure you, we are not. Investors who put up 15% of the total deal value (but virtually 100% of the equity) and end up with only 25-30% of the common equity (a 1.7-2.0x "step-up") are not getting a "rich" or unfair deal at the expense of the searcher. The self-funded search deal is effectively a single asset private equity fund where the "self-funded" searcher is charging a large management fee (their salary) plus a 70-75% carry on all of the profits after a preferred return. In no other world would this be called a "step-up" or would a sponsor be able to put up virtually no equity and end up with a majority of the common equity (or carry) and have full control. And no, the SBA debt that you're PG-ing is not an equity contribution from you. 100% of the cash flows and proceeds from the sale of the business goes towards repaying that debt first. The investors are paying that debt off just as much as you. I recommend we start using the term "equity factor" as it better describes what it is. Investors who put up $1.5m of equity on a $10m deal (15% of EV), and receive 30% of the common equity, are receiving a 2x "equity factor" (not "step-up"). I've recently received a number of deals marketed with a 1.0-1.25x "step-up". I'm not sure who is advising these searchers, but this math simply does not work or make sense on a risk-adjusted basis. The problem is, due to a competitive deal market, and a desire to do a "big" deal, these searchers are paying up a bit (4-5x ) for larger businesses ($10-12m EV) and can only get $5-$7m of senior debt and $1-$2m of seller financing. They need $2.5-$3.0m of equity (25-30% of EV) to get the deal done but they don't want to give up the 35-45% of the common equity that is going to be required to make the deal work. They've read about other searchers getting 70-80% of the common equity and they want to get that too (and who doesn't, right?). Unfortunately, IMO, the math just doesn't make sense on a risk-adjusted basis and requires using very aggressive assumptions. The searchers that get 70-80% of the common are paying 3-4x and only need 10-15% of the deal value in equity.