I write a monthly newsletter on Search, ETA, SMB, & more.

I thought I'd share an excerpt of the April edition I sent recently - sign-up at bit.ly/etamusings if want to get on the list


Big news in "monthly musings" world.

After several years of investing in and supporting the search community, we are thrilled to announce the launch of The Brydon Group. Alex has wrapped up his two decades in large cap private equity, Steve has transitioned from his CEO & operating exec roles, and our third partner, George Dutile, is joining us from JP Morgan.

Our three defining principles behind The Brydon Group were:

  1. We wanted it to be additive to the ETA community
  2. We wanted a model that led to better outcomes for searchers, and
  3. We wanted to bring the best from large cap private equity (in both the search and operating phases) to address the challenges we see many searchers experience in their journey.

Finding and acquiring a high-quality business has undoubtedly become more competitive as private equity continues to push down market. A lack of committed capital, inefficient and ad-hoc due diligence processes, the necessity to “re-create the wheel” in sourcing, due diligence and structuring, the required corralling of a broad investor base, are all impediments we have seen for many searchers to compete with private equity.

Brydon Entrepreneur In Residence Program – Combining the best of Private Equity and Search

In addition to taking minority stakes in outstanding searchers, we are launching the Brydon Entrepreneur in Residence (EIR) program, a hybrid search / private equity program.

Better Economics: We will invest 90% of the equity in our EIRs search (and at the transaction) and support salaries commensurate with their work experience ($150,000 – 200,000 per year, based on experience). Searchers earn up to 25% of the equity in their deal (or 30% for partnered searchers), based on the standard vesting schedules (1/3 upon acquisition, 1/3 time-based vesting and 1/3 based on performance hurdles).

The EIR program is a mix of in-person and remote, kicking off with 10-day initial cohort training in the Caribbean, followed by quarterly in-person events. Otherwise, we strongly encourage our EIRs to base their search where they want to live and focus their search efforts in the US.

Better Support: We wanted to build a model where we can provide much more hands-on support and guidance to a smaller, dedicated group: we will select 5 EIRs per year for our EIR cohort and provide full, professionalized sourcing, diligence and operations support while working closely with our EIRs to acquire and operate one business.

What’s more, because we come from private equity and PE-backed companies, we will be in the trenches with our EIRs in their thesis-driven search, sourcing deals and conducting due diligence with them.

Better Outcomes: The EIR model also allows us to scale up and down depending on the searcher - we can support deals as small as $5mm all the way up to $50mm in enterprise value. Furthermore, we can much more effectively support and fund searcher strategies that may involve roll-ups or tuck-in acquisitions with a dedicated pool of capital.

Over the years, we have spoken with many prospective searchers, especially those several years out of business school with more industry experience, who would love to pursue search but struggle with the two prevailing options. On the one hand, stepping back from a career at a top bank, consulting or tech firm to earn $115-125k a year for two years of searching is relatively unattractive. On the other, the risk-reward trade off of “betting it all on black” with limited support on a personally-guaranteed, self-funded microdeal makes even less sense.

Our approach is designed to support such searchers, with higher salaries, commensurate with their experience, and better, PE-caliber support throughout their thesis-driven search journey.

By “arming the rebels” with the same sourcing tools, diligence approach, committed capital and operating playbooks we used in private equity, we can combine the best of PE with the best of search in support of our searchers.

If you are interested in learning more about our EIR program, or submitting an application to our 2022 cohort, please reach out for more information.

And with that, enough about us. On to the "monthly musings"....
Recent Investments Traditional Search Investments:
o United States: We are excited to back Danny Salzman, a graduating Booth MBA with a background in startups and digital transformation, as well as Nick Buege, a graduating Kellogg MBA with a background in consulting (whose first job, like Steve, was caddying...). o Thinking about Raising? Are you thinking about your search journey and debating which approach is best for you? Have an industry thesis you are thinking about pursuing and want a larger pool of committed capital? Interested in both a traditional search or an Entrepreneur-in-Residence program? We'd love to meet and talk about ways we can work together - just reach out --@----.com Equity Investments: o Tree Services: We were excited to be part of GuessworkInvesting's acquisition of a Tree Services company in the Pacific Northwest. We met him early in his search journey - it has been fun watching his evolution from his original deal, to creating great SMB content and now closing an amazing business and entering the operating phase. o Have a traditional, independent sponsor or self-funded deal that is looking for equity investment? We'd love to see it - just reply to this email. • Deal & Diligence Assistance: We continue to dig in and help on deal-level analysis, deal structuring and sourcing directly with searchers on a number of software, business services and gov-related deals. If we can be of help, please reach out.

Content & Community
• Podcasts: o The Veteran Professional: Steve was interviewed on The Veteran Professional podcast last week. If you haven't listened, Mark Delaney is a great host. o Now What? - It's been fun to get to know Dzmitry Miranovich over the years and was great to hear him on Acquisition Anonymous sharing lessons from his vet clinic roll-up on the episode "I Bought a Business. Now What?" o What do Investors Want? - I've always enjoyed Bradford's Twitter presence and hot takes on DC life but was great to finally hear him on a podcast sharing his background and discussing "what's on an investor's mind."

• Posts: o Twitter Threads: John Wilson wrote a thread on 30 great folks to follow if you are passionate about the SMB space o Wall Street Journal: It was great to see search funds covered in this Wall Street Journal article - while Steve's quote didn't make the article (he needs to work on his one liners :), he enjoyed getting to know the reporter and connecting her with some great searchers & operators. o Outsourced Lead Gen Services: A number of searchers have asked for recommended outsourced lead gen services (in addition to Upwork - if there are specific groups folks recommend). Let us know if have a recommendation.

Searcher Opportunities:

• Events:
o How to Buy a Software Business as a Searcher. We were excited to give a talk "Buying and Operating SaaS Businesses in Search" on Searchfunder this month. Replay is available at Searchfunder here & if you'd like a copy of the slides, please email Steve. o Universities: We enjoyed giving our "Introduction to Modeling for Search Funds" talk at a joint session with MIT, Booth, Tuck, Kellogg this month. Who knew that learning about financial modeling during lunch on a Friday would be so popular? o Search Fund Bootcamp: Our friend Sam Rosati is hosting his next bootcamp for self-funded searchers. Applications are open for the summer cohort.

• Conferences: o Wharton ETA: Steve and George had a blast at the first ever Wharton ETA conference for current students and alumni. Was a great day of meeting students and alumni and highlighted by an amazing $10m donation by Richard Perlman to advance ETA at Wharton. o Booth- Kellogg ETA Conference: We are excited to be attending the Booth/Kellogg ETA conference in Chicago on April 25th. The content looks great & excited to taste Chicago's finest (Intelligencia coffee, Lou Malnati's pizza, & Goose Island beer). If you are going and would like to meet up, please send Steve a note. o HoldCo Conference: Our friends John Wilson & Kelcey Lehrich are hosting the Holdco Conference in Cleveland on July 24-26th. It's a conference specifically designed for folks doing deals, growing through acquisition and scaling. o Run an ETA club / course / conference? Alex & I have spoken on topics from Financial Modeling, Buying & Operating a SaaS Business, Veteran Search and Intro to ETA and are always happy to present at clubs and events. • Jobs & Internships: We highlight job openings from our portfolio and the broader search community. If you have a career opening you want us to include in a future newsletter, send it our way and happy to share with the broader community.

o Internships:  M&A Associate Intern: Grit Capital, a Brazil-based traditional search fund, is looking to hire a remote MBA Associate. Contact Caio at --@----.com or apply here (https://www.linkedin.com/jobs/view/###-###-#### ).  Summer Associate: Coltala Holdings, is seeking a Summer Associate, here is the listing.

Community Roles: Here are a few exciting roles in the broader ETA community.  Research & Content Editor: We (Steve, Alex & George) are looking for part-time, paid support on a variety of content projects we are working on. Writing, PowerPoint and Excel skills are a plus. Fun projects & I've heard the people aren't bad. Please reach out to us at --@----.com  COO: Phil Strazzulla, an active search operator & investor, is looking for a COO for his fast-growing software review media company. Anyone interested can apply by emailing: --@----.com

For Search Investors: Are you currently an investor in search funds / SMB? Or interested in potentially investing in the space and want to connect? We always love connecting and swapping notes with other investors - just reply if want to set up time to connect.

Thanks again for reading and let us know if we can ever be of help. If you enjoyed it, pass it along to a friend and have them sign-up at bit.ly/etamusings

-Steve, Alex & George