Scout Q&A — Emily Holdman

Emily Holdman of Permanent Equity on the scout model for small-business deal sourcing.

Notes

• ==Notes==
  • My degrees are in journalism and economics. I’ve always been interested in how everything intersects. From a financial point of view, that has shown itself in how to communicate, and how to generate demand and evaluate product-market fit opportunity for any company.
  • In the early days, we did everything from pursuing businesses on BizBuySell, to road tours around the country meeting intermediaries, to steak dinners. We did the whole dog and pony show and saw how ineffective and undifferentiated it was. And so we were looking for ways to make sure that our philosophical differentiation was clear. That ultimately led to us establishing the core tenants of how we run our deal funnel. We focus on generating a lot of ==content ==and you have likely engaged with some of that. We do not do any outbound deal generation; we do not call on businesses and say, ‘Hey, we’re interested in you.’ We try to make sure people understand who we are and how we operate. That way we know if they think we are attractive, or if they don’t care. And there’s no harm, no foul to that. There are plenty of people who go to market for opportunistic reasons or to get the highest check at close, and they really don’t care who they sell to. Ultimately, that’s just not the right type of transaction for us. Sourcing
  • Speaking back to the call I had last week, this individual was the CFO and an equity holder in the company. And for him, the issue was, ‘I have three options.’ His options were: We either need to figure out how to live forever; we need to to build an ESOP plan and implement it (which is an option, but has some onerous terms in association with it); or we’re going to have to shut down the business. And he’s like, ‘I don’t think I’m going to be immortal. I’m not going to figure that out. So basically I can do an ESOP or I’m going to need to figure out how to wind down this business.’ Teamshares