E154: Jeffrey Oboy of Paratus Capital Shares his Search for the Right Business Acquisition - Watch Here
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About The Guest(s): Jeffery Oboy is the founder of Paratus Capital, a search fund focused on acquiring and operating small to medium-sized businesses. He has a background in running and growing businesses, with experience in equity partnerships and international operations.
Summary: Jeffery Oboy, founder of Paratus Capital, shares his journey in the search fund space and discusses the type of business he is looking to acquire. He emphasizes the importance of finding a business with a clear succession plan and a niche market with growth potential. Jeffery also highlights the need for a strong marketing and sales strategy in the businesses he considers. He discusses the challenges of the search process and the importance of understanding valuation and deal structure. Jeffery shares his optimism for finding the right opportunity and navigating the current economic climate.
Key Takeaways:
- Paratus Capital is looking for businesses with a clear succession plan and growth potential in niche markets.
- Jeffery emphasizes the importance of a strong marketing and sales strategy in the businesses he considers.
- Understanding valuation and deal structure is crucial in the search fund process.
- Jeffery remains optimistic about finding the right opportunity despite the challenges of the current economic climate.
Quotes:
- "We're looking for more one-off businesses that you can grow organically as the founder entrepreneur has likely done up until now."
- "In the end, we are not venture capital investors looking for profitability down the road. We're looking at it today."
- "The key is just being sure that they are in fact representing a seller. That's right."
- "There are a lot of weaves in this journey, but there are certain items that you need to and can zero in on to at least pre-qualify this."
- "In the end, we can pay what we can pay, and we don't have an alignment there."
- "Understanding what your value proposition is and notably who really yearns for that is extremely important."
Note: The show notes have been written in the same voice and writing style as the main speaker.
Article:
How to Find the Perfect Business to Acquire: Insights from Jeffrey Oboy
Note: This article is based on a transcript from the "How to Exit" podcast episode featuring Jeffrey Oboy, founder of Paratus Capital. The article aims to provide a comprehensive analysis of the main themes discussed in the podcast, using verbatim quotes from the transcript.
Introduction
In the world of business acquisitions and mergers, finding the perfect company to acquire can be a challenging task. In this thought-provoking podcast episode, Ronald Skelton interviews Jeffrey Oboy, founder of Paratus Capital, to gain insights into his search for the ideal business to acquire. Jeffrey shares his background, the origin story of Paratus Capital, and the specific criteria he looks for in a potential acquisition.
Exploring the Search Criteria
Jeffrey emphasizes that Paratus Capital is agnostic when it comes to the vertical of the business they are looking to acquire. Instead, they focus on certain characteristics of an industry, such as nicheness and growth potential. They are particularly interested in business service-related companies and technology/software companies. However, the most important factor for Jeffrey is finding a business where he can have a high impact as the CEO and where the owner has a clear succession plan in place.
Geographical location is not a limiting factor for Paratus Capital. While Jeffrey is currently based in New York, he is open to opportunities across all 50 states. The size of the business they are looking for falls within the lower middle market, with revenues ranging from $5 million to $30 million and a focus on profitability.
The Search Process
Jeffrey shares that he has been on the search for the perfect business for 21 months, which is within the average timeframe for funded searchers. He has reviewed countless businesses during this time, but only a small percentage of them meet the criteria that align with Paratus Capital's investment thesis. Jeffrey employs a combination of self-sourcing and working with brokers, M&A advisors, and investment bankers to find potential acquisition targets.
The search process involves a meticulous evaluation of each business, considering factors such as product/service value, market potential, and growth opportunities. Jeffrey emphasizes the importance of understanding the story behind the numbers and the gut feeling that comes with it. He also highlights the significance of valuations and the need to navigate the complexities of determining a fair offer for both parties involved.
The Impact of COVID-19
COVID-19 has had a significant impact on the search for the right business to acquire. Jeffrey mentions that businesses heavily impacted by the pandemic and experiencing an unusual recovery pose challenges in terms of predicting future performance and determining valuation. While he remains open to considering such businesses, the uncertainty surrounding the economic landscape and potential future disruptions make it a more challenging proposition.
The Role of Marketing and Sales
Jeffrey expresses his excitement for businesses that have a great product or service but lack effective marketing and sales strategies. As someone with a background in operations and growth, he sees immense potential in helping these businesses reach their full potential. By leveraging his expertise in marketing and sales, Jeffrey aims to take these businesses to new heights and expand their impact.
The Importance of Understanding Valuation
One of the key takeaways from the podcast episode is the importance of understanding valuation. Jeffrey acknowledges that valuation can be a complex and often misunderstood aspect of the acquisition process. He emphasizes the need for business owners to have a clear understanding of the drivers of valuation and the factors that make a business investable. By demystifying the valuation process, business owners can make informed decisions and navigate their businesses' future with confidence.
Conclusion and Future Outlook
In conclusion, Jeffrey Oboy's search for the perfect business to acquire highlights the importance of finding a company that aligns with one's expertise and values. By focusing on businesses with growth potential, a clear succession plan, and a need for improved marketing and sales strategies, Jeffrey aims to make a significant impact as the CEO of the acquired company. While the search process can be challenging and time-consuming, Jeffrey remains optimistic about the future and the opportunities that lie ahead.
As the business landscape continues to evolve, it is crucial for aspiring acquisition entrepreneurs to carefully evaluate their value proposition and target businesses that offer growth potential and align with their expertise. By understanding the intricacies of valuation and staying informed about industry trends, acquisition entrepreneurs can navigate the acquisition process successfully and find the perfect business to acquire.
Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of any other agency, organization, employer, or company.
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