How does the HLP model work?

  • We provide 100% of the capital required to support a 2-year acquisition search, and 100% of the equity required to close the transaction.

  • We have an acquisitions finance credit facility in place, which means the debt for our transactions is in place before we find the company. Our debt requires no guarantees from our partner.

  • We offer training and support before the search, during the search, to close the deal and in on-going operation of the acquired company, including the following:

Before the Search

  • We help our partner develop market positioning strategy and all associated materials, including website, email copy, snail mail copy, call scripts, etc...

  • We conduct mock calls to practice broker and seller communications and asking the right questions to evaluate opportunities efficiently

  • We plug our partner into our central CRM, mail merge, Axial and other software tools

  • We help our partner select office space and recruit interns

  • We introduce our partner to business owners we know from prior searches, both as final pre-launch practice and as a source of deal flow

During the Search

  • For pressing issues, we communicate daily via Slack (phone or text are also options)

  • We hold a standing weekly video call with each partner to discuss opportunity pipelines and to evaluate strategy for promising opportunities

  • HLP manages the brokered deal funnel, qualifying the companies and sellers, and then hands deals to our partner when they are confirmed relevant

  • We will speak to sellers, intermediaries or anyone else our partners request. We've found that a call with us can assuage fears about our partner's ability to close and enhance the counter-party's perception of legitimacy.

  • We will travel to meet sellers, or anyone else our partners request, if they believe doing so will improve the odds of closing.

Closing an Acquisition

  • We will assist in, or complete, the valuation of potential acquisitions

  • We will advise on negotiation strategy.

  • If requested by our partner, we will sit with them at the table during the negotiation. It's important to note that we don't negotiate. It's important that only the partner and seller (or intermediary) negotiate. We will play a well-defined role, and will offer suggestions on how to define it, but it's never our negotiation.

  • After LOI, we will assist the partner in due diligence material review, and coordinating work from our attorneys, accountants and other service providers.

  • We use the same deal team for all our deals, which helps control costs, and increases speed to close.

  • We will walk our partner through the process to prepare, negotiate and lock all deal documents and ultimately close the deal.

  • We help our partner with post-close planning. What do you say, when do you say it, how do you manage the seller to help you transition and learn, etc.

On-Going Operations

  • We help our partner through the first days, weeks and months of transition. Sometimes that's just phone calls and reassurance, sometimes that's showing up on-site and digging in. We'll do whatever they need.

  • We build a board of directors around our partner, to help support the business and them as emerging leaders.

  • We will do special projects on an on-going basis. We've learned this can be helpful because the companies we buy usually lack management with the time or training to do them.

Will you invest outside of your HLP partnerships?

We are frequently approached by other members of the ETA community, or deal-makers from beyond, with opportunities to invest in “deals.” We prefer to restrict our investments to our partnerships and thereby with entrepreneurs we know very well. While we support the search community as a whole, we will not buy units in search funds, or provide bridge capital to help close under-subscribed acquisitions financed through this model. Likewise, we would not consider investing in other “deals” (self-funded, independent sponsor, etc.) on an opportunistic basis.

How does the economic relationship with your Entrepreneur Partner work?

  • We provide search capital in two contributions: at launch and after 11-12 months

  • We provide the equity required to close the acquisition (including all deal fees and costs)

    • We also have the senior lending in place for any deal we’d like to do

  • Our partner has the right to invest with us, pari passu (on the same terms), for up to 20% of the deal value

  • Our capital contributions go into the deal as participating preferred units, accruing a 10% annual coupon rate

  • Upon close of the deal our partner is granted 10% ownership of the business, in common units

  • Our partner vests into an additional 15% ownership, in common units, vesting quarterly over 4 years

  • HLP collects 100% of profit distributions from the company until we have recovered our equity and accrued preferred interest, at which point we convert to common units

  • Our partner gets a catch up, meaning she then collects 100% of the distributions until generating 25% of the total funds distributed up to that point

  • If Halstatt converts to common before our partner's 4-year vesting window is complete, she fully-vests immediately

  • We split future distribution streams on a pro-rata basis

What does HLP look for in an entrepreneur partner?

We are looking for exceptional people with whom we can be proud to be associated for a long time. Our partners tend to be the following:

  • Gifted communicators, skilled in writing, speaking and listening

  • Empathy. They are in the habit of trying to understand first, and influence or manage second.

  • Persuasive and skilled at building relationships 

  • Reasoned decision-makers who seek information and opinions to inform themselves

  • Willing to candidly discuss mistakes, evaluate how they happened and take steps to prevent them from recurring (they've all made mistakes too... sometimes big ones)

  • Humble. They don't think they know everything, or that they're the smartest person in the room.  They don't regard any job or person as beneath them.  They're never embarrassed to ask a dumb question, and they are not shy about asking for help.

  • Extremely self-aware.  They have a fully-formulated reason for pursuing entrepreneurship, which has been vetted by their spouse or partner, broader family, mentors and anyone else who's opinion matters to them.

  • Biased toward action.  Yes, they’re thoughtful, but when the time comes, they move forward with a decision in the absence of perfect information or a perfect process.

What is your process to evaluate a potential Entrepreneur Partner?

We are looking to find alignment between HLP and a partner in terms of long-term entrepreneurial objectives, decision-making method and leadership philosophy.  We are not at all concerned whether a potential partner has ever been an i-banker or worked in PE.  They have varying degrees of prior management experience and pre and post-MBA work experience, and they've come from different industries.

Our Process (a basic outline):

  • Introductory conversations, usually focused on fact-finding

  • 4-5 phone or video conversations to explore who you are, where you've been, how you decided this is right for you, your entrepreneurial vision, your management philosophy, what you need from a partner, etc...

  • In-person meeting near you to further establish understanding

  • Reference checks with people who you've worked for, you've worked with and who've worked for you

  • Visit to Halstatt offices to meet the entire Halstatt team

  • Conversation via phone, Skype or in person with your spouse or partner, so they can get comfortable with Halstatt as your partner

  • Thorough background check for criminal or financial

  • Alignment on budget, launch date and search location and search parameters/constraints

  • Offer and acceptance

  • Sign partnership documents

  • Find a great company!

Our partnership process had ranged from 7-18 months.  We believe it’s smart for both parties to take their time in evaluating one other.  The result is that as partners we never wonder how the other thinks or works, and our partner never wonders whether the capital will be there to close the deal.  Once we’re partners we only need to evaluate the merits of an opportunity, not each other.

Are there specific industries you're most interested in?

Our interests are driven by the skill, experience and interests of our partners.  The result of our relationship development work is a shared thesis about the type of company that would make our partner happy and successful.  That thesis is idiosyncratic to each partner.  That having been said, there are a few areas where we are not interested in making search investments.  They are the following:

  • Opportunities closely tied to the Real Estate new build cycle

  • Opportunities with innovation or market development risk (technology, life sciences, software, pre-profit or early-stage companies)

  • "Sin" industries (alcohol distribution, tobacco, cannabis, pornography, etc.) 

  • Opportunities that secure revenue through small business set-aside contracts or disadvantaged business enterprise (DBE) designations

What is your expected holding period for each investment?

We would prefer not to sell productive investments and like to work with partners who have a long-term perspective on their entrepreneurial journey.  That doesn't mean we would never sell.  It means we prefer to invest in businesses and with partners who will generate sustainable value over the long-term.  If someone approached our partner with "an offer we couldn't refuse," we would certainly consider it.  If our partner decided she no longer wanted to lead the company, then we'd have to work with that partner to determine the best plan for the company (sell, find a replacement for CEO, etc...). We enter into an acquisition with the expectation that we will own the company with our partner for decades.

Do HLP's entrepreneur partners have to work from Naples, Florida?

Our partners are certainly welcome to work within our Naples offices, but we don't expect it. They come down here to visit periodically, and we travel to them regularly. Our expectations about where partners conduct their search are the following:

  • The Eastern half of the US. We believe it's important for partners to meet face-to-face, regularly. Naples isn't the easiest place to get into and out of, and it's very difficult to get to the Western US from here. If our partner finds the right deal in Seattle, we'll work it out, but during the search we would prefer the Eastern half of the US.

  • Proximity to educational institutions. Interns are valuable for many reasons: management practice, helping you increase your capacity to find and contact companies, energy in the office, etc. We believe that working in the same office with them is better than managing them remotely. Working somewhere with lots of good colleges increases your chances of finding good interns.

  • Ease of travel. If the prior two conditions hold, this one probably won't be a problem. Life is easier if you can fly direct or drive via an interstate.

  • Proximity to other entrepreneurs and searchers. This can be a lonely 2-year road. It helps to have people around you who are also trying to do hard things.

  • Reasonable cost of living. This isn't a deal-breaker - one of our partners is based in Manhattan. The biggest line-item in each search budget is the cost of the searcher. If you live someplace reasonable, you’ll need less capital.

How did Halstatt Legacy Partners get involved in Entrepreneurship through Acquisition?

Halstatt Legacy Partners is the result of Halstatt's interest in the following:

  • Continuing its prior success in direct private equity investment

  • Moving down-market where valuations are more compelling

  • Forming long-term partnerships, defined by aligned incentives, with exceptional, young entrepreneurs

  • Maintaining the integrity of that partnership by limiting it to the entrepreneur and Halstatt

  • Protecting communities through the economic benefits of small business success

  • Generating investment returns through long-term ownership and profit distributions, not liquidation events

Shannon Jones and Halstatt's leadership aligned around these interests to devise an investment model.  We were inspired by Entrepreneurship through Acquisition and studied the good and bad from its many forms (search funds, incubators, self-funded, etc.).  We chose to keep the tenets, or devise new ones, that are consistent with our philosophies for partnership, entrepreneurial risk-taking and investing.

What is Halstatt?

Halstatt is a family owned investment firm located in Naples, Florida, and proud to be affiliated with the Barron Gift Collier legacy. We have enjoyed a long history of successful real estate development in Southwest Florida, and over the years we have cultivated a valuable network of trusted operating partners and investment managers. Today, Halstatt and our affiliated firms manage our own capital as well as that of a select number of family offices and institutional investors across a broad range of asset classes.  Halstatt and our affiliates conduct direct investment across real estate, venture capital, private equity, public markets and entrepreneurship through acquisition.

Halstatt Legacy Partners' sole source of capital is Halstatt.  We have no other limited partners involved in our investments.