Key Points From the Interview
ruce Vann was going through a rough patch. On paper, he had had a successful career, but he felt that none of his jobs had really been a good fit. Then he lost several jobs in a row. He was trying to find a new position through his network when one of his contacts suggested he run a search fund.
When he was in business school at UVA, Bruce had wanted to become an entrepreneur — he just didn’t think it would be possible. Like many, he thought his only option was to build a business from scratch. But in learning about search funds, he found it was possible to realize his entrepreneurial dreams via a different path.
Bruce had saved enough money in his earlier career for a down payment on a business and decided on a self-funded search. He didn’t care about the industry or the geographical location. He only wanted something he could figure out and scale but couldn’t easily break and a fair price.
Bruce checked business listings and connected with brokers every day. He looked at thousands of businesses, and went far down the path with a few of them, but none worked out. His persistence paid off, though. He found his deal in LuXout Stage Curtains of Richmond, Virginia, and acquired the company in February 2020.
In this episode of Acquiring Minds, Bruce talks about transitioning from unemployment to owning a business with a staff of 25, how acquiring a business saved him from a career rut, and his experiences conducting a search as a Black man.
✳️ About Bruce Vann
✳️ Episode highlights with timestamps
Acquisition Entrepreneur: Bruce Vann
💵 What he acquired: Bruce acquired LuXout Stage Curtains in February 2020. LuXout manufactures stage curtains used in theaters, churches, and schools. Despite challenges from the pandemic and labor shortages throughout 2020 and 2021, the company was able to bounce back and expects to see significant growth this year.
💡 Key quote: “I didn't care about the industry. I didn't really care that much about where it was. I just cared that I could find something that I knew I could scale and wrap my head around. I wanted something that I could not mess up with my high-falutin’ MBA ideas … And I wanted something that I could get at an acceptable multiple. I didn't want to overpay.”
👋 Where to find him: LinkedIn
Acquisition Tips From the Episode
Top takeaways from this conversation
🏀 Closing on a business requires you take a lot of shots until you get lucky.
Bruce went down the path on a few businesses before he found LuXout Stage Curtains. Despite the setbacks, he was able to keep his chin up by remembering that closing on a business requires a lot of luck.
“Doing this is just like taking a full-court shot … and it's just a numbers game,” he says. “You put up as many shots as you can in a certain amount of time, and eventually, something goes in if you do it the right way.”
⛈️ Find a business that can weather any storm, whether it’s caused by you or external factors.
One factor that really mattered to Bruce was finding a business that he wouldn’t be able to “mess up.”
Having graduated from business school, Bruce recognized MBAs’ tendencies to bring in fancy ideas that make sense for a company on paper, but don’t translate to the market.
LuXout ended up being the perfect business for this. Not only was it relatively MBA-proof, its long sales cycle meant the business was able to weather the storm of the pandemic, and labor shortages.
“Even with the disruption of the pandemic, we were alright,” Bruce says. “We had our best year in 2020 as a company, even though our orders were down substantially, and I don't think that's unique to us. Then in 2021, we came out alright, and crawled forward. Now in 2022, it looks like we're going to be in a really good spot for growth as a company.”
🔍 Look in places nobody else has thought of to find a good deal.
Getting a fair price was important to Bruce, but he’s still surprised at the deal he was able to work out. He acquired LuXout for 2x earnings before interest, taxes, depreciation, and amortization (EBITDA), even though it was growing substantially.
Bruce attributes this deal to the fact that during his search, he was looking in places other people weren’t. While everyone else was looking at larger targets, he set his sights on the smaller ones.
He also found that the cashflow the broker on the business had reported wasn’t EBITDA but net income. Even more important, it was the net income after the seller and his wife paid themselves a salary.
“Because of my digging and my persistence, I was able to find, Oh, this is a great deal,” he says. “I can't believe everybody else passed over this deal, based on the terms that I was able to get it for.”
🧠 Take time away from the business to think about the bigger problems.
For Bruce, it’s important as an owner to take time away from the day-to-day running of the business to focus on other things. He hasn’t always been able to do that, as he’s had to work in the business rather than on the business, to cover labor shortages. But now that those have been addressed, he tries to take at least one day a week to himself.
“I needed this time to just sit by myself in quietness and think,” he says. “Maybe I'll go play a video game or something to think about the problem. Do something else, come back to it, and try to have some sort of solution.”
Inflection points from the show
[1:49] Bruce’s background and why someone in his network suggested he search for a business to acquire.
[5:36] Finding himself in a career rut, acquiring a business appealed to Bruce’s entrepreneurial spirit.
[10:13] Bruce didn’t care about industry or geography. He just wanted to find something he could afford that he would be able to understand and scale.
[12:02] Being willing to knock on doors and relentless persistence were how Bruce got his deal.
[14:15] Starting out with a proprietary search, Bruce found most sellers were overvaluing their businesses.
[15:59] Going after several businesses that didn’t end up working out.
[18:54] Keeping his head up despite the frustrations of the search, knowing he was on the right path.
[24:14] Being on the path to growth despite setbacks caused by COVID.
[25:41] Digging and persistence paid off when Bruce found an unbelievable deal in LuXout Stage Curtains.
[29:53] Pursuing growth by chasing down every lead and turning them into sales.
[36:27] Why stage curtain manufacturing would be difficult to outsource to another country.
[41:01] Finding himself working in the business due to labor shortages.
[42:50] Taking time away from the business to focus on problem solving.
[45:20] Being unprepared for how on-edge the staff were during the transition.
[47:02] Going from being unemployed to owning a business generating six figures a year.
[49:57] Having a business in what was the capital of the Confederacy, and what it would mean to create generational wealth for his family.
[51:50] Acquiring a business as a Black man, and advice for other BIPOC searchers.