Buying in a Small Market, Building a Regional Powerhouse

oday's guest returned home to do a search predicated on the assumption that there would be a cohort of baby boomers looking to retire.

That's the trend that Jonathan Bournigal heard about during his time here in the US; it's one we still hear constantly.

But when he started searching at home in the Dominican Republic, he found that retiring baby boomers wasn't really a thing on the island.

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He was going to have to adjust his approach by, among other things, leaning heavily on that discipline that every searcher with challenged deal flow eventually turns to: networking.

It worked, and Jonathan bought a small document storage business partly owned by the father of a friend.

And today we learn how he transformed that little business into the leading document storage provider in the entire Caribbean region.

We cover lots of ground; here a few key themes:

• Thinking about the multiple you pay to buy the business in terms of the exit multiple, as opposed to being anchored to the 3-4x we talk about so often.
• Putting the "entrepreneur" in "entrepreneurship through acquisition." Jonathan bet the company to take it to the next level.
• To that point, the value creation model here was more "growth equity" than "leveraged buyout". The latter, LBO, is how most searchers create value: buy business with big loan, pay loan down from profits of business, and improve & grow business along the way. In the growth equity model, by contrast, there's no debt, and it's all about reinvesting to grow grow grow.
• Real estate. The are pros & cons to having real estate included in your acquisition. You've heard how you can get more favorable SBA loan terms when real estate is involved. You heard how Carlo Santelli used the real estate owned by his target business to execute a sale-leaseback and generate the capital to buy the business. But others will say that you're not in the real estate business, so it shouldn't be an asset of the business you buy. Jonathan is in that camp, even though his business model is leasing space. We discuss.
• And of course, buying in a non-US market. How Jonathan found capital, how he found deal flow, in the DR.

Please enjoy this ride through building a regional powerhouse from a small platform business with Jonathan Bournigal, owner of BUNKER.