Key Points From the Interview
t happens all the time: a white collar owner acquires a blue collar business (think plumbing, roofing, fencing).
What could possibly go wrong? A lot.
And Shannon Jones, founder and managing partner of Halstatt Legacy Partners, which has acquired five businesses since 2014, has gained valuable insights on the communication gaps that exist while acquiring a blue collar business.
He outlined those in a talk, “Buy Like a Poet, Not Like a Quant,” and joined Acquiring Minds to elaborate on those ideas and share observations from multiple blue collar business acquisitions.
“If you think of yourself as, I'm the White Collar President of a Blue Collar Business, you're going to have a problem.”
While buyers tend to focus on the investment from a numbers perspective, “from the seller’s perspective, it's not as relevant as some of the more squishy and personal aspects of who you are as a potential buyer, and how they're thinking about who they should choose to sell their baby to,” Shannon explains.
In the episode, he outlines how buyers can build trust and understanding with sellers of different backgrounds. Once an acquisition takes place, Shannon also has recommendations for fostering a good relationship with existing team members.
“When you walk into this company, there will be decades and decades of experience around you,” he notes. You jeopardize your ability to grow the company “if you ignore that, you don't actively seek it, and/or you dismiss it.”
Listen in as Shannon explains the importance of defining your “why” in an acquisition and how to navigate some of these softer realities of acquiring a business that don’t always get the focus they deserve.
✳️ Top takeaways from the episode
✳️ Episode highlights with timestamps
Acquisition Entrepreneur: Shannon Jones
💵 What he acquired: Shannon wanted to help people on the road to entrepreneurship, and founded Halstatt Legacy Partners. Through Halstatt, he has conducted seven searches and acquired five businesses, including a concrete asphalt paving business, an acoustic ceilings business, and a resurfacing business. Having acquired blue collar businesses, he has a lot of insights into the subtle cultural elements that can arise when a white collar owner steps in.
💡 Key quote: “If you think of yourself as, I'm the White Collar President of a Blue Collar Business, you're going to have a problem. And if you don't find yourself enjoying or being intrigued by the context in which your soon-to-be team is existing on a day-to-day basis, I don't think you should buy the company.”
👋 Where to find him: LinkedIn
Acquisition Tips From the Episode
Top takeaways from this conversation
✍️ When acquiring a blue collar business: ‘Buy like a poet, not a quant.’
Buyers tend to be obsessed with numbers like ARR, ROI, and multiples. That focus on the metrics — especially when acquiring a blue collar business — won’t help build trust with the seller and is a mindset that can ultimately kill a decent deal.
Rather than looking at the deal only in terms of numbers and spreadsheets, Shannon advises looking for ways to focus on the relationship aspect with a seller to achieve a degree of trust and understanding. He calls out four keys:
- Self-reflection. Many aspiring searchers don’t dig deep enough on their “why” for wanting to own a business. Being brutally self-reflective in defining your why can help you create a story that will enable better understanding of your journey (and how acquiring a business fits in).
- Vulnerability. It’s common to talk about ourselves in terms of our professional achievements, which may indicate accomplishment and capability, but these markers aren’t as important as expressing who you really are. Adding vulnerability to the mix will allow others to better understand you and, just as important, reciprocate with their own vulnerability that can help you understand what is motivating their sale of the business.
- Curiosity. The only way to know what is going on in someone else’s head is to ask good questions, be humble, and listen. This further allows you to understand a seller’s motivations, fears, and objectives and to determine whether you are the person who can provide what they’re looking for.
- Empathy. Once you’ve gone through the three previous concepts and created a connection, you can use empathy to work through the difficulties of the acquisition process. Shannon says deals die several times throughout the negotiation, and having empathy for the seller allows you to overcome these roadblocks.
👷🏼️ Not interested in blue collar jobs? Maybe don’t buy a blue collar business.
If you have no experience in the industry of the business you plan to acquire, find a way to shadow someone in that industry to find out if you truly want to spend a significant chunk of your time thinking about it.
Shannon advocates learning about the business from the ground level because that direct experience can help bridge the cultural and experiential gap between a white collar owner and blue collar seller and team.
And if you’re not open to doing that? Well maybe that’s a sign.
“If you're not willing to try, then I don't think you should own the blue collar business, because what I've seen — either in advising other entrepreneurs and in some cases in my own career — is if you don't bridge that gap, it creates massive cultural implications that you don't want, and ultimately revenue implications,” Shannon says.
“That's why I'm advocating for the white collar buyer of a blue collar business that you break these “on the business” versus “in the business” rules because you have to understand your team.”
💰 Think acquisition is a quick path to riches? Think again.
Knowing your objectives and reasons for getting into search acquisition is vital, and if your reasons are to fast-track your way to a CEO position or to make money quickly, that probably won’t be enough to carry you through when times get tough — and they will always get tough.
“Most people who acquire [a business] have this really interesting, visceral, existential need to do it,” Shannon says. “It has some broader impact on the life that they want to lead and the life that they want to create. And when you talk to another entrepreneur about that, they recognize themselves in it.”
Inflection points from the show
[3:19] A marriage of interests: Shannon was interested in helping entrepreneurs achieve their goals and combined that with the Halstatt family’s interest in investing in business acquisitions in the lower markets to found Halstatt Legacy Partners. In six years, they’ve conducted seven searches and acquired five businesses (some of which are blue collar).
[6:15] 4 ways to connect w/the seller: Shannon recaps a talk he gave about acquiring a business as a poet vs. a quant. While buyers can get lost in the numbers, Shannon emphasizes the need to focus on the “squishier” personal aspects to foster connection with the seller and ultimately get the deal to go through.
[12:28] The difficulties of being a poet: Of the 4 ways to be a poet business buyer, self-reflection is the concept would-be buyers do the least, while vulnerability is the most difficult, according to Shannon. He explains why pinpointing what you are trying to do by acquiring a business and admitting when you don’t know something is key to developing a good relationship with the seller.
[17:46] Evaluating a blue collar biz: If you’ve never been in the context of the business you’re thinking about acquiring, put yourself into it. Shannon advises shadowing someone to get a feel for their days. Guiding questions to consider → “Is this a context in which you want to be spending the vast majority of your waking life? Are these conversations that you want to be having, or constantly thinking about as an entrepreneur?”
[24:04] Bridging the white collar-blue collar divide: To illustrate how white collar buyers can gain the trust of a blue collar business owner, Shannon tells the story about how his partner John, a Harvard MBA, approached the owner of a paving company they acquired.
[28:35] Everyone makes mistakes: John had put in the work of developing a good relationship with the seller, and Shannon almost tanked the deal with a misstep during a lunch meeting.
[32:22] Know your why (and why nots): It’s critical to understand your reasons and objectives for acquiring a business. Shannon explains his calculus for evaluating whether a business is a good fit for acquisition and describes why he considers an entrepreneur’s long-term leadership capabilities.
[39:28] Connecting with blue collar employees: Shannon talks about common pitfalls when a new owner starts working with an experienced team in a blue collar business. It’s critical not to discount their domain expertise based on assumptions about education level or other factors.
[44:22] On change: New owners often claim they want to keep everything the same when they first take over a business, but you need to recognize that just the switch in ownership has changed everything for the existing team.
[48:07] Making material changes: While there are no set metrics for when it’s okay to start making significant changes in a business, determining the moment for change should be relationship driven. “You're ready to make changes when you have a strong enough relationship with the important people around you at the company … and you are aware enough of their methods and their feelings … to create a shared solution so that this is not an edict or dictatorial change management situation.”
[54:57] Search investment: Shannon talks about the kind of searches he’s interested in funding.