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Welcome back to The Small Business Mentor!
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This week, we're diving into the world of business acquisitions and private equity with Steve Wiesner, owner of Watershed Associates, whose core business is providing negotiations training primarily for businesses. Steve's journey from private equity to small business ownership offers valuable insights for anyone considering the entrepreneurship through acquisition (ETA) path.
Watershed Associates Story:
Steve acquired the company, founded nearly 30 years ago, in August of 2022. Watershed serves Fortune 250 companies and government agencies (NASA, FDA) across 40 countries with around 20 employees.
They delivery primarily through in-person workshops, with some virtual options. The company’s client retention rate is something we can envy: 90% of clients are repeat customers, some dating back decades.
Steve is clearly happy with the business and has done well with Watershed but it was the many challenges along the way to getting there that I think made him successful in the end.
The Journey from PE to Small Business Owner
Steve's path to owning Watershed was far from linear. After stints in investment banking and private equity, he launched a software startup in 2012.
While that venture didn't succeed, it led him to pivot into the training world. After running a sales-focused training business that underperformed, he finally acquired Watershed.
The best lessons I learned when I talked with Steve came not from his success with Watershed but from his previous ventures which either failed or didn’t become the businesses he wanted.
1. The Danger of "Never Quit": Steve cautions against the "never quit" mentality instilled in many entrepreneurs. He now regrets many years trying to save previous ventures when it was clear it wasn’t working. Knowing when to walk away from a failing venture is crucial.
2. Friends and Family Money: Emotional ties to investors can lead to keeping a business open longer than financially prudent.
3. The Myth of "Don't Buy a Job": For first-time buyers, starting with a smaller business can be beneficial. It allows for easier implementation of changes and clearer visibility of opportunities. The stakes are also lower.
4. Roll-ups Aren't Easy: While roll-ups can be successful, Steve warns against novice buyers planning multi-company acquisitions before proving they can run one business.
5. The PE Perspective: Steve's experience in private equity taught him the importance of internal persuasion and negotiation and a focus on numbers and results; skills he now applies at Watershed.
Keep growing,
Alan
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