From Searcher to Investor: Building a Multi-Million Dollar Education Services Hold Co

Matt Cop's journey into entrepreneurship through acquisition is a remarkable story of rapid growth and strategic decision-making in the Australian education services market. Starting as a lone searcher in 2018, Matt went on to build a multi-million dollar hold co through a series of acquisitions over just a few years.

Matt's path to entrepreneurship began after working in corporate finance and consulting roles. Inspired by the search fund model he learned about during his MBA, Matt decided to pursue entrepreneurship through acquisition, despite the concept being relatively unknown in Australia at the time.

The First Acquisition: Southern Biological

After a challenging search process, Matt acquired Southern Biological in 2019 for just under 3x EBITDA. The company supplied biological specimens and science equipment to schools, with around $2 million in revenue and $350,000 in EBITDA.

Matt quickly implemented changes to improve efficiency and profitability:

• Reduced staff from 12 to 5
• Implemented new systems like NetSuite
• Added online payment capabilities
• Updated the website and product offerings

Within the first year, revenue grew to $2.7 million and EBITDA increased to $650,000.

Building the Hold Co During COVID

When COVID hit in 2020, Matt saw opportunity amid the uncertainty. He acquired several complementary businesses at attractive multiples:

• Hands-on Science: Provides in-school science workshops
• Two music education businesses
• A circus training program for schools

By the end of 2021, Matt had assembled a portfolio of 5 education services businesses with over 100 casual staff.

The Elizabeth Richards Acquisition

In late 2021, Matt made his largest acquisition yet - Elizabeth Richards, a school supplies company doing $8 million in revenue and $1 million in EBITDA. He paid $5 million, funded entirely with debt through a COVID-related loan program.

Just one day after closing, Matt received an offer from a private equity firm to buy his entire portfolio. He declined, seeing more potential in Elizabeth Richards. Over the next year, Matt:

• Cut $800,000 in costs
• Merged warehouses
• Improved operations

One year later, Matt sold Elizabeth Richards to the same PE firm for a $3.8 million profit.

Transitioning from Operator to Investor

Through his success, Matt was able to renegotiate terms with his initial investors, increasing his equity stake to 40% without requiring an exit. This allowed him to think more like an owner and investor rather than just an operator.

Matt has now stepped back from day-to-day operations, hiring a manager to run the core businesses which generate about $2 million in EBITDA. He's taken some chips off the table through dividends and the Elizabeth Richards sale.

Launching an ETA Incubator

Matt's latest venture is Enduring Investment Partners, an ETA-style incubator backed by $30 million in private equity funding. The goal is to find and support 4 CEOs to acquire and grow businesses in Australia, applying the lessons Matt learned through his own journey.

Key Takeaways

1. Look for opportunities in niche, fragmented markets with high customer retention
2. Move quickly to improve operations and cut costs after acquisition
3. Be open to bolt-on acquisitions to build a larger platform
4. Think strategically about when to hold vs. when to sell
5. Transitioning from operator to investor mindset can open new opportunities
6. There's still significant opportunity in markets like Australia where ETA is less mature

Matt's story demonstrates how a motivated searcher can build significant value in a short time through smart acquisitions and operational improvements. His transition to investor and now supporter of other searchers shows the potential long-term career path in the entrepreneurship through acquisition space.

Article created from: https://www.youtube.com/watch?v=nTefk3HIThY