Special edition of our update—don’t worry, we haven’t amped up the frequency to every-other-week! [J: not even O likes to hear himself talk THAT much]
- We’re fundraising! Email us if you’d like to talk about joining our search
- Our search will be focused on one industry: Community Association Management
- We’ll continue to talk about our search, acquisition, and running the business once a quarter. Click here if you want to stay in touch.
We hope you had a great, relaxing Thanksgiving.
Thanksgiving is a great time for reflection – and work! We both spent the holiday at Jalen’s family home in Charlotte, NC. We were able to get a lot done, from wrapping up our fundraising materials (more on that below) to truly comprehending the journey we are about to embark on.
We want to build a great business – a task that will span at least the next decade. 2030. So much will happen over the course of that time. We’ll likely get married [O: speak for yourself], have children. We’ll have encountered many new people and loved (and lost) many more over that time.
We’re committed to taking on the next decade together. Spending time with each other’s family (in person and via zoom) only confirms the reality that our careers are intertwined, resting upon the success of Ellery Partners.
That’s why we’re so focused on finding the right capital partners. We’re so excited/nervous/frenetic/tranquil/everything(!!) about constructing our cap table. The folks who back us will be taking a flyer on us. Just as much as both of us will be integrated, our investors will be key parts of our life. [J: notice the singular “life” there. I think O’s just repurposing the wedding vows he “almost” but never got to use…]
In short, we’ll be in it together – successes and failures. Ten years from now, we want to make you proud for taking a chance on us.
We started Ellery with the idea that our efforts had to work in ways where “1 + 1 = 3.” We determined that meant running a business where organic growth and inorganic growth were achievable. We built a framework for identifying attractive industries. We developed processes to manage proprietary and brokered channels, and ultimately decided that the best way to learn was to moonlight a search and iron the kinks out.
What we didn’t expect is that we’d identify a suitable industry early on and get enough traction to commit to a targeted search. We feel this industry has it all: strongly recurring revenue, comfortable margins, macro tailwinds, fragmentation, and opportunity to professionalize operations. Consolidation has been proven, yet the biggest players combined are still <10% of the overall market.
We’re talking about Community Association Management (CAM). We like the industry, and we’re ready to raise capital on a thesis that we can build a $20M EBITDA company in the next 10 years.
It was love at second—or maybe third—sight
Born from Orlando’s prior investing experience and Jalen’s personal connections in the space, CAM was identified early on as one of our potential industries.
Fast forward to the summer: Jalen and our team of 10 interns are sending nearly 1,000 outreach emails. While we did conduct a search across multiple industries that summer, our response rate and quality of conversation remained high in CAM. We spoke with CEOs (even one attempting consolidation) and various stakeholders, including the former industry trade association president who now works as a consultant/broker.
In the fall, we focused on digging deeper: cataloging neighborhood HOA boards, residential developers, and HOA managers in core geographies where we think growth is most attractive.
… And as time passed, we only learned to love it more
All in all, we were able to amass 1,400+ CAM prospects and 400+ HOA communities/developers in our target geographies. From our 30+ calls with prospective sellers, we found 3 willing river guides. We also began diligence with two prospective sellers; one of these, which we’ll call “Project Buckeye,” has progressed, and we’ve extended an IOI.
Our Turkey-Day trip (a 12-hour drive) to Charlotte fulfilled two purposes: it allowed us to visit family safely and allowed us to pay a visit to the Buckeye CEO in Columbus, OH.
The meeting was everything we could have asked for. We had wings and beer [J: or, in O’s case, celery sticks and whiskey 🙄] and talked about football, family, and faith [O: pretty sure at one point J teared up]. The conversation went well, and afterwards we were both fired up! This was the search. It sank in that we could successfully get it done.
It all seems to be clicking:
- We think we now know the space well enough to be dangerous
- The macros and prior proof points give us confidence we can make “1+1=3”
- We’re getting a sense of how we’ll drive value once we acquire a company
- All of this and more is detailed in our fundraising deck. Let us know if you are interested in hearing us talk your ear off about it.
So what’s next?
We’re focused on putting together the cap table that makes the most sense for our search:
- Long-term, patient investors willing to let an asset compound for 10+ years
- Experience with serial acquisition in the lower middle market
- Appetite (and dry powder) to participate in M&A via follow-ons
- Thought partners with experience mentoring and coaching first-time CEOs
- Good personality fits who appreciate authenticity and transparent conversation [O: and can help me deal with J’s pedantry] [J: oh look, O’s been reading the dictionary for new burns again!]
Then it’s off to the races!
We’ll be putting together our Spring 2021 intern class (we’ve already begun accepting applications – feel free to connect us with anyone you think would be a great fit). Here are some thoughts from our prior interns on their experience.
We’ve not only enjoyed moonlighting the search, but also capturing our thoughts along the way and sharing them with you. We’d like to continue to do that. Once our fundraise is wrapped, we’ll be converting to a quarterly email that captures our experiences searching, acquiring, and running our business. We’d love you to be along for the journey. Please click here if that’s something you’d be interested in. Hopefully our learnings can be helpful to investors, potential searchers, CEOs, and ill-advised amateur comedians.
We hope you’ll join us for the ride. This week perhaps more than usual, we’re thankful that you’ve supported us on the journey so far.