Acquiring Minds How to Build a Holdco (4 Acquisitions So Far)
Jan 24, 2022
Justin Turner, co-founder and managing partner of Traction Capital, shares insights from his journey in building a permanent equity fund with four acquisitions since 2018. He discusses why $4-5M businesses can be easier to acquire than smaller ones and the unique benefits of holding companies long-term. Justin reveals the surprising appeal of paving companies as solid investments and emphasizes the importance of nurturing seller relationships. He also outlines strategies for successful acquisition processes and the significance of building a diversified business portfolio.
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Why Traditional PE Rarely Holds Long
- Traditional PE lifecycle (10‑year fund, 3–5 year holds) is driven by LP return horizons and fundraising needs.
- That structure makes long‑term compounding uncommon among larger PE firms.
Standardize On An ERP For Portfolio Visibility
- Implement a single ERP like NetSuite across portfolio companies to simplify reporting and analysis.
- Use traction resources to execute systems implementation and free operating teams to run day‑to‑day.
Paving Business Fulfills Ongoing Infrastructure Need
- Traction acquired a Seattle‑area asphalt paving business that does $7–8M yearly and works on bid and relationship projects.
- They secure contracts from cable/fiber companies to repave strips after utility work.