#295: Creating a Holding Company that Buys Companies & Plays the Long Game with Trish Higgins

Private equity gets a bad rap when it comes to owners thinking about their legacy. Thankfully there is a new wave of players coming in who are focused on the long game and what it takes to see a company through multiple decades, not just years. Enter Trish Higgins. Trish, her husband James, and his brother Palmer started Chenmark with the mission to buy small businesses in order to hold on to them and preserve their legacies long-term.

Today Trish opens up about choosing the C-corp route and how that influences her acquisition choices. She also talks about why she looks at the owner's personal drivers as well as the cash flow statements of the company to determine fit. One thing you’ll notice is that Trish tends to buy up those “boring” companies because they have sustainable and predictable cash flow, plus those types of companies don’t require a lot of hyper-skilled managing partners to run them. Her unique strategy is proving quite successful—to the tune of 31 acquisitions since 2015.

WATCH THE INTERVIEW ON YOUTUBE: Intentional Growth™ Podcast

What You Will Learn

Why Trish made the shift from finance to starting her own private equity holding company
What types of businesses Trish focused on out of the gate and why
Why Trish never wrote up a “grand plan” for her investments like most business owners
How Trish finds business owners that are ready to step back and sell
Why Chenmark Capital is structured as a C-corp
What drove Trish to allow her employees to use their holiday bonuses to buy equity in their company
How Trish structured Chemark’s first deal
Why Trish goes after “boring” and “uninteresting” businesses
What factors into making a deal that preserves the legacy of a company and how that goes beyond numbers
Why small business owners need to understand how to deploy their capital, even if it’s not directly into business operations
Why Trish looks into a company's cash flow statements rather than EBITDA to evaluate the deal

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Bio:

Trish Higgins is a founding partner at Chenmark, a firm based out of Portland, Maine, focused on the acquisition and long-term ownership of small businesses throughout North America. She is currently acting CEO of Cap'n Fish's Cruises, a Boothbay Harbor-based whale watching, puffin tour, and sightseeing operation founded in 1936, which Chenmark acquired in February 2020. Outside of work, Trish can be found spending quality time with her husband and business partner, James, and their two kids. She also tries to get to her local Crossfit box as much as time permits.

Interview Quotes:

14:19 - “Fair valuations (nothing crazy). We can be long-term owners and we want to build a portfolio of these cash-flowing businesses. And we want to use the cash flow from one business to buy the next business.” - Trish Higgins

15:00 - “I definitely wasted some opportunities in business school. ‘Cause when I was in business school, I was very focused on going back into finance, primarily so that I could have the firm would pay for my business school debt.” - Trish Higgins

17:07 - “‘We want to own businesses for the long term, that generate cash flow. And have a portfolio of those things.’ Once you figure out that thesis, you don’t have to spend any time thinking about it.” - Trish Higgins

22:22 - “Our highest priority is long term compounding of capital.” - Trish Higgins

29:53 - “A lot of business owners are going to be most successful in their sale, if they first define what success looks to them.” - Trish Higgins

35:54 - “When somebody decides a great time to sell is a highly personalized decision.” - Trish Higgins

39:10 - “We look for things that are–what we call–reoccurring revenue. So it’s more like, ‘Can we get comfortable with the durability of demand?’” - Trish Higgins

65:12 - “Be successful on purpose, not on accident.” - Trish Higgins