On today’s show, we’re focusing on how a founding entrepreneur grew and sold his tutoring business to private equity. John Rood previously co-founded Next Step Test Preparation, which grew from a 2-person tutoring company to one of the largest MCAT test prep companies in the US. After building it up from scratch, he sold it to private equity in 2018. He runs us through why he chose private equity over other sales options (including an ESOP) and how that influences his buying patterns today.
After selling, John started a search fund: an investment vehicle through which an entrepreneur raises funds from investors in order to acquire a company in which they wish to take an active, day-to-day leadership role. John isn’t shy about diving into how search funds operate, what makes an attractive acquisition target, how capital structures influence a purchase, and the incredible value of long-term planning if you want to achieve your goals and ultimate lifestyle.
In this episode, you’ll learn all about search funds: what they are, how they’re structured, and how they might be beneficial and a viable option if you’re partnered with the right person who is going to be the owner/operator. If you want to learn more about search funds, go check out the Intentional Growth course at Arkona.io.
Take The 2-Minute Assessment To Get Your Intentional Growth Score™ And 1-Page Vision Board.
John Rood is an education entrepreneur. He co-founded Next Step Test Preparation, which grew from a 2-person tutoring company to one of the largest MCAT test prep companies, and sold in 2018 to private equity. John now searches for small businesses to acquire in the education or senior care industries. Additionally, he is working on a platform connecting university alumni to peer mentorship groups. He lives in Chicago with his wife and two boys.
11:55 - “We put together a little board of advisors early on in our business, before we really needed to.” – John Rood
12:51 - “Let’s go get the right people, the right staff, and kind of go after it.” – John Rood
15:16 - “If we want to have a company that’s valuable as an enterprise, we have to get out of just doing the services.” – John Rood
18:13 - “There’s a certain subset of equity holders that care about the enterprise value of the business. And then there’s a much larger piece of your business, of your customers, of your customers, of your employees that cares about ‘Are we doing something that’s good for the world? Am I respected by my manager? Is my compensation fair?" – John Rood
20:13 - “Think about starting with a business where the cash cycles are really good.” – John Rood
20:29 - “I actually think I took too much out of the business. If I had to do it again, I would have invested more.” – John Rood
21:39 - “You really have to separate out your labor from your equity.” – John Rood
24:57 - “You have to have a bench of people that you can go hire.” – John Rood
31:32 - “If you’re going to hire an intermediary, you can’t just hire the first one. You’ve got to get intros to a couple people. See who’s doing a lot of deals, specifically in your industry.” – John Rood
36:08 - “What do I want my worklife to be for the next thirty years?” – John Rood
36:40 - “I hadn’t sat down and thought, ‘Here’s what I want to accomplish when I’m sixty. I’m doing that stuff now and I wish I would have done it back then. It really helps guide, are you making the right long term choices or not.” – John Rood
37:09 - “Do I feel fulfilled even if my business fails?” – John Rood
47:53 - “I think people underestimate the challenge involved in that because you still have to get humans to agree with you, to lend you the money, and to actually run the business.” – John Rood
53:06 - “If private equity wants to buy your business, they don’t want to go run it… whereas a search funder oftentimes will become the CEO of the business.” – John Rood
Reach out to me if you have questions about the boot camp!
On today’s show, I’m talking with Anese Cavanaugh. Anese created the IEP (Intentional Energetic Presence) methodology on how you show up, being intentional, the way you take care of yourself. She also created a company out of her ideal beautiful job (Active Choices Incorporated; better known as IEP methodology) and has written two books, Contagious Culture, and Contagious You. In this episode, we’re talking about how you can reenergize your leadership energy by building a healthy, happy, contagious culture within your business. The most important takeaway from this episode is the importance of culture in your work environment. Leadership and the culture are two critical components that make it fun for your team to do the hard work they have to do. People are what it takes. It starts with you and how (or if) you’re showing up. What do you want your impact to be? Once you start to name your assumptions, you start to realize they're only assumptions and they're probably not fully real. And there's things that you can get curious about. What You Will Learn In Today's Podcast Interview How recognizing that you’re part of the problem gives you back your power. Why you need to take better care of your energy. What the IEP Method® (Intentional Energetic Presence®) is and the vital role it plays in your business. When burnout isn’t about your financial asset, but the role you play in it. How writing out her ideal job description and crafting her intentions inspired Anese to start her first company. Who is responsible for creating the culture in your business and how you can improve it. If you take care of your people and are being intentional about your impact, the money ...
My guest today is Corey Northcutt, the founder of the Northcutt agency. The company is highly successful and Corey has built an impressive SEO and Cloud service. However, it wasn’t always that way. Before Northcutt, Corey was a co-founder of Ubiquiti, a web hosting company. That company grew wildly, but it became a nightmare once the four business partners involved began seeing dollar signs. Corey tells me about his time in a highly political and stressful business. His story is a cautionary tale about how to structure your company in the beginning to maintain a fair balance of power. Corey left his company in a massive blow-up that left him aimless and shell-shocked. He tells me how he found his direction and how he’s done things differently this time around with Northcutt. You will learn about: The beginnings of Ubiquiti. How Corey pivoted into other services. Why Corey chose his first business partner. When Ubiquiti merged with one of its clients and two more partners joined the team. The benefits of catering to a niche market. The initial partnership structure Corey and his partners used. The issues Corey and his partners had. Lessons Corey learned from dealing with potential buyers. The cracks that appeared within the partners’ relationship. The toxic environment that developed during the sales process. How Corey left the company. Life after the buy-out. The lessons Corey took from his time at Ubiquiti. Why does Corey choose not to work from an office? Corey’s advice to the audience. Office politics is a little more serious than we give it credit for. On today’s show, we talk through a ‘hostile work environment’ that’s hard to ...
Cindy Eckert (formally Whitehead) is the founder of a Sprout the first pharmaceutical company to develop Addyi, the first female Viagra. In the mid-2010s, Cindy sold her company to a bigger pharmaceutical company but soon found she made a mistake. The program Pinkbator is searching for women entrepreneurs wanting to improve the lives of women and the world in general. Cindy is very passionate about her mission and the company she built. She takes me on the journey of Slate (her first pharmaceutical company), Sprout, and finally The Pink Ceiling, She tells me about her billion dollar exit and how her purchaser disappointed her in the end. Cindy was so disappointed by her company’s “adopted parents” that she sued for the right to take the company back. I ask her how she managed it and she credits creative deal structuring and a great legal team. She won the case and built The Pink Ceiling, a business incubator that is dedicated to empowering, educating, and giving women entrepreneurs a chance to grab capital opportunities. What you will learn: Why Cindy became an entrepreneur Why she gravitated to pharmaceuticals Cindy’s fascination with women’s sexual health and why it is important. The beginning of Slate and how it led to Sprout. How to “Be the Workhorse.” The qualities Cindy looks for in her team. The danger of having the wrong partner and being selective about investors. Why you should be accountable to investors. The benefits of an awesome legal team. The stipulations Cindy included in her sale agreement when she sold Sprout. How those stipulations helped her win the company back in court. The Pink Ceiling and Cindy’s view of the future. Takeaways: You need to know what you are passionate about and what you want ...