Masters in Small Business M&A

Today's guests are Alex de Pfyffer and Ross Porter, Co-Founders of Heritage Holding, an investment firm that has completed nearly 50 acquisitions across 12 active platform companies.

After graduating from HBS, where they met as classmates and intramural soccer teammates, Alex and Ross partnered up to pursue a self-funded search. They share what gave them the confidence to move forward on their first acquisition, a business many PE investors passed on due to customer concentration and key-person risk.

Alex and Ross explain how an unexpected second acquisition emerged that set them on the path from self-funded search to an independent sponsor and, eventually, to raising a $220M committed fund focused on acquiring and scaling sub-$10M EBITDA businesses. 

The conversation also covers sourcing, founder partnerships, building acquisition platforms, and advice for the next generation of HBS searchers.

Discussion Points:

Why they chose a self-funded search over a traditional search fund

Ross's path from Stanford engineering and a hearing-aid startup into search

Alex's investment banking background and what drew him to small business acquisitions

Underwriting customer concentration risk: how they structured their first acquisition

Why earning founder trust starts long before the LOI

The shift from mass email campaigns to a relationship-driven sourcing strategy

Building acquisition platforms through industry-focused buy-and-build strategies

Why their earliest investors continued backing each new platform

The decision to raise a $220 million committed fund in 2024 

Staying disciplined on deal size: why they target businesses averaging $2 million of EBITDA

Why "scaling quickly" appears on Heritage Holding's homepage, and where they deliberately move slowly

Returning to HBS to share their deal story and share advice for future searchers

Why the firm is named "Heritage Holding," not "Heritage Holdings"

Masters in Small Business M&A is produced by its host Peter Lehrman and the team at Axial (www.axial.com). Axial makes it easy for small business owners to confidentially explore growth capital and exit transactions with top-ranked lower middle market M&A advisors and professional capital partners. In every episode, we explore the dynamic world of small business M&A, interviewing a mix of proven and emerging owners, operators, acquirers, and M&A advisors whose strategies and methods are being put to the test.

If you’d like to go deeper, head to Axial.com, where we make available the Axial member directories, downloadable tools for dealmakers, the Axial quarterly lower middle market investment banking league-table rankings, the SMB M&A pipeline report, and other useful information. If you’re a business owner, professional acquirer, or M&A advisor, you can start using Axial for free at Axial.com.

Resources

Alex de Pfyffer LinkedIn

Ross Porter LinkedIn

Heritage Holding Website

Today’s guest is Grant Hensel, founder of Entrepreneurial Capital, a fund that partners with self-funded searchers acquiring small businesses through ETA. After building and exiting businesses of his own, making personal ETA investments, and completing an acquisition with his wife, Grant launched Entrepreneurial Capital to back the next generation of owner-operators.

In this episode, Grant explains why he prefers the self-funded search model over traditional search funds, how he evaluates both businesses and searchers, and the investment philosophy behind backing a "trustworthy searcher buying an enduring business." The conversation also covers the evolution of the ETA ecosystem, lessons from underwriting dozens of acquisitions, and the growing role of SBA lending and policy in financing small business acquisitions.

Discussion Points:

Why Grant is drawn to self-funded search over the traditional search fund model

Entrepreneurial Capital’s thesis: a trustworthy searcher buying an enduring business

Raising a $12.8 million debut fund backed by 80 LPs

Key underwriting risks: customer concentration, economic resilience, and capital efficiency

Evaluating searcher trustworthiness using the Speed of Trust framework

Why the self-funded search community is a surprisingly small, interconnected world

Sourcing talent versus sourcing deals, and the This Week in ETA newsletter

Managing a deal with multiple interested searchers and involving the seller in the selection

SBA loan basics and its role in financing ETA acquisitions

Recent tightening of SBA underwriting standards and citizenship eligibility

The SBA E-Tran issue impacting repeat investors in small business acquisitions

How Grant thinks about portfolio construction, defaults, and downside risk

Distinguishing operational challenges from seller fraud

Potential effects of raising the SBA 7(a) loan cap

Perspectives on personal guarantees and required equity injections

Why Grant favors conservative leverage in SBA-backed acquisitions

Outlook on future fund size and the evolving ETA equity capital landscape

Masters in Small Business M&A is produced by its host Peter Lehrman and the team at Axial (www.axial.com). Axial makes it easy for small business owners to confidentially explore growth capital and exit transactions with top-ranked lower middle market M&A advisors and professional capital partners. In every episode, we explore the dynamic world of small business M&A, interviewing a mix of proven and emerging owners, operators, acquirers, and M&A advisors whose strategies and methods are being put to the test.

If you’d like to go deeper, head to Axial.com, where we make available the Axial member directories, downloadable tools for dealmakers, the Axial quarterly lower middle market investment banking league-table rankings, the SMB M&A pipeline report, and other useful information. If you’re a business owner, professional acquirer, or M&A adviso...

Today's guest is Lane Carrick, founder of Optima Mergers & Acquisitions, a boutique lower middle market investment bank he launched in 2024. Lane brings a “renaissance man” profile and personal story to the M&A advisory seat: he grew up in the Holiday Inn franchise business his father built, completed a leveraged buyout in his 20s without knowing it, founded and exited a wealth management firm, cofounded B.B. King's Blues Club, and now teaches M&A and alternative investments at SMU as an adjunct professor.  He’s also a published author.  

Lane and Peter discuss the founder's exit journey through a business sale. Drawing on his experience as both an entrepreneur and advisor, Lane explains why some owners begin thinking about an exit only after a triggering event, why he often feels like an emergency room physician for founders, and how emotions are usually what put deals at risk. 

The conversation also covers private equity's complicated reputation among business owners, the importance of buyer chemistry, how sellers begin to second-guess a transaction as it approaches the finish line, and what to do about it.

Discussion Points:

Lane Carrick’s entrepreneurial upbringing and early business influences

Lessons learned from his father’s successful Holiday Inn exit

Building and exiting his own wealth management business

Why owners often decide to sell only after a triggering life event

The difference between planned exits and emergency-room transactions

Challenges of unsolicited acquisition offers from private equity firms

The risks of negotiating with a single buyer versus running a competitive process

Communication breakdowns between founders and institutional buyers

The importance of specialized M&A legal counsel

Setting valuation expectations before going to market

Recognizing self-sabotaging behavior during the sale process

Common misconceptions about private equity buyers

Evaluating execution risk across private equity, search funds, and strategic buyers

The importance of chemistry, trust, and cultural fit between buyers and sellers

Building buyer relationships versus focusing on founder relationships

How his new book helps owners assess sellability, optimization, and exit readiness

Planning for identity and purpose after the sale of a business

Masters in Small Business M&A is produced by its host Peter Lehrman and the team at Axial (www.axial.com). Axial makes it easy for small business owners to confidentially explore growth capital and exit transactions with top-ranked lower middle market M&A advisors and professional capital partners. In every episode, we explore the dynamic world of small business M&A, interviewing a mix of proven and emerging owners, operators, acquirers, and M&A advisors whose strategies and methods are being put to the test.

If you’d like to go deeper, head to Axial.com, where we make available the Axial member directories, downloadable tools for dealmakers, the Axial quarterly lower middle market investment banking league-table ran...

Matt Plooster returns to the podcast to deliver a timely update on private credit and specifically its deployment in the lower middle market. 

Despite lingering gaps in awareness and education among business owners and professional advisors, the overall picture is bullish on private credit’s continued growth and deployment. The bearish private credit headlines in the WSJ and Bloomberg aren’t representative of lower middle market activity. AI and private credit in software have undergone a full re-rating. Software no longer gets its own software-centric ARR oriented underwriting framework.  It’s back to cash flow and EBITDA.  

Matt and Peter examine how non-dilutive capital is being used to solve shareholder liquidity issues, fund growth, and support acquisition strategies for Main Street businesses. They also cover the current bifurcation in the private credit market, why software underwriting has shifted materially in the AI era, and why industrial and infrastructure-related sectors continue attracting significant private credit dollars. 

The conversation closes with a broader discussion that is closer to home for Matt regarding AI’s impact on the investment banking industry, the deal process, and how it’s impacting investment banking hiring and diligence processes. Again, listeners will hear some surprising answers that fly in the face of the mainstream media’s generally gloomy AI narrative.   

Discussion Points:

The continued education gap around private credit in the lower middle market

How private credit helps solve shareholder liquidity and succession issues

Why today’s LMM credit environment is more borrower-friendly than headlines suggest

The role of non-dilutive capital in growth and acquisition financing

How software underwriting standards have shifted in the AI era

The growing importance of defensible EBITDA and cash flow generation

Why industrials, infrastructure, and data center-related sectors remain attractive

Strategic buyers versus private equity buyers in today’s M&A market

The impact of AI on investment banking workflows and diligence

How AI is reshaping analyst hiring and talent evaluation

The future of white-collar work and AI adoption inside professional services firms

Why clean financial data is becoming even more important in transactions

How younger professionals are approaching careers with greater intentionality and purpose

Masters in Small Business M&A (sign up for podcast drops here) is produced by its host Peter Lehrman and the team at Axial (www.axial.com). Axial makes it easy for small business owners to confidentially explore growth capital and exit transactions with top-ranked lower middle market M&A advisors and professional capital partners. In every episode, we explore the dynamic world of small business M&A, interviewing a mix of proven and emerging owners, operators, acquirers, and M&A advisors whose strategies and methods are being put to the test.

If you’d like to go deeper, head to Axial.com, where we make available the Axial member directories, downloadable tools for dealmakers, the Axial quarterly lower middle market inv...

Today’s guest is James Bohannon of Belzberg & Co., a family office with a significant history of backing lower middle market independent sponsors and leading direct investments.

James joins Peter to discuss the emerging “F2E” (Finance to Entrepreneurship) category, where pedigreed investment professionals are leaving “partner-track” roles in private equity or investment banking to acquire and operate lower middle market businesses.

James shares how this category differs from traditional ETA or independent sponsor models, why more top-caliber finance professionals are pursuing this path, and how family offices evaluate and partner with these emergent operator investors. The discussion also covers James’ perspective on capital formation, the role of anchor investors, and the key characteristics he sees in the most promising “F2Es”.

Discussion Points:

The emergence of the “F2E” (Finance to Entrepreneur) investor in small business acquisitions

How “F2E” differs from ETA, search funds, and traditional independent sponsors

Why mid-career finance professionals are leaving partner-track roles to buy businesses

The risks and personal stakes F2E operators bring when investing their own capital

How capital formation works between F2Es and family offices

The role of anchor family offices in supporting these new sponsors

How reputation and relationships drive deal flow and partnerships in the ecosystem

Gaps in skill sets when transitioning from large PE firms to smaller, scrappier deals

Why fundraising and sales become core responsibilities for first-time sponsors

How family offices source and evaluate emerging sponsors

The importance of alignment and trust between investors and F2E sponsors

Why the individual operator (“the jockey”) often matters more than the specific deal

The potential for F2E to become a meaningful pipeline of talent into the lower middle market over the next decade

Masters in Small Business M&A is produced by its host Peter Lehrman and the team at Axial (www.axial.com). Axial makes it easy for small business owners to confidentially explore growth capital and exit transactions with top-ranked lower middle market M&A advisors and professional acquirers. In every episode, we explore the dynamic world of small business M&A, interviewing a mix of proven and emerging owners, operators, acquirers, and M&A advisors whose strategies and methods are being put to the test.

If you’d like to go deeper, head to Axial.com, where we make available the Axial member directories, downloadable tools for dealmakers, the Axial quarterly lower middle market investment banking league-table rankings, our Industry Top 50 reports, the SMB M&A pipeline report, and other useful information. If you’re a business owner, professional acquirer, or M&A advisor, you learn more and get started for free at Axial.com.

Resources

James Bohannon LinkedIn

Peter Lehrman LinkedIn