In this episode, Michael Aubrey shares his unconventional path—from investment banking to his family’s parking business—before using a search fund to acquire StatLab Medical Products. He discusses the challenges of entrepreneurship, including nearly running out of capital, and lessons from scaling businesses. Mike also reflects on leading Mission Veterinary Partners (MVP), transforming it from a struggling operation into an industry leader with 330+ hospitals and 8,000 team members. He highlights the power of perseverance, culture, and leadership, while discussing the Shore ecosystem and his passion for mentoring searchers.

Chapters:

• 00:00 Introduction
• 05:44 Creating MVP
• 10:07 Back to Search
• 11:32 The Search Fund Model
• 18:41 Why Shore Capital?
• 23:44 Setting the Record Straight

Listen to our podcasts at:

https://www.shorecp.university/podcasts

You'll also find other Microcap Moments episodes, alongside our series Everyday Heroes and Bigger. Stronger. Faster., highlighting the people and stories that make the microcap space unique.

Other ways to connect:

Blog: https://www.shorecp.university/blog

Shore Capital University: https://www.shorecp.university/

Shore Capital Partners: https://www.shorecp.com/

LinkedIn: https://www.linkedin.com/company/shore-university

This podcast is the property of Shore Capital Partners LLC. None of the content herein is investment advice, an offer of investment advisory services, or a recommendation or offer relating to any security. See the “Terms of Use” page on the Shore Capital website for other important information.

Michael Burcham: 00:00:18

Welcome to Microcap Moments, a podcast from Shore Capital Partners that highlights the stories of founders, investors, and leaders who have taken on the challenge of transforming ideas and small companies into high growth organizations.

Michael Burcham: 00:00:32

The journey of building and scaling a business.

Michael Burcham: 00:00:34

Takes one down many unexpected paths.

Michael Burcham: 00:00:37

It's a journey where we learn from our mistakes fall down often, but have the entrepreneurial grit to pick ourselves up and persevere.

Michael Burcham: 00:00:45

Within this series, we will share these stories of success and failure of the challenges and the rewards faced by those who dare to dream big.

Michael Burcham: 00:00:53

And through their lessons learned, we hope to inspire others.

Michael Burcham: 00:00:57

Who are on a similar journey of becoming, growing and leading.

Anderson Williams: 00:01:02

In this episode, I talk with Mike Aubrey, the Partner with a Shore Capital Partners search fund, Shore Search.

Anderson Williams: 00:01:08

Mike's career journey includes investment banking, working with his father managing parking lots in Detroit, being a successful searcher himself, and serving as the CEO of a Shore Capital portfolio company Mission Veterinary Partners.

Anderson Williams: 00:01:20

Mike has found success in every phase of his career.

Anderson Williams: 00:01:23

And shares practical insight on what has worked and what hasn't in both delivering an 11 times return as a searcher.

Anderson Williams: 00:01:30

And in interning a struggling vet business with 18 hospitals, no growth, 300 employees and high turnover into an industry leader with over 330 hospitals, more than $1.2B in revenue, 8,000 team members and the lowest turnover.

Anderson Williams: 00:01:45

In the industry in partnering with Shore Capital to launch the search fund.

Anderson Williams: 00:01:49

Mike talks about the value of the Shore ecosystem and the opportunity to build the kind of investor he dreamed of having in his own search experience.

Anderson Williams: 00:01:57

Aside from holding depths of hard-earned wisdom, Mike is both a stellar communicator and a teacher, both of which have been critical to his journey and will certainly play an important role in the success of the searchers around him.

Anderson Williams: 00:02:09

Welcome, Mike.

Anderson Williams: 00:02:09

Thanks for joining me today.

Michael Aubrey: 00:02:10

Thrilled to be here.

Michael Aubrey: 00:02:11

Anderson, good to see you.

Anderson Williams: 00:02:12

Will you just introduce yourself and say what you do and where you do it?

Michael Aubrey: 00:02:15

Sure.

Michael Aubrey: 00:02:16

My name is Michael Aubrey.

Michael Aubrey: 00:02:17

I'm the Partner here at Shore Search.

Anderson Williams: 00:02:19

And give us some context to your backstory.

Anderson Williams: 00:02:22

What did you do before the search fund and how did you get connected with Shore?

Michael Aubrey: 00:02:25

Well, I'm getting old, so I'll try to make a long history brief.

Michael Aubrey: 00:02:29

Started off doing investment banking.

Michael Aubrey: 00:02:30

Then I worked for my father at his parking company for four years in Detroit, Michigan.

Michael Aubrey: 00:02:34

And then I actually got a phone call from a guy named Dan Henn, who was graduating HBS in 2007, and we partnered up to form a search fund.

Michael Aubrey: 00:02:43

I'll never forget the first time he called me to explain to me what a search fund was.

Michael Aubrey: 00:02:47

I literally told him, I think you should ask Harvard for a refund because this is the dumbest idea I've literally ever heard as I was parking cars in Detroit, Michigan.

Michael Aubrey: 00:02:54

And so ultimately he convinced me to fly out to Boston and took me to dinner.

Michael Aubrey: 00:02:59

I'll never forget we went to Illegal Seafood and he convinced me why search funds was such a neat opportunity for me at that point in my career.

Michael Aubrey: 00:03:06

So having never gone to business school myself, partnered up with Dan in '07 and we searched for two years.

Michael Aubrey: 00:03:11

We found a business, we bought it.

Michael Aubrey: 00:03:12

After two years of searching, we were down to our last $17,000 of search capital.

Michael Aubrey: 00:03:17

We thought we were gonna have to close shop.

Michael Aubrey: 00:03:19

We bought a business called StatLab Medical Products in Dallas, Texas.

Michael Aubrey: 00:03:22

Ran that for nine years.

Michael Aubrey: 00:03:23

We sold it.

Michael Aubrey: 00:03:24

Our investors made 11 times their money.

Michael Aubrey: 00:03:26

And along the way I met Justin Ishbia, the founder of Shore Capital, and learned about what he was doing here and frankly his interest in the veterinary space.

Michael Aubrey: 00:03:34

And so I got a phone call from my cousin who was like a pharmaceutical drug rep in the veterinary space.

Michael Aubrey: 00:03:40

And he had met this veterinarian who wanted to sell and do a rollup.

Michael Aubrey: 00:03:43

And I referred the veterinarian to Justin and Shore Capital and they did it.

Michael Aubrey: 00:03:47

I didn't know that they would do the deal, but that was the platform that ultimately became MVP.

Anderson Williams: 00:03:51

No kidding.

Michael Aubrey: 00:03:51

Yeah, and then I think as a thank you to me, they put me on the board.

Michael Aubrey: 00:03:55

I obviously had no experience in veterinary medicine.

Michael Aubrey: 00:03:58

I'm not sure where they put me on the board, but I guess because I referred the deal maybe.

Michael Aubrey: 00:04:01

And so I was on the board for a year at MVP after I had sold StatLab and I was unemployed anyways.

Michael Aubrey: 00:04:08

And they, at one point the board decided that we needed to bring in A CEO, and so they asked me to do it.

Michael Aubrey: 00:04:14

And of course I initially declined 'cause I was like, no, this would be a big project.

Anderson Williams: 00:04:17

Did they take you to Illegal Seafood and talk you into

Michael Aubrey: 00:04:20

Exactly.

Michael Aubrey: 00:04:21

And so I've been running MVP for the last six years.

Michael Aubrey: 00:04:24

We just recapitalized the business in December.

Michael Aubrey: 00:04:26

And so I'm kind of retired now, partially retired.

Michael Aubrey: 00:04:29

And so Justin and I decided to do this about a year ago, and I'm thrilled to be here.

Anderson Williams: 00:04:33

So since we're talking about search today, I have to at least go back and ask what was the, this is the dumbest idea to Yeah.

Anderson Williams: 00:04:40

I'm in moment at Illegal Seafood way back then.

Anderson Williams: 00:04:43

What changed your mind?

Michael Aubrey: 00:04:44

Yeah.

Michael Aubrey: 00:04:45

I think the dumbest idea part was I didn't understand how we were going to buy a business that we knew nothing about and I wasn't really interested in moving to a part of the country that I wasn't from or had no ties to.

Michael Aubrey: 00:04:57

And I mean, ultimately if you're gonna do search successfully, those two things are sort of the ante that get in the poker game, if you will.

Michael Aubrey: 00:05:03

And when I met with Dan, he was really smart.

Michael Aubrey: 00:05:06

He and he introduced me to some of the long time investors in search.

Michael Aubrey: 00:05:11

And you know, these are folks that owned the Boston Celtics or the St. Louis Cardinals.

Michael Aubrey: 00:05:15

I mean, and all of a sudden you're 27 years old and you're meeting some of these folks and they're talking to you about the success that they've had investing in the space and the mentorship and the guidance that they're gonna give you along the way.

Michael Aubrey: 00:05:26

And the fact that so many people had done it before and that you can learn a new business in a new industry.

Michael Aubrey: 00:05:32

And it is possible.

Michael Aubrey: 00:05:33

And I think they opened my eyes to the possibility where I think I had maybe a fixed mindset going into the dinner.

Michael Aubrey: 00:05:38

I left 48 hours later feeling like this was going to be the coolest thing that I've ever did.

Anderson Williams: 00:05:44

And you kind of did it again with MVP going into an industry you didn't know, give us a little bit of context about your time at MVP and where the company was as you transitioned from board to leading the company to, you just mentioned a recent recap.

Anderson Williams: 00:05:57

Give us a brief history there of what you were able to build and grow.

Michael Aubrey: 00:06:00

Well, when MVP was founded, we had 18 hospitals and I think it was probably 25 or 30 million in revenue.

Michael Aubrey: 00:06:07

About a year in the company was having real problems.

Michael Aubrey: 00:06:10

Organic growth was negligible to trending negative.

Michael Aubrey: 00:06:14

We were losing 25% of our doctors.

Michael Aubrey: 00:06:17

We had staff shortages and I think the home office really just wasn't functioning properly.

Michael Aubrey: 00:06:22

And I think ultimately the board thought, Hey, we've gotta turn this around quickly.

Michael Aubrey: 00:06:27

So when I got here again, probably $30-35M in revenue ish.

Michael Aubrey: 00:06:32

By then, maybe we had 22 practices.

Michael Aubrey: 00:06:34

I don't remember exactly, but directionally I think I'm correct.

Michael Aubrey: 00:06:36

And today it's been six years.

Michael Aubrey: 00:06:38

Today we have over 330 hospitals and we're doing over $1.2B in revenue, 8,000 team members, and the lowest veterinary turnover in the industry.

Michael Aubrey: 00:06:48

In other words, I think, you know, arguably the happiest employees are recruiting is off the charts and people wanna stay.

Michael Aubrey: 00:06:53

And I'm really proud of more than anything what the team was able to do in terms of the culture that we built.

Anderson Williams: 00:06:58

I know from hearing you talk about it, that that's far from an accident.

Anderson Williams: 00:07:02

Will you talk a little bit about what you knew you wanted to change about what it meant to be in the veterinary business when you looked at that and said, this is how we turn this thing around?

Michael Aubrey: 00:07:11

Sure.

Michael Aubrey: 00:07:12

When I got here, it's important to know that my paradigm of veterinary medicine was from the client perspective.

Michael Aubrey: 00:07:18

So I like to say like before 2018, I had never been behind the receptionist counter, so I was under the impression that.

Michael Aubrey: 00:07:25

Veterinarians charged a lot of money for their services, that they made a lot of money, and that everybody that worked in a veterinary hospital was doing really well financially.

Michael Aubrey: 00:07:32

And when I got to MVP, we had 300 employees at the time, and I actually met with every single one of 'em.

Michael Aubrey: 00:07:38

I drove to every single hospital we had.

Michael Aubrey: 00:07:41

It was three states at the time.

Michael Aubrey: 00:07:43

It was a lot of driving my first 90 days and I met every single team member and I heard their stories and I actually didn't know this, but most people in the veterinary world live below the poverty line and veterinarians actually don't charge a lot, especially in the general practice.

Michael Aubrey: 00:07:56

I think, you know, not to defend or get in a war 'cause I know this might be unpopular, but I think a lot of the big ticket prices that you hear about in veterinary medicine or that are in the press, those actually occur at specialty hospitals or ER hospitals.

Michael Aubrey: 00:08:08

But most of the community is general practice, which is like kind of going to your primary care doctor.

Michael Aubrey: 00:08:12

And the folks that live there, truly, you know, when I met these folks, some of 'em making $12, $13, $14 an hour and I heard their stories and I heard how they had to live paycheck to paycheck, and honestly it broke my heart.

Michael Aubrey: 00:08:23

And I very quickly, after about 90 days, I said, okay, we have to change this.

Michael Aubrey: 00:08:29

We have to move the paraprofessional teams in our hospitals above the poverty line, we have to move them into the middle class so that this can be something that can actually be a career.

Michael Aubrey: 00:08:37

'cause what was happening in the profession was folks wanted to get in because they loved animals, and then they quickly left because they couldn't afford to stay.

Michael Aubrey: 00:08:45

And ultimately the ramification of that is that doctors were constantly working with brand new people and they were constantly turning their teams over.

Michael Aubrey: 00:08:52

And that is exhausting.

Michael Aubrey: 00:08:53

And what happens in that environment is you really don't have anyone you can trust or delegate to.

Michael Aubrey: 00:08:57

And so doctors were doing everything in a hospital and literally burning themselves out.

Michael Aubrey: 00:09:01

You may not know this, but veterinary medicine is actually one of the highest rates of suicide of any profession there is in any industry because of this burnout.

Michael Aubrey: 00:09:09

And so I became really passionate about trying to solve that problem.

Michael Aubrey: 00:09:13

So when I went back to Shore and the board, I said, look, I'll do this if you are supportive of the fact that we're not gonna have any dividends come outta this company and that all the free cash flow is gonna go back into the ecosystem.

Michael Aubrey: 00:09:22

And we are consciously going to try to raise paraprofessional wages from where they're at, $13, $14 an hour to hopefully over $30 an hour.

Michael Aubrey: 00:09:31

And that comes at a really big cost.

Michael Aubrey: 00:09:33

And the argument I made was that if we did that, we would have more sustainable teams and that doctors would thrive in that environment and ultimately healthy, thriving doctors would lead to healthy thriving practices and it would work.

Michael Aubrey: 00:09:45

And it did.

Michael Aubrey: 00:09:46

And so we have been able to move literally thousands of people to make this a career for them.

Michael Aubrey: 00:09:52

It's something we're really proud of.

Michael Aubrey: 00:09:54

I know our doctors are, and it's the place that people want to come and be a part of.

Michael Aubrey: 00:09:57

And I think that's something that's really cool and was fortunate to be a part of something that's special.

Anderson Williams: 00:10:01

Yeah, it's really incredible.

Anderson Williams: 00:10:03

I could talk for days more about that, but we're here to talk about the search fund today.

Anderson Williams: 00:10:07

So given that journey and where you are, why are you back in search?

Michael Aubrey: 00:10:13

It's interesting.

Michael Aubrey: 00:10:14

I always wanted to be a teacher, so my background grandparents immigrated from Lebanon and my dad grew up with basically nothing, and so did my mom.

Michael Aubrey: 00:10:22

I think from an early age, they had high hopes for me and they wanted me to, you know, frankly take our family to a different level and that those were my dad's dreams.

Michael Aubrey: 00:10:29

I think that had a profound impact on me.

Michael Aubrey: 00:10:31

I only share that with you because when I graduated from college, I went to my father and said, dad, I want to be a teacher.

Michael Aubrey: 00:10:35

I want to teach high school history and be a football coach.

Michael Aubrey: 00:10:38

I love to teach.

Michael Aubrey: 00:10:39

I'm a teacher at heart.

Michael Aubrey: 00:10:40

And he said, no.

Michael Aubrey: 00:10:42

You're going to go into business, which is why I worked so hard and paid all this money for you to go to the University of Notre Dame and you're gonna go into business and you're gonna do that.

Michael Aubrey: 00:10:49

And I was like, yes, sir. And here I am, you know, 46 years old, and I have the freedom to do what I want.

Michael Aubrey: 00:10:54

And I have learned a lot about business because I could probably write three books about all the mistakes I've made.

Michael Aubrey: 00:10:59

And, um, I want to give back and I want to teach and I want to help people that are still at a point in their career where they wanna learn.

Michael Aubrey: 00:11:05

And having sat on a number of boards over the course of my life, what I have found is that more experienced CEOs.

Michael Aubrey: 00:11:10

Really don't wanna learn board meetings or check the box exercise.

Michael Aubrey: 00:11:13

And that's okay.

Michael Aubrey: 00:11:14

I get it.

Michael Aubrey: 00:11:14

And to some extent I'm probably guilty of that myself in companies that I've run.

Michael Aubrey: 00:11:18

But searchers are at a point where they actually are seeking for the help and they want it.

Michael Aubrey: 00:11:22

And I think to be in that kind of environment, and I'm really passionate about investing in learning about new industries and new businesses, it allows me to satisfy all the things that are life-giving for me.

Anderson Williams: 00:11:32

And for those of us who aren't familiar with the search space, will you just give us the quick and dirty version of what that even means when we're saying search?

Anderson Williams: 00:11:40

What does the structure of that look like?

Michael Aubrey: 00:11:42

So basically, the quick version is one or two people decide to search.

Michael Aubrey: 00:11:45

Either you go solo or you get a partner and you raise somewhere between $500K and $1M to essentially pay yourself a small salary and keep the lights on, pay for flights, hotels, meals, entertainment.

Michael Aubrey: 00:11:55

You get the drill and you basically fly around the country looking for a business to buy.

Michael Aubrey: 00:11:59

That's it.

Michael Aubrey: 00:12:00

Then if you're fortunate enough to get a business that you like under letter of intent, that you're gonna acquire it, and now you need $10, $15, $20, $25M to actually buy it.

Michael Aubrey: 00:12:10

You go back to those investors that gave you the $500K or $1M upfront, and you say, Hey, now you can write a bigger check.

Michael Aubrey: 00:12:16

And the thought is, is that searcher is going to be able to make you multiples on your investment.

Michael Aubrey: 00:12:21

And so that's basically what a search fund is.

Michael Aubrey: 00:12:23

And so that searcher literally dedicates their life to move to where the business is.

Michael Aubrey: 00:12:28

They immerse themselves in it every single day, and their job is to grow it and ultimately create value for the shareholders and themselves.

Anderson Williams: 00:12:36

So let's go back to that stage in your particular journey, the early stages of your search experience.

Anderson Williams: 00:12:41

Give us a little bit of history there on how you identified your market and your company, and how did you get started?

Anderson Williams: 00:12:47

Just go back to that so that there's some further insight for anyone who's in the search fund today, which I'm sure you've already talked to them, but anyone listening?

Anderson Williams: 00:12:55

Say this is what it actually looks like firsthand.

Michael Aubrey: 00:12:57

So, first of all, I've gotta give a lot of credit to my partner Dan Henn, who is really thoughtful and a, I think a very good investor.

Michael Aubrey: 00:13:04

And Dan and I would basically get together and talk about what spaces we thought had legs, for lack of a better word.

Michael Aubrey: 00:13:10

And keep in mind, we searched from '07 to '09.

Michael Aubrey: 00:13:14

So when we started in '07, it was high times in this country.

Michael Aubrey: 00:13:17

It was great.

Michael Aubrey: 00:13:18

And then '08 hit.

Michael Aubrey: 00:13:19

And I mean, people were scared and investors were scared to deploy capital and we were scared.

Michael Aubrey: 00:13:24

And so we had to be super thoughtful about effectively what's gonna be recession proof, because we were living in a time where people that we knew were losing their homes, and so we thought healthcare would be a safe place to be.

Michael Aubrey: 00:13:37

And so we spent time and we ultimately found StatLab and that business.

Michael Aubrey: 00:13:40

What StatLab did is they sold products that are used in cancer testing, and ultimately we came to the conclusion that if we're in healthcare, no matter what happens in the broader economy, people are still going to go to the doctor, in particular, people that have cancer and they're gonna get tested irrespective.

Michael Aubrey: 00:13:56

Of what's happening because it's that essential.

Michael Aubrey: 00:13:58

And so ultimately we had to be really judicious about picking things that we thought could frankly be financeable because at that time, very few businesses were financeable at all because of most businesses have some sort of cyclicality to them, and we found one that fortunately didn't.

Anderson Williams: 00:14:14

And how do you take that and translate to the critical eye your searchers need to have on today's market?

Anderson Williams: 00:14:21

Yeah.

Anderson Williams: 00:14:21

How do you take that experience that was a, in your face, I mean, it wasn't when you started, but by the time '08 hit, the sky was falling.

Anderson Williams: 00:14:28

How do you translate that today to, even if the sky doesn't feel like it's falling?

Anderson Williams: 00:14:32

Being hypercritical about the industry and the particular business you're looking for.

Michael Aubrey: 00:14:37

It's really hard because the last decade have been high times for investors.

Michael Aubrey: 00:14:41

I mean, especially when interest rates were, you know, effectively people could borrow money for free.

Michael Aubrey: 00:14:45

And obviously that's changed a little bit here in the last, you know, year and a half.

Michael Aubrey: 00:14:48

And I think to some extent that's actually helping add some discipline that I think had been lacking.

Michael Aubrey: 00:14:52

But the reality is, is that most people searching have only seen success almost no matter what, because no matter what has been bought in the last 10 years, not only did it kind of go up to the right.

Michael Aubrey: 00:15:01

You got multiple expansion because the amount of capital trying to be put to work is so much now in the country that I think we had that.

Michael Aubrey: 00:15:08

And so I think it's important that searchers surround themselves with investors that have had a lot of reps, a lot of pattern recognition.

Michael Aubrey: 00:15:15

I obviously think Shore can say that we've had.

Michael Aubrey: 00:15:17

Some pattern recognition on things that work and don't work.

Michael Aubrey: 00:15:20

And all you can do is give the searcher your honest opinion.

Michael Aubrey: 00:15:23

At the end of the day, you know, they get to make their decision, and I think what you wanna show them is, I genuinely care about you.

Michael Aubrey: 00:15:30

You're the one moving to city X, Y, Z. You're the one putting your reputation on the line.

Michael Aubrey: 00:15:35

You know, respectfully, whether the deal goes well or not for you.

Michael Aubrey: 00:15:38

Investors are gonna be fine.

Michael Aubrey: 00:15:39

That just is the reality.

Michael Aubrey: 00:15:40

I don't wanna sound harsh about it, but that's just the truth.

Michael Aubrey: 00:15:42

And so I really am trying to think about your next decade and where you wanna spend your time.

Michael Aubrey: 00:15:47

And I have the ability to be neutral about it where you are so in your search and frankly maybe exhausted or fatigued of searching that maybe all I can say is when I was searching, sometimes I was trying to find the deal within the deal just so I could get something done and stop the pain of actually searching.

Michael Aubrey: 00:16:01

And I think surrounding yourself with folks that are actually gonna be honest with you and have your best interest at heart is important.

Michael Aubrey: 00:16:05

And I think we're gonna be that.

Anderson Williams: 00:16:07

So when you think about your time, what are a couple of things you know, you did right in the search process?

Michael Aubrey: 00:16:12

Well, we worked really hard, you know, I can tell you that we held each other accountable and Dan was the best partner.

Michael Aubrey: 00:16:17

And I think I'm proud of the effort that we gave it every day.

Michael Aubrey: 00:16:21

We didn't take any days off, even though it was hard, you know, we went to a new city almost every other week, and we met with.

Michael Aubrey: 00:16:27

Probably 10 to 15 intermediaries in those cities for two straight years.

Michael Aubrey: 00:16:31

I mean, I would say effort and I would say consistency of follow up, and I think we did a pretty good job of attending some industry trade shows and being connected in those spaces.

Anderson Williams: 00:16:40

What about things you did wrong?

Anderson Williams: 00:16:41

Anything come to mind that you know you did wrong?

Michael Aubrey: 00:16:43

How much time do we have?

Michael Aubrey: 00:16:45

I think if I were to synthesize that question, it would be we spent too much time on things that we had absolutely no chance to win.

Michael Aubrey: 00:16:52

We spent too much time talking to brokers or intermediaries where we had absolutely no chance to win.

Michael Aubrey: 00:16:58

And I think our naivety was part of what allowed us to actually just.

Michael Aubrey: 00:17:01

Get in the game and search.

Michael Aubrey: 00:17:02

I mean, you have to have a certain amount of naivety or almost like confidence that you can do the impossible just to even get in the game.

Michael Aubrey: 00:17:07

And so naturally, anybody that thinks that way is like, we can win this deal, even though there was no chance that we were gonna be able to compete with a private equity firm on something or work with an advisor that did multiple deals.

Michael Aubrey: 00:17:17

They're not gonna sell a business to a searcher because you're not gonna be a repeat client for them, and they're gonna do everything in their power to advise their client against you.

Michael Aubrey: 00:17:24

And I think having not understood that, and time being our most valuable commodity, we wasted a ton of it.

Anderson Williams: 00:17:29

So when you think about that, you think about those characteristics, what makes a good searcher?

Michael Aubrey: 00:17:33

First of all, I'm not sure I was a good searcher.

Michael Aubrey: 00:17:35

It's a good question.

Michael Aubrey: 00:17:36

I think a good searcher is someone that is disciplined, persistent, doesn't get discouraged by the word no, because I promise you you're gonna hear it a lot.

Michael Aubrey: 00:17:44

And someone that can ultimately, for lack of a better way to put it, you have to be a good sales person.

Michael Aubrey: 00:17:49

In so far as.

Michael Aubrey: 00:17:50

Here's the reality.

Michael Aubrey: 00:17:51

The reality is it's gonna come down to one moment.

Michael Aubrey: 00:17:53

It's gonna come down to you probably taking that owner to dinner and potentially their spouse to dinner, or their partner, their significant other, and convincing them that you are the person or you are the team that they should trust their life's work to.

Michael Aubrey: 00:18:05

And then you have to convince their advisors.

Michael Aubrey: 00:18:07

Then you have to convince their employees.

Michael Aubrey: 00:18:08

And at the end of the day, I think good searchers are great communicators and they can show their passion and conviction and make you believe that they can be trusted with the thing that you probably value the most.

Anderson Williams: 00:18:18

That's pretty intense.

Anderson Williams: 00:18:19

I'm not gonna lie.

Anderson Williams: 00:18:20

I'm struck by the reality of what you're describing is that being successful and closing that deal is not coming down to how you manage a spreadsheet or what you're promising is, or how you do any of the numbers it comes down to you sign across the table with someone and their significant other and building a relationship and building trust and those kinds of things.

Michael Aubrey: 00:18:40

I unequivocally believe that.

Anderson Williams: 00:18:41

So why Shore?

Anderson Williams: 00:18:43

You talked about you and Justin having a conversation.

Anderson Williams: 00:18:46

Why does this make sense for Shore?

Michael Aubrey: 00:18:49

So we left this part out of the intro, but part of the recapitalization of MVP, the veterinary rollup, was that we got to merge it with Southern Veterinary Partners, which is another veterinary rollup that Shore had an equity stake in, and it allowed me to leave the business on a day-to-day basis because the SVP CEO is gonna be the CEO of the combined company, and he's great and wonderful, and it's great and we're friends and it's great.

Michael Aubrey: 00:19:12

I was sitting with Justin at dinner one night and he asked me what I wanted to do next, what was I passionate about, and I told him that I wanted to invest in search funds and that I wanted to be back in that community more on a full-time basis, and that I wanted to be with searchers and in their life and in their cap table.

Michael Aubrey: 00:19:27

And he asked me about it and we had a long conversation.

Michael Aubrey: 00:19:29

By the end of it, he said, how would you like to partner on it instead of you going alone and here's what I have to offer and I can give you access to the Shore ecosystem.

Michael Aubrey: 00:19:39

And I got really energized by that because I only have so much individual bandwidth.

Michael Aubrey: 00:19:44

And one of the challenges that I had as a searcher was that my investors only had so much individual bandwidth, and so I wasn't able to really leverage a lot of that experience.

Michael Aubrey: 00:19:54

And so I thought to myself, wow, sure has scalable infrastructure.

Michael Aubrey: 00:19:58

This could be exciting.

Michael Aubrey: 00:20:00

And ultimately we could build the kind of investor I always dreamed of having in my cap table.

Michael Aubrey: 00:20:05

So that's what I got out of it, is something I'm proud of to bring the community.

Michael Aubrey: 00:20:08

I think the way Justin and Shore look at it is this is an opportunity to get connected to some of the most talented MBA students in the world and have them become affiliated with Shore.

Michael Aubrey: 00:20:17

Even if we have a small portion of someone's cap table, even if we're a small portion of their deal, we're certainly not in control.

Michael Aubrey: 00:20:23

We don't govern it.

Michael Aubrey: 00:20:24

You know, we don't control the board, but they get to know us and they see that, well, there's so many outcomes that can happen with that searcher.

Michael Aubrey: 00:20:29

Think about what happens in five to seven years after they sell their business.

Michael Aubrey: 00:20:32

We might love them and they might love us.

Michael Aubrey: 00:20:33

We might ask them to be on a board of one of our portfolio companies.

Michael Aubrey: 00:20:36

Or what if we love the business so much that we try to buy it from the rest of the cap table?

Michael Aubrey: 00:20:40

Or what if the searcher is great and he's like me or she's like me and just a little less lucky.

Michael Aubrey: 00:20:46

'cause like I said, I came down to my last $17,000 when I searched, we almost hung our shingle.

Michael Aubrey: 00:20:49

What if their search isn't successful?

Michael Aubrey: 00:20:51

But they're really talented.

Michael Aubrey: 00:20:52

We have so much going on at Shore that we would love to have them as a CXO or one of our portfolio companies.

Michael Aubrey: 00:20:57

Or maybe they come work at the fund.

Michael Aubrey: 00:20:58

If you think about just.

Michael Aubrey: 00:20:59

The relationships that we can build, the possibilities are endless over a 20, 25, 30 year horizon, which is sort of how Justin thinks of the world.

Michael Aubrey: 00:21:06

And so I think from his perspective, and Shore's perspective, it's a way to build relationships that create massive optionality on things that we can't even predict yet, but I think could be really exciting for both the firm and for the searcher themselves.

Anderson Williams: 00:21:18

I'm gonna go back to something you said about the Shore ecosystem because you've experienced that as a CEO in the Shore portfolio.

Anderson Williams: 00:21:24

Will you just describe, draw those two ideas together?

Anderson Williams: 00:21:26

What do you mean when you say the Shore ecosystem, and then what does that mean to you now as you think about the searchers?

Michael Aubrey: 00:21:32

Well, for me, really Shore's fascinating insofar as they invest in really small companies, right?

Michael Aubrey: 00:21:39

They're a micro cap fund.

Michael Aubrey: 00:21:40

By definition, but they bring Fortune 500 resources to microcap companies.

Michael Aubrey: 00:21:45

And so when I say the ecosystem, I'm talking about all of the resources that I know of, not the least of which, frankly, Anderson is you.

Michael Aubrey: 00:21:51

Right?

Michael Aubrey: 00:21:52

And Michael Bertman, what you guys do at the Leadership Academy.

Michael Aubrey: 00:21:54

So for those who don't know, all I can tell you is my company Mission Veterinary Partners, we had countless people go through a program that Shore has called the Leadership Academy, and Anderson here is one of the leaders with his colleague Michael Burcham.

Michael Aubrey: 00:22:07

And we were able to literally help people who had never learned those kinds of skills to do that.

Michael Aubrey: 00:22:13

Now, what other private equity firm is able to offer their vice president, director level, managerial level, supervisor level folks, that kind of training.

Michael Aubrey: 00:22:22

That's just one example.

Michael Aubrey: 00:22:23

We have the Centers of Excellence here at Shore.

Michael Aubrey: 00:22:25

This is where we take all of our marketing professionals or all of our CFOs or all of our heads of HR or all of our business intelligence folks, and we put them in cohorts with one another.

Michael Aubrey: 00:22:35

And I think, you know, now we have like 45 or maybe 50 portfolio companies.

Michael Aubrey: 00:22:39

So when you think about being in a room full of marketing professionals, of folks that are starting out at maybe $3-4M of EBITDA to companies like mine that have $200M of EBITDA.

Michael Aubrey: 00:22:48

Think about the knowledge that you're gonna have in that room in terms of not only, Hey, how do I deal with the challenges of doing this at a $3M enterprise, but where do I want to go to make it a $10M, $20M, $30M, $40M?

Michael Aubrey: 00:22:59

Guess what?

Michael Aubrey: 00:23:00

You're gonna be in a room full of people that have been there, done that, and they can help you.

Michael Aubrey: 00:23:03

And if that's too much for you personally as the entrepreneur to do great, send your marketing person, send your HR person, whatever it is.

Michael Aubrey: 00:23:09

The other thing I'd say is we have something like 300 independent board members that are now connected to the Shore family, we likely have someone that is in an industry that you're excited about.

Michael Aubrey: 00:23:20

Could be a river guide, could help you navigate maybe which companies to buy or potentially introduce you to companies or just sit on your board or provide you just informal advice.

Michael Aubrey: 00:23:28

And so when I think about the ecosystem, honestly those are just three examples of things that we bring to bear.

Michael Aubrey: 00:23:33

But as you know, there's many more.

Michael Aubrey: 00:23:35

And I think having worked in this in the Shore family for six years, it really is unlike anything I've ever been a part of and I'm proud to bring it to the search community.

Anderson Williams: 00:23:44

And you know this clearer than I, and so you can help educate me in this question as well, but some might say there's a perception of a conflict of interest between Shore searchers and the microcap funds and those kinds of things.

Anderson Williams: 00:23:55

We just talk about what that is and then how are you navigating that?

Anderson Williams: 00:24:00

How are you working through those perceived conflicts of interest?

Michael Aubrey: 00:24:03

Well, I think perceived is a great way to put it because I do think that they are perceived and truly it ends there.

Michael Aubrey: 00:24:09

'cause I don't actually think we have a conflict and, and here's why.

Michael Aubrey: 00:24:12

And I wanna help searchers win against private equity.

Michael Aubrey: 00:24:14

And I think they can and it ultimately comes down to this.

Michael Aubrey: 00:24:16

Private equity, including Shore, requires the entrepreneur or founder to stay as the CEO and roll a bunch of equity.

Michael Aubrey: 00:24:25

So where I'm going with this is it's situational Anderson.

Michael Aubrey: 00:24:27

We might actually both want the same company, or we may want something in the same industry.

Michael Aubrey: 00:24:31

First of all, the odds of that actually happening are really, really low.

Michael Aubrey: 00:24:34

When you think about literally the hundreds of thousands of companies that could be for sale, the odds that Shore the fund and a Shore back search are literally fighting for the same company.

Michael Aubrey: 00:24:43

Are really, really minuscule, but in the event that it actually happened, I would say, A, it was gonna happen anyways whether we were in your cap table or not, but B, I can help you win in that situation as a searcher because you can go up and say, Hey, founder, entrepreneur, do you really wanna sit here for the next 5, 7, 10 years and have to roll a bunch of equity and still be the person?

Michael Aubrey: 00:25:01

Or would you like to take a bunch of cash and go to The Bahamas?

Michael Aubrey: 00:25:04

How does that sound?

Michael Aubrey: 00:25:05

Because as a searcher, I can be the succession plan, I can be your long lost son or daughter and be your succession plan and you get to go retire.

Michael Aubrey: 00:25:14

And that is a very compelling pitch that no private equity firm including Shore could make anyway.

Michael Aubrey: 00:25:18

So I think we delineate that in terms of the situation.

Michael Aubrey: 00:25:21

And like I said, if we were gonna be looking at it anyways, we were gonna be looking anyway.

Michael Aubrey: 00:25:24

'cause here's what I can tell you.

Michael Aubrey: 00:25:25

I can promise you this and this you can take to the bank.

Michael Aubrey: 00:25:28

We are not going to show our search or deal flow to the fund to create competitive tension.

Michael Aubrey: 00:25:34

There is going to be a wall there of extreme secrecy and no one is going to violate it.

Michael Aubrey: 00:25:39

I can guarantee you that.

Anderson Williams: 00:25:40

Well, and even your example is one that there are different premises upon which a founder seller might partner with a searcher.

Anderson Williams: 00:25:48

Then private equity, a hundred percent.

Anderson Williams: 00:25:49

What they're looking for out of a partnership, one is a retirement plan and the other is a partnership and an ongoing active business relationship and do very different outcomes.

Michael Aubrey: 00:25:58

They are, and I can tell you, having been a searcher and the entrepreneur that wants to continue to be the CEO.

Michael Aubrey: 00:26:04

And have a partner never is gonna sell to you as a searcher anyway.

Michael Aubrey: 00:26:07

There's 0% chance.

Michael Aubrey: 00:26:08

'cause they don't want you in their business or they don't want you around and they certainly don't wanna let anyone else be the CEO.

Michael Aubrey: 00:26:12

And so I think that's a really astute observation and you're spot on.

Anderson Williams: 00:26:15

So give me a little bit of context about where Mike the search fund is today at Shore Capital.

Anderson Williams: 00:26:21

Just in terms of the state of the process.

Michael Aubrey: 00:26:24

So we actually raised our first fund.

Michael Aubrey: 00:26:26

It's a $65 million fund we raised, and so we want that fund to be dedicated to 30 searchers.

Michael Aubrey: 00:26:32

Okay.

Michael Aubrey: 00:26:33

'cause we think that 30 searchers will need that much capital between their search and the deals they do.

Michael Aubrey: 00:26:37

We have partnered with 12 amazing searchers and teams already, and so that effectively leaves about 18 spots that we're trying to find the right partner.

Michael Aubrey: 00:26:47

And as soon as we find and get our commitments in those cap tables, I think we'll start to raise another fund.

Michael Aubrey: 00:26:52

And so that's kinda where we're at.

Michael Aubrey: 00:26:53

We're really thrilled about the 12 teams we have going today.

Michael Aubrey: 00:26:56

And we're really excited about the pipeline that we've built and the, some of the conversations we've had with some of the top MBA students across the country.

Anderson Williams: 00:27:02

I'm curious, take me into one of those conversations, Mike.

Anderson Williams: 00:27:05

You're getting access to an interest from, you know, some of the, like you say, the top MBA grads who's right for this kind of an opportunity, and who can you sit in front of and say, you're brilliant, you're talented, but.

Anderson Williams: 00:27:18

This is maybe not for you.

Anderson Williams: 00:27:19

If somebody's listening to this and they're thinking, well, this search thing may be interesting.

Anderson Williams: 00:27:24

Just gimme a sense of like, when you're looking at that, having an honest conversation, what's an indicator that this is the right match, and what's an indicator that you're great, but this is not for you?

Michael Aubrey: 00:27:32

I think sometimes when the job markets are not great, people decide to search because they figure, well, I really can't get anything better than this.

Michael Aubrey: 00:27:41

And when job markets are really competitive and people are hiring and someone still chooses search despite having a huge opportunity cost that they're walking away from, I get really excited about people that I know have a massive opportunity cost, but are doing this because they literally have to like, they're the kind of people that say to themselves, when I'm 85 years old, if I don't do this, I'm gonna regret this for the rest of my life.

Michael Aubrey: 00:28:02

Even though I have this amazing job at this amazing firm that would've otherwise paid me a lot of money.

Michael Aubrey: 00:28:07

I'm gonna give all that up.

Michael Aubrey: 00:28:09

Because this is like in my soul, entrepreneurship is who I am.

Michael Aubrey: 00:28:12

I can't get around it.

Michael Aubrey: 00:28:13

As opposed to when someone's like, well, this is the best option I have.

Michael Aubrey: 00:28:17

I think that is probably the first thing that came to mind when you asked me that.

Michael Aubrey: 00:28:21

So I would say, you know, maybe one thing we could talk about is, is we talked a little bit about the perception of conflicts.

Michael Aubrey: 00:28:26

What about the perception that like Shores this big, bad private equity firm, and if things don't go well, you're gonna get outed as CEO.

Anderson Williams: 00:28:33

So say more about that, Mike.

Anderson Williams: 00:28:34

Yeah.

Anderson Williams: 00:28:34

Just in terms of that perception and how you see reality of this happening and working within the Shore ecosystem.

Michael Aubrey: 00:28:41

I think I'd say a couple things.

Michael Aubrey: 00:28:42

One is Shore started with really humble beginnings.

Michael Aubrey: 00:28:45

I love when Justin tells the story of how he actually had to negotiate the price of the first conference room table that he ever bought in his first office because they couldn't afford anything else.

Michael Aubrey: 00:28:55

And if anyone has been through ups and downs, and if anyone has invested in lower middle market firms and micro cap firms and understands that those firms actually have to go through J curves to go from good to great, it's Shore Capital.

Michael Aubrey: 00:29:08

And so I actually think the opposite, that we're not in a rush to go fire a bunch of entrepreneurs, but rather be alongside them in their J curve.

Michael Aubrey: 00:29:18

Because I know I went through multiple J curves at StatLab and multiple J curves at MVP, and Shore, as a fund has gone through 'em and.

Michael Aubrey: 00:29:25

All of Shore's portfolio companies have gone through 'em.

Michael Aubrey: 00:29:26

I, I know because I know a lot about the portfolio companies and the J curves that they all went through, and I think sometimes, you know, when you hear about all the successes, you don't hear about the trials and tribulations that it took to get there.

Michael Aubrey: 00:29:38

And I can unequivocally tell you that the number one reason why Shore and we are doing it.

Michael Aubrey: 00:29:43

Is to build relationships with some of the most talented people in the country and the opportunity to be alongside them in that journey and frankly, what I can tell you is that I think some of the best relationships and partnerships I've built have all had moments of adversity, and we've gone through those moments of adversity together and it actually creates a bond that's actually stronger than when everything goes well.

Michael Aubrey: 00:30:03

And so I think, you know, that's not to say that everything will be perfect all the time.

Michael Aubrey: 00:30:07

And it's not to say that maybe, you know, there might be this one anomaly of really bad actor and some unethical person, but outside of, I think true character deficiencies and flaws are the spirit of what we're trying to do is the actual opposite of that, and rather build people up and have you say one day that sure was the partner that helped me grow the most or helped me deal with that situation the most.

Michael Aubrey: 00:30:28

So that you do wanna stay in our ecosystem one way or another for a majority, or if not all of your career.

Anderson Williams: 00:30:38

If you enjoyed this episode, check out our other Microcap Moments episodes at www.shorecp.university/podcasts or anywhere you get your podcasts.

Anderson Williams: 00:30:48

Here you will also find our Bigger.

Anderson Williams: 00:30:49

Stronger.

Anderson Williams: 00:30:50

Faster.

Anderson Williams: 00:30:50

and Everyday Heroes series, each highlighting the people and stories that make investing in the lower middle market unique.

Anderson Williams: 00:30:56

This podcast was produced by Shore Capital Partners with Story and Narration by Anderson Williams, recording by Austin Johnson.

Anderson Williams: 00:31:03

Editing by Reel Audiobooks.

Anderson Williams: 00:31:05

Sound design, mixing, and mastering by Mark Galup of Reel Audiobooks.

Anderson Williams: 00:31:09

Special thanks to Mike Aubrey.

Anderson Williams: 00:31:11

This podcast is The Property of Shore Capital Partners, LLC.

Anderson Williams: 00:31:15

None of the content herein is investment advice, an offer of investment advisory services.

Anderson Williams: 00:31:19

Nor a recommendation or offer relating to any security, see the terms of use page on the Shore Capital website for other important information.