Welcome to The Business Buying Academy with Sieva Kozinsky. Here's what we have in store for you today:

• Want to get your business in front of my audience?
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• 3 family-owned businesses that sold to PE
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• He raised $2 billion to buy boring businesses

🔑Market your business to Sieva's Business Business Academy audience

We began testing with our first advertisers last year, and it turns out this community is incredibly engaged. With 70,000 operators, investors, and "acquisition curious" reading this letter each week, we drove customers for advertisers ranging from Vesto (treasury management platform) to Mainshares (sourcing investors for SMB acquisitions).

We are looking for a couple new advertisers to partner with this year as we launch a few new products.

Interested in marketing your business to this audience? Just respond to this newsletter and say hi.

🔑 Buying a family-owned business: What can go well (and wrong)

Many businesses start out as family businesses.

We've looked at hundreds of them (and even bought a couple).

But what happens when the founder is ready to retire, but none of the children want to take over?

Or what about when the family wants to raise money to scale, but doesn't want to lose control?

These happen a lot.

Today I'm looking at three different family-owned businesses that got acquired - each with a different outcome.

They all faced different challenges:

Succession planning, a lack of professional management, and control struggles.

I love family businesses.

But there can be an added layer of complexity to the deal when a family is involved.

Let's take a look at some of these historical M&A deals and see what we can learn:

KKR's Boren Clay Products Buyout (1974)

In the early 1970s, Kohlberg Kravis Roberts (KKR) pioneered the leveraged buyout (LBO) model, targeting undervalued companies with strong cash flows but operational inefficiencies.

Boren Clay Products, a North Carolina-based brick manufacturer founded as a family business, was a prime buyout target for KKR.

The aging CEO lacked a clear successor, leading to stagnant growth and informal management practices.

If the CEO had to step down, who would fill the void? Would the company be forced to shut down?

This scenario probably sounds familiar if you've looked at SMBs for sale.

KKR partners Henry Kravis and George Roberts identified the opportunity in 1973, explaining the new LBO concept to the CEO.

By 1974, KKR closed an $18 million buyout, contributing just $1 million in equity and borrowing the rest against the company's assets.

The deal went smoothly at first.

KKR introduced professional management operations and expanded production.

This professionalization fixed the succession void, allowing the founder to exit gracefully while preserving jobs and the company's core identity.

Boren Clay became one of KKR's first successes through the 1970s (but struggled in the 1980s).

Overall, this deal was a success. Selling to PE helped solve the succession problem and the company grew as a professional management team took over.

Lesson for Business Buyers: In family businesses with no heirs ready to take over the business, private equity can act as a "bridge builder" by retaining founder expertise through advisory roles during the handover.

Cobblers Industries Acquisition (1970s)

KKR also targeted Cobblers Industries, a $27 million family-owned footwear and apparel company plagued by succession issues.

The founding family lacked interested heirs, resulting in outdated operations and declining market share.

KKR's approach mirrored their early LBO playbook: minimal equity input, heavy reliance on debt secured by the target's assets, and a focus on quick professionalization to address the leadership vacuum.

Unfortunately, the deal unraveled.

Post-acquisition, hidden operational weaknesses, such as inefficient supply chains and market competition, proved insurmountable. Despite efforts to install new management and cut costs, Cobblers filed for bankruptcy, erasing investor value.

This early flop taught KKR valuable lessons about due diligence in family businesses, where informal accounting often masks liabilities.

Lessons: This deal contrasted sharply with successes like Boren Clay. Succession gaps can signal bargains, but they can also be a blackhole for due diligence. Dig deep into the family secrets and you might find vendor dependencies or cultural inertia. Or worse yet, you may not find these issues until it's too late.

FSI's Minority Stake in Missoni (2018)

Missoni, the iconic Italian fashion house founded in 1953 by the Missoni family, faced a classic succession challenge:

The second generation wanted to expand globally, but needed capital without losing control.

Enter Fondo Strategico Italiano (FSI), an Italian sovereign-backed PE firm. FSI acquired a 41.2% minority stake for approximately €70 million in 2018.

The deal involved a capital increase with no leverage on Missoni, allowing the family to retain 58.8% ownership while injecting funds for growth.

The partnership succeeded, increasing Missoni's international presence through e-commerce and new markets. By 2023, the company's value had risen significantly as management explored a full sale.

This minority acquisition approach preserved the family's control while professionalizing operations.

Lesson for Business Buyers: Control can often be a huge point of contention for a family-owned business, especially a larger one. As a buyer, you'll have to find a solution that works for all members of the family - fighting for control rarely ends well.

🔑 How to raise $2 billion to buy boring businesses

John Caple, partner & co-founder at Hidden Harbor Capital Partners, has raised $2 billion to buy "boring" businesses like manufacturers and HVAC companies.

I sat down with him to figure out how he learned the private equity business, how he raised $2 billion, and where he finds companies to buy.

He even broke down his detailed approach to running companies after he buys them.

If you want to buy businesses, this interview is a must-watch.

​Watch on YouTube​

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Have a great day,

Sieva

P.S. - Are you hiring? Get started with top global talent from Somewhere (I'm a customer and investor)

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Disclaimer: nothing here is investment advice. Please do your own research. The information above is just for information and learning.

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