250 Hampton Newsletter

Friends of 250 Hampton,

It’s officially 2025 and I am in month seven of my search. As you will read in my search update, I am back to working my pipeline as it appears that the deal that went under LOI in November is stalled. These ups and downs are par for the course in the search world. While I continue to work, and add to, my pipeline (with a new focus) I will also work to get the deal under LOI moving again.

The Search

Despite the holidays, I was able to review another nineteen businesses closely in the month of December. After further inspection, eighteen of these opportunities did not meet my criteria and I passed on them. There is one opportunity that I am keeping warm with the seller and their broker (need to see full year 2024 financials before moving forward). More to come on that opportunity if it moves forward.

Active Opportunities

Medical Products Distribution - Under LOI

This business is still one that I would like to own. The challenge here, and what has stalled our progress, is that through the diligence process we have found that the TTM EBITDA is significantly lower than it has been in the previous three years (~25% lower). While this is a manageable, and likely short term, dip, the acquisition price outlined in the LOI is now too high and needs to be adjusted.

Through the month of December we worked on, and presented, creative solutions that would allow the seller to get to the acquisition price in the LOI through sharing some risk with us. That said, the seller is standing firm that they want the full acquisition price listed in the LOI in cash at close. We are going to go back with one more idea, but I suspect we have low odds of closing this deal at this stage. That would be an unfortunate outcome, but I also won’t do a bad deal just to get a deal done.

Looking Forward

After reflecting on my search over the holidays, I determined that spending my proactive outreach time on deals in the Chicagoland area (extending into southern Wisconsin and western Indiana) and widening my industry aperture would improve my odds of success. In addition, I will focus on a few key areas where I will source off market deals in this geography. Those areas are medical distribution, commercial services and general distribution.

Value Add

Eyes & Ears

I am combining the Eyes and Ears section this month. I recently had a chance to watch the documentary Hargrove about the legendary trumpeter and musician, Roy Hargrove. I have always been a big fan of Hargrove and his music, but I honestly didn’t know much about the man himself. This documentary gives a raw and personal look at Roy Hargrove in the last year of his life while on tour in Europe. This documentary is both beautiful and heartbreaking.

Roy’s constant battle with illness, having to receive regular dialysis and foregoing a kidney transplant because he couldn’t afford not play and earn money for the six month recovery period, says something both about the state of professional artists today, but also about what kind of guy Hargrove was. Despite the pain, he continued not only to make incredible music, but also to spend a lot of time bringing up the next generation of jazz musicians.

Another part of Hargrove’s life and approach the music that the documentary highlights is his feeling that musicians shouldn’t be boxed in by the genre labels used to guide consumers. Instead, musicians should blur the lines and explore. He did just that in a number of ways, including being one of the legendary Soulquarians and contributing to hip hop, soul and other forms of music (e.g. he is the co-writer of Spanish Joint on D’Angelo’s Voodoo and he appears on a number of other songs on that record - this is something most jazz musicians wouldn’t have even considered).

Hargrove left an indelible mark on the music world and left us way too soon. Seeing him talk about his struggles, musical philosophy and other topics during the last year of his life was powerful. I urge you all to give Hargove a watch. You won’t regret it.

Thought of the Month

I recently was convinced to run the Chicago Marathon by my friend Chris Byrne (or should I say “friend”). “Do it for the kids,” he said. How could I refuse? Bottom line, I am supporting the Illinois Spina Bifida Association and running an ungodly amount of miles in 2025 as a result. This situation led me to commit to run a 10k before the end of 2024. For those keeping track, this 10k would be the longest run I have ever done. I made good on my commitment on December 31, 2024.

During the run, I listened to an episode of one of my favorite podcasts, EconTalk. The episode, “The Power of Nuance: Lessons for Public Health (with Emily Oster)” was a great listen. Oster and Roberts (the host) use some public health situations to talk about the role nuance should play in order to build and maintain trust in our critical pubic health institutions.

I often like to frame critical decisions as trade offs rather than stating with 100% certainty what the best decision is when I communicate up to a CEO or Board (I may do this with my direct reports in certain situations well, but not further down than that). I do also state a preference and note why I would like to move in that direction. That said, I don’t think this nuanced framing has helped me a lot. Folks seem to want certainty, even though certainty is largely an illusion and outcomes are probabilistic.

As Oster states in the podcast, if you state one path with certainty and then that path doesn’t work out, credibility is lost. Had the conversation about trade offs and uncertainty been had, the path would still be open to discuss alternatives and learn why the chosen path didn’t work.

Ultimately, the podcast got me thinking about nuance and trade offs and why it seems that oftentimes there are disincentives to speaking about decisions in this manner despite the fact that explaining the uncertainty could preserve trust in the long run and allow for specific preferences to be prioritized. I don’t have a conclusion here. This is just something that has been on my mind since listening to the podcast. If any of you want to discuss this topic further, hit me up!

That's it for the January newsletter. Look for the next one at the beginning of February. Happy New Year and thank you all for your support. It means a lot.

Best,
Eric