250 Hampton Newsletter

Friends of 250 Hampton,

It is already time for the second newsletter and a lot has happened since last month. Before we get into the updates on my search, I wanted to thank you all for opting in to stay up-to-date on my journey and for the feedback some of you provided on the first newsletter. The feedback I received resulted in me moving the newsletter over to beehiiv, which should make for a much better reader experience. Now, on to the search!

The Search

The search heated up quickly in August. As a result, I was able to take a first look at over 30 businesses. This analysis led to 4 serious and ongoing conversations and has led me to focus ~50% of my time on two specific areas:

• Highly engineered custom plastic parts

• Custom cable assemblies and wire harnesses

Highly engineered custom plastic parts businesses tend to have attractive cash flow characteristics and long-term stability along with the potential for growth. These businesses also tend to sell into a nice mix of industries including aerospace, oil & gas and automotive among others. As a result, I am targeting ~30% of my search time in this area. I am lucky to be working with a small group of experienced advisors with backgrounds in manufacturing, plastics and electronics. They are helping me get to the critical questions much faster. A big thank you to those folks. You know who you are.

Another area that looks to have promise is the manufacturing of custom cable assemblies and wire harnesses. Two businesses in this area that fit my criteria have crossed my desk in the last month and I am digging deeper into one of them. In addition, I am actively searching for other businesses in this space and will spend ~20% of my search time in this area for the time being.

The balance of my search time is devoted to specialty distribution and to packaging opportunities (as well as other opportunities that arise from my network). With regard to packaging opportunities, I will be attending Labelexpo Americas 2024 in Chicago next week (September 10 - 12). I’ll provide more information on what I see and learn at Labelexpo in the October newsletter.

As you can see, the search is rolling and momentum is building. That said, I am keeping my foot on the accelerator and driving opportunities into the funnel. As always, if you know of any business owners looking to sell, or if you have folks in your network I should get to know (CPAs, accountants, financial advisors, estate attorneys, etc.), please consider making an introduction. I sincerely appreciate it.

Value Add

Eyes

As part of my ongoing deep dive into the world of plastics, I have read a lot of interesting articles over the past month. That said, here is a small piece (video included) that was produced by Lego. As Lego works toward their sustainability goals, they are incorporating an increasing amount of recycled material into their plastic bricks using the mass balance approach, which is explained via text and video. This is a piece you can share with your children, nieces, nephews, grandchildren, etc. to open up a discussion on sustainability.

Ears

My favorite podcast from the last month was an Econtalk episode on Chaos and Complexity Economics with J. Doyne Farmer. In this episode, Farmer discusses his work on taking what we have learned from chaos theory to build more accurate models of how humans actually behave. Farmer believes these models make better predictions than standard economic theory and will do a better job of dealing with our biggest societal problems. I, for one, believe Farmer is on to something. Having a background in economics and also having completed classwork on chaos theory and dynamic systems, it seems to me that the two coming together will allow for a richer modeling of human behavior relative to classic modeling that assumes humans are rational. Be sure to pick up Farmer’s new book “Making Sense of Chaos: A Better Economics for a Better World” if you are interested in diving deeper.

Thought of the Month

It is interesting that we never seem to hear or see the second half of the quote above. In a world increasingly focused on specialization, the generalist is left to wonder if they are useful. However, it seems there is a growing appreciation of what generalists bring to the table. A relatively recent book on the topic by David Epstein, “Range: Why Generalists Triumph in a Specialized World,” was an excellent read and received many accolades. As computers are able to do more of what specialized humans once did, one wonders if generalists, who think broadly and have varied experiences to draw on, will thrive. In addition, as J. Doyne Farmer is arguing for in the Econtalk podcast noted above, one can hope that more folks will cut across academic disciplines and, in obtaining new insights, expand human knowledge.

That's it for the September newsletter. Look for the next one at the beginning of October. Thank you all for your support. It means a lot.

Best,
Eric