Podcast Summary: Acquiring Minds – "Geography as Moat: Building a Hometown Holdco"

Episode Information:

• Title: Geography as Moat: Building a Hometown Holdco
• Release Date: June 12, 2025
• Host: Will Smith
• Guests: Sarah Chiles and Matthew Ferguson, Owners of Aspen Total Automotive

Introduction

In this compelling episode of Acquiring Minds, host Will Smith delves deep into the entrepreneurial journey of Sarah Chiles and Matthew Ferguson, two native Aspen, Colorado residents who have embarked on an ambitious path to acquire and sustain local businesses. Their mission extends beyond mere business ownership; they aim to preserve and enrich the community fabric of their hometown through strategic acquisitions, ultimately forming a hometown holding company (Holdco).

Guests' Background and Journey

Sarah Chiles and Matthew Ferguson share their unique backstories, highlighting their deep roots in Aspen and their professional experiences prior to venturing into acquisition entrepreneurship.

• Sarah Chiles:
  • Born into a three-generation Aspen family.
  • Holds engineering degrees from USC in aerospace and mechanical engineering.
  • Transitioned from Boeing to venture investing but felt unfulfilled by the startup grind, especially after witnessing the financial instability of high-risk ventures.
  • Found renewed purpose post-COVID by returning to Aspen and exploring acquisition entrepreneurship.

"Buying a local Aspen business and it probably wouldn't be a one-off. We could grow our impact in the rapidly gentrifying town by acquiring other local institutions over time." [00:00]

• Matthew Ferguson:
  • Originally from New York, moved to Aspen at 10 days old.
  • Studied engineering at Dartmouth but pivoted to diverse roles in tech and venture firms.
  • Reconnected with Sarah while working at an aerospace accelerator, solidifying their partnership in building a local Holdco.

"We're born and raised in Aspen... We realized we're going to commit a lot of time, a lot of effort to this. We might as well go a little bit bigger." [07:13]

Vision: Building a Hometown Holdco

Sarah and Matthew's overarching vision is to create a sustainable ecosystem of local businesses that preserve Aspen's unique character amidst rapid gentrification and influx of wealthy newcomers.

• Preservation and Growth: By acquiring cornerstone businesses, they aim to maintain the town’s local identity and support the working-class community.

"We're trying to start this flywheel of invested in by locals, run by locals... long on Aspen for sure and we know that there are the right people to continue this flywheel." [31:50]

• Expansion Strategy: While their initial focus is Aspen, they envision expanding to other resort towns facing similar challenges, creating a network of Holdcos that protect and nurture local businesses nationwide.

Acquisition of Aspen Total Automotive

The heart of the episode revolves around their first acquisition: Aspen Total Automotive.

• Finding the Business: After exploring various options and criteria, Sarah and Matthew identified Aspen Total Automotive as a prime target due to its monopoly status in the region and its strong cash flow.

"Our pillars were essentially, is there a good operator, does it cash flow for a long time, is it a cornerstone business... does it have somewhat of a monopoly?" [27:00]

• Deal Structure:
  • Purchase Price: Negotiated down from $2.1 million to $1.5 million.
  • Financing: Utilized a combination of SBA loans (70%) and seller financing (10%), with Sarah and Matthew providing the remaining 20% through investor equity.

"We negotiated the price down from basically 2.1 million to, to 1.5." [25:57]

• Challenges Faced:
  • Key Man Risk: The departure of the shop manager shortly after acquisition tested their resilience.

"He ended up leaving. So that was incredibly... what a blessing in disguise." [73:51]

• Operational Overhaul: Transitioning from relying on a single operator to implementing robust systems and hiring skilled mechanics to reduce dependency.

Overcoming Early Hurdles

The abrupt exit of their initial operator posed a significant threat, but Sarah and Matthew leveraged industry coaching and peer support to navigate the crisis.

• Support Systems:
  • Joined Shop Fix Academy, providing access to experienced coaches and a community of auto shop owners.

"Having a coach to call immediately... requires a methodical approach to rebuild the business." [66:06]

• Operational Improvements:
  • Team Building: Hired experienced mechanics and promoted internal talent to stabilize operations.
  • System Implementation: Introduced CRM systems, standardized inspection protocols, and enhanced customer experience through transparency.

"We have two people who really know cars and can explain to people in layman's terms what's going on with their vehicle." [75:15]

• Cultural Shift: Fostered a collaborative and accountable workplace culture by aligning individual goals with business objectives.

"We sit down with every single person and said, what’s your goal... this is very much a team problem." [81:49]

Financial Performance and Growth

Six months into ownership, Sarah and Matthew report impressive financial gains:

• Revenue Growth: From $2.6 million to an expected $3.1 million by year-end.
• SD&E (Seller's Discretionary Earnings): Projected to rise from approximately $500k to upwards of $750k-$850k.
• Debt Management: Successfully managed a variable quarterly SBA 7 loan with strategic reinvestments enhancing profitability.

"We're already almost 14% ahead of our revenue target and much higher on the EBITDA SDE target." [84:17]

Strategic Insights and Best Practices

Sarah and Matthew share invaluable lessons for acquisition entrepreneurs:

1. Community Integration: Building trust within the local community is paramount. Transparency and genuine engagement foster loyalty and repeat business.

   "We tell the guys up front to be extremely transparent about what a car really needs... pure transparency." [64:35]

2. Operational Resilience: Avoid over-reliance on single operators by implementing scalable systems and distributing responsibilities.

   "Building a system and a weighted system here just allows the shop to run and everybody feels like they're contributing equally." [72:24]

3. Leverage Coaching and Peer Support: Engaging with industry-specific coaching groups can provide critical guidance during challenging times.

   "Surrounding yourself with people that have that kind of wisdom is very helpful." [65:27]

4. Financial Strategy: Prioritize reinvestment into the business over immediate personal gains to fuel long-term growth and stability.

   "We bought the business at 1.5 but then we raised money at a 1.72 million project cost... $450,000 worth of equity." [54:20]

Building a Lasting Legacy

Sarah and Matthew are committed to not just running a single successful business but creating a replicable model that ensures the longevity and prosperity of multiple local businesses.

• Permanent Capital Approach: Viewing their acquisitions as long-term investments rather than vehicles for quick exits.

  "We are permanent capital... putting it on autopilot and letting it do that for the next 2030 years." [38:38]

• Employee Ownership: Empowering employees by offering equity shares, fostering a sense of ownership and dedication.

  "We are trying to sell back some equity to our key employees... put their kids through college through the auto shop." [38:38]

• Expanding the Holdco Model: Planning to replicate their success in other regions, starting with similar resort towns.

  "We have a model that points to the end of the year where we expect our bank account to be, and it is much higher than we were expecting." [84:17]

Conclusion

Sarah Chiles and Matthew Ferguson exemplify the transformative power of strategic acquisition entrepreneurship. Their dedication to preserving Aspen's local businesses while fostering growth through a hometown Holdco model offers a blueprint for aspiring entrepreneurs looking to make a lasting impact on their communities. Despite early challenges, their commitment to operational excellence, financial prudence, and community engagement has set them on a path to not only sustain but significantly enhance the economic and social fabric of Aspen.

Notable Quotes:

• "The only thing constant in Aspen is change and locals complaining about it." – Sarah Chiles [45:18]
• "How do you keep the horse? We've got control, and no matter what happens, it's under our control." – Matthew Ferguson [73:25]
• "The best way to predict the future is to build it." – Matthew Ferguson [47:32]

For more insights and detailed strategies on acquisition entrepreneurship, subscribe to Acquiring Minds and visit Acquiring Minds YouTube or sign up for episode summaries at acquiringminds.co.