Acquiring Minds: The $50M Lifestyle Holdco Hosted by Will Smith | Release Date: January 20, 2025

Introduction

In this episode of Acquiring Minds, host Will Smith delves into the innovative Holdco model with guest Abhi Ravi Shankar. Abhi shares his journey from a seasoned consultant to an acquisition entrepreneur, detailing how he and his partners have created a robust framework for buying and scaling businesses while maintaining personal flexibility and building substantial wealth.

Background of Abhi Ravi Shankar

Abhi Ravi Shankar, a native of India, brings a diverse background to the table. With 14 years in the San Francisco Bay Area, his career spans consulting with BCG, operations in the Middle East's oil and gas sector, and a pivotal role in a high-growth robotics startup. However, a yearning for a more balanced life led him to explore acquisition entrepreneurship.

[06:09] Raj: "I lived in the San Francisco Bay area for 14 years, primarily in consulting and operations. After spending time in India and the Middle East, I joined a startup focused on warehouse robotics. Two years there solidified my love for entrepreneurial culture, but I realized I hadn't been truly fulfilled."

The $50M Holdco Model

Abhi and his three partners have pioneered a Holdco (Holding Company) model aimed at mitigating the common challenges faced by acquisition entrepreneurs, such as isolation and the loss of collaborative decision-making inherent in W2 jobs.

Structure:

• Pooling Resources: The four partners collectively purchase businesses sequentially.
• Equity Distribution: Each partner operates one business with a 40% stake while holding 20% in each of the other three businesses through the Holdco.
• Revenue Goals: Each business aims to exceed $10 million annually, culminating in a portfolio goal of $50 million.
• CEO Understudy System: Ensures continuity and support by having each partner familiar enough with another business to step in if needed.

[00:00] Will Smith: "Abhi's model is not just about equity numbers in a spreadsheet. It's about sharing the burden of CEO responsibilities, backstopping each other, counseling each other, providing flexibility to each other as owners."

This structure fosters a collaborative environment, reducing the emotional and operational burdens typically felt by solo business owners.

Acquisition Process and Strategies

Abhi’s first acquisition was a strategic entry into the pool service industry, chosen for its local appeal and potential for growth. The criteria for acquisitions included:

1. Local Presence: Avoiding long commutes and ensuring manageable operational oversight.
2. Revenue and EBITDA: Targeting businesses with $700k-$2M in EBITDA.
3. Recurring Revenue: Preference for businesses with repeat customers or contracts.

Financing Approach: Rather than relying on traditional SBA loans, Abhi leveraged a Holdco partnership to increase down payment capabilities, facilitating higher seller financing terms.

[62:21] Raj: "We ended up putting our capital upfront by allocating resources from the Holdco, allowing us to secure a larger seller note which was crucial for closing the deal."

First Acquisition Highlights:

• Business: Established pool service company with $3 million in revenue.
• Employee Base: 17 long-tenured employees.
• Growth: Almost tripled revenue within 18 months through strategic bolt-ons and operational improvements.

Scaling and Integration

Since the initial acquisition in May 2023, Abhi and his partners have successfully added four more businesses to their portfolio, expanding their first company from $3M to approximately $8-9M in revenue and growing their employee count from 17 to 51.

Key Growth Strategies:

• Add-On Acquisitions: Targeting complementary businesses to consolidate operations and expand service offerings.
• Leadership Expansion: Building a robust leadership team with directors for sales, residential, and commercial operations.
• Process Optimization: Implementing standardized systems and processes across all businesses to streamline operations and enhance efficiency.

[81:12] Abhi Ravi Shankar: "In less than 18 months, we've almost tripled our revenue and expanded our team significantly, moving closer to our $10 million revenue goal per business."

This disciplined approach ensures scalable growth while maintaining operational integrity across the portfolio.

Life as an Operator

Transitioning from consulting and startup roles, Abhi describes his current role as a fulfilling blend of team building and strategic leadership. Unlike the high-pressure environment of startups or the detached nature of consulting, running a small business provides tangible results and direct impact.

Personal Metrics:

• Family Time: Prioritizing time with his five-year-old daughter.
• Personal Fulfillment: Engaging hobbies and maintaining personal health.
• Financial Goals: Achieving a sustainable income that supports his lifestyle without excessive reinvestment into the business.

[99:01] Raj: "I wanted to build a career around my life, not the other way around. Now, I'm hitting two and a half out of the three personal goals I set, with a clear path to achieving the third."

This balance underscores the Holdco model's success in aligning business growth with personal well-being.

Future Plans and Expansion

Looking ahead, Abhi and his partners are not resting on their laurels. They have already acquired a second business in the kitchen cabinet and shelving solutions sector, aiming to reach their $10 million revenue target by expanding geographically and diversifying service lines.

Rebranding Efforts: Originally named Route 1 Capital, the Holdco has rebranded to Trust One Partners to better reflect its expanding footprint and to resolve trademark issues.

[98:31] Raj: "We started as Route 1 Capital, but due to trademark issues, we rebranded to Trust One Partners, which better signifies our mission and growth."

Ongoing Acquisition Strategy:

• Third Acquisition: Actively scouting for additional businesses to join the portfolio.
• Operational Excellence: Continuously refining integration processes and team structures to support growth.

[95:14] Raj: "Our vision is to have each business reach around $10 million in revenue within three to four years, leveraging both organic growth and strategic acquisitions."

Conclusion

Abhi Ravi Shankar’s journey through the Holdco model exemplifies a strategic and collaborative approach to acquisition entrepreneurship. By pooling resources, sharing responsibilities, and maintaining a clear alignment of personal and professional goals, Abhi and his partners are on a promising path toward building a diversified and profitable business portfolio.

For aspiring acquisition entrepreneurs, Abhi’s story serves as an inspiring blueprint on how to balance business success with personal fulfillment.

Notable Quotes

• Will Smith [00:00]: "Abhi's Holdco model is not just about equity numbers in a spreadsheet. It's about sharing the burden of CEO responsibilities..."
• Abhi Ravi Shankar [06:09]: "After two years in a startup, I realized I wanted more flexibility and a path that allowed me to build something of my own."
• Abhi Ravi Shankar [26:37]: "We started by pooling our resources to buy a company for me to run, and gradually each of us would take on another business."
• Abhi Ravi Shankar [55:14]: "Without defining what matters to me, it’s easy to get lost in measuring based on EBITDA and growth rates."

Connect with Abhi Ravi Shankar

For those interested in learning more or reaching out, Abhi is available on LinkedIn and X.

For more insights and episode summaries, sign up at acquiringminds.co.