Invest Like The Best
Episode 357 Lessons from Acquiring 586 Companies
Invest Like The Best

Episode 357: Lessons from Acquiring 586 Companies

Invest Like The Best

Episode 357

Lessons from Acquiring 586 Companies

Justin Ishbia is the Founding Partner of Shore Capital. We cover the repeatable system he has built for acquisitions, how to construct successful boards and incentive structures, and why microcaps are the last inefficient component of private markets.

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(00:03:10) - (First question) - “The system is the star” and how it applies to Shore Capital 

(00:07:10) - Shore Capital’s origin story

(00:12:48) - What the perfect type of deal looks like for Justin 

(00:16:34) - The historical rates of return for their deals 

(00:18:12) - Shore Capital’s defensibility and strategic advantages 

(00:22:13) - Their board system and incentive structure 

(00:28:20) - Why they focus on the industrial subsector 

(00:31:21) - Overview of thesis evaluation and generation 

(00:37:24) - What they’re looking for during the diligence stage

(00:40:45) - The bad reputation of levered rollups    

(00:43:57) - What he’s learned about negotiations

(00:46:39) - The weak points of Shore Capital’s system

(00:48:59) - The Innovation Stack; Thinking about stacking unfair advantages 

(00:52:11) - Selling a business and what buyers are looking for  

(00:55:08) - Heavy focus on operations and their portfolio performance group 

(00:58:00) - Why nobody above an associate level has ever left Shore Capital 

(00:60:46) - Lessons learned becoming the owner of a major sports franchise 

(01:03:56) - What’s surprising about how the league functions 

(01:05:05) - Key people and firms he’s learned the most from 

(01:07:17) - Where Shore Capital’s system could improve the most 

(01:11:06) - The kindest thing anyone has ever done for Justin

 

Lessons from Acquiring 586 Companies

Introduction

Patrick
My guest today is Justin Ishbia. Justin is the founder of Shore Capital. Shore is a private equity firm that invests in microcap businesses within industry niches. With $7 billion in capital deployed but an average transaction size of just $12 million, Justin has worked to build a system to drive success for hundreds of businesses through replicable operating procedures and championing young professionals.

The firm has created a moat around volume with nearly 600 acquisitions over the last 3 years, some of the highest numbers in the world. We discuss identifying growth prospects, constructing a meaningful board and the business mentality behind Main Street, not Wall Street, as Justin puts it. Please enjoy my conversation with Justin Ishbia.

The System is the Star

Patrick
Justin, it's such a pleasure to have you joining me today. I remember on our very first call, taking more notes about how you were building your firm than about any firm introductory call that I can recall. And I want to start with a line that you said when we first met, which is that the system is the star as you think about building your asset management firm. Maybe describe why that term or idea is important to you and how it applies to Shore Capital.

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