Buying Well: What We Look For in a Founder-Led Business
Great acquisitions are made at the point of selection, long before the point of improvement. However capable the operator, the raw material has to be right.
Demand that does not depend on brilliance
We look for businesses whose customers would find it genuinely inconvenient to leave — because the product is embedded in their operations, because switching is disruptive, or because the service solves a problem that recurs every month regardless of the economic weather. Durable demand forgives operational imperfection. The reverse is never true.
Owner-dependence as an opportunity
Most founder-led businesses are heavily dependent on the founder, and many buyers treat that as a defect. We treat it as the core of the opportunity. A company that has grown to meaningful revenue while every decision routes through one person is demonstrating strength, not weakness — imagine what it does with a full management system around it. The task of ownership is to institutionalise what the founder carried in their head.
Unit economics beneath the mess
Accounts in this segment are often untidy: personal costs through the business, legacy pricing, one big customer subsidising ten small ones. Untidiness does not concern us. What concerns us is the underlying unit: when the noise is stripped away, does a single job, product, or contract make honest money? If the unit works, the rest is management. If it does not, no amount of management will save it.
A culture worth keeping
Finally, we pay close attention to how the business treats its people and how its people talk about the business. Long tenures, low drama, and pride in the work are assets that never appear on a balance sheet and take a decade to build. We would rather pay fairly for a healthy culture than buy cheaply into a toxic one.
None of these criteria are exotic. The discipline is in refusing to proceed when one of them is missing — especially when everything else about a deal is attractive.
— Harp + Partners