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Episode Summary
You’re getting calls every week. Different firms, different pitches, same general script: We’d love to buy your business, here’s a multiple, here’s a timeline. You start to assume that’s just what selling looks like. It isn’t. I had Paul Moffatt back on the show because Encore One is a 25-year-old family-owned investment holding group that operates on completely different math than a traditional PE fund. No third-party investors. No fund timeline. No mandate to flip in three to five years. They write one equity check from a family trust, lever the deal conservatively (one and a half to three turns of EBITDA from a traditional bank), and plan to hold the business in perpetuity for the next generation. Which means the conversation with the founder looks different. The reinvestment math looks different. The board behavior after close looks different. We got into what a “platform” looks like for them ($4-10M EBITDA, industrial, business services, manufacturing, distribution), how they think about the trade-off between price and structure when you’re choosing between a 30 and a 28, why distributions get reserved for taxes when the return on equity inside the business beats anything else on the trust’s pie chart, and the honest version of when their model fits and when it doesn’t.
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## Top 10 Takeaways- A family office isn’t one thing. Ask what slice of the pie chart you’re sitting inside (direct investing, fund-of-funds, real estate, public markets).
- If a buyer has no fund timeline, the question isn’t “when do we exit.” The question is “is this a better return than anything else on the family balance sheet.”
- A $30M offer levered to the ceiling and a $28M offer with breathing room are not the same offer. Run the post-close math, not just the headline.
- The same EBITDA can support one and a half turns of debt or three turns. The difference shows up in your wiggle room, not your closing wire.
- Distributions get reserved for taxes when the return on equity inside the business beats the alternative. Cash leaves only when reinvestment can’t earn more.
- A “rolled equity” piece is a different risk depending on who’s rolling. A 75-year-old with health issues rolling 7M is not the same as a 45-year-old with growth runway.
- The buyer who plans to own you forever has no reason to consolidate your back office or replace your CFO. Cost-cutting is not where the return comes from.
- Long-hold buyers compete on certainty and continuity, not on price. If price is your only filter, you’re shopping in the wrong aisle.
- Ask every buyer: who funds the next acquisition, who funds the next piece of capex, and what’s the leverage ratio the day after close.
- Your Module 1 — Ownership Goals is the lens that ranks the offers. Without it, every term sheet looks the same and the biggest number wins by default.
Sound Bites
“We’re not set up like private equity for a lot of velocity and to do a lot of deals. We’re looking for one or two really, really good ones.” (@TBD) — Paul Moffatt
“If you’re gonna own something for a hundred years, what’s the present value of all that cashflow? Just the multiple that you could get paid today probably isn’t big enough to make that equation work, to make the exit more valuable than owning it for decades longer in the future.” (@TBD) — Paul Moffatt
“In terms of creating value, it’s not really cutting costs or consolidating it at a corporate level. It’s about hopefully creating an exciting growth opportunity. You know, not through cost cutting in the next three years.” (@TBD) — Paul Moffatt
“All offers are not equal. You have two offers, it’s enterprise value, but when and how you get your money is completely different. And so people need to be aware of that.” (@TBD) — Ryan Tansom
“We don’t need more 6% return. We need a little bit of that, a little bit of this, a little bit of that, all diversified.” (@TBD) — Paul Moffatt
About This Episode
Paul Moffatt is a Director at Encore One, a 25-year-old family-owned investment holding group based in the Twin Cities that makes direct investments in middle-market operating companies. Encore One was set up by Jerry Rauenhorst, founder of Opus Group, to diversify family wealth away from construction and real estate through a series of generation-skipping trusts. Paul came up through commercial banking in Chicago before joining Encore One five years ago to lead business development. This is Paul’s second appearance on the show and sits inside the “Through the Eyes of a Business Buyer” mini-series, where Ryan walks owners through how different buyer types perceive value, structure deals, and behave post-close.
Resources Mentioned
- Encore One — Family-owned investment holding group focused on direct investments in middle-market companies. — encoreone.com
- Opus Group — The original family construction business that seeded the trust structure behind Encore One.
- Paul Moffatt on LinkedIn — Direct connection point for referrals and conversations.
- Intentional Growth Bootcamp — Ryan’s two-day program at Bethel University walking owners through ownership goals, financial targets, and exit options. — arkona.io
Connections
Phase + Module:
- Module 1 — Ownership Goals — The intent that decides whether a long-hold buyer is the right fit or the wrong fit
- Module 9 — Operator Transition — Buyer type shapes what the operator transition actually looks like after close
Milestones:
- Milestone 5 — Market Value — What the market would pay across different buyer types
- Milestone 6 — Transaction Value — Net proceeds after the structure, leverage, and rolled equity actually play out
- Milestone 25 — Operator Transition Plan — Post-close role and continuity, which family-office buyers treat very differently than traditional PE
Concepts referenced:
- Enterprise Value vs. Equity Value — Headline price versus what actually lands in the seller’s account
- The Multiple & WACC — Why the same multiple produces different outcomes depending on leverage and hold period
- Three Lenses of Value — Strategic, financial, and intrinsic value through the seller’s lens
- Normalized EBITDA — The earnings base the buyer is underwriting against
- Capital Allocator — The mindset shift from operator to owner choosing among reinvestment options