Key Takeaways

  • Kanbrick splits family-owned acquisition targets into two groups: roughly half seek a successor within three to five years, while the other half are builders looking for scale resources.
  • Rather than submitting an initial valuation bid, Britt Cool asks founders to state what they consider fair, establishing alignment before running formal diligence.
  • Internal personnel transitions, including the removal of family executives, are managed strictly in person rather than through blunt mandates or virtual meetings.
  • Kanbrick pairs a 15-plus year holding horizon with an operational community of 4,000 leaders to compete against typical private equity buyout structures.

Founders Split Into Builders and Sellers

Britt Cool spent years working alongside Warren Buffett at Berkshire Hathaway before running Pampered Chef and co-founding Kanbrick. When she evaluates mid-market family enterprises, she finds that sellers rarely fit the monolithic mold assumed by institutional sponsors. Instead, acquisition targets divide down the middle based on generational intent.

“We find about half of our partners are looking for a successor,” Britt Cool explains. “They want someone to come in and help them in this next phase of growth, right away or in three to five years, they don't have a successor in the business.” These owners focus on liquidity and orderly retirement. For them, a transaction represents an off-ramp where the continuity of their staff and customer base outweighs squeezing out the final turns of leverage.

The other half wants the exact opposite. “The second profile is typically someone who's a builder. A founder, maybe second, third-generation. They want to build their company, take it to the next level, but they want someone to come alongside them and help them.” Treating a builder like an exiting retiree ruins the acquisition pitch immediately. Kanbrick approaches these operators by providing operational systems and access to an executive community of 4,000 business leaders rather than presenting a playbook designed to extract cash flow over 36 months.

Let the Seller Set the Valuation Anchor

Traditional private equity firms run detailed financial models, submit an Indication of Interest, and spend months attempting to bridge valuation gaps through legal mechanics. Kanbrick flips the sequence by ceding the opening number to the seller.

“We usually ask our owners what they think about valuation,” says Britt Cool. “They know the business better than we do. What do they think is fair and reasonable? Sometimes we're not in the ballpark, it's different than what we think. It allows us to start that conversation there.”

Sellers often carry emotional expectations that exceed EBITDA multiples. By asking the founder to articulate what feels reasonable, the conversation moves directly to the assumptions behind their number. When expectations diverge wildly, the process stops before legal fees mount. When the expectations match reality, the buyer avoids creating the adversarial dynamic common in competitive auction processes.

Family Politics Demand In-Person Truth

Generational companies carry institutional memory alongside unresolved family friction. Successors often possess deep operational expertise, but relatives on the payroll can also bottleneck company performance. Britt Cool notes that successful sponsors cannot dismiss legacy staff, nor can they blindly accept every relative on the cap table.

“Family businesses are special because the people in the business usually have grown up in it. They know so much. They have this depth of understanding and knowledge,” Britt Cool says. “And we want to reward that and support that when we find it, but also recognize when there's gaps or issues.”

When an underperforming relative must transition out of an operational role, Kanbrick rejects standard private equity restructuring tactics. “With humility, with respect, almost always in person, not getting on a Zoom and saying, Johnny's got to go,” says Britt Cool. “We're focused on what's important to the business. Sometimes we come in with too many preconceived notions of this won't work, or why do they have that? We just ask questions.” Asking why an inefficient arrangement exists often uncovers relational commitments that can be solved with dignity instead of edicts.

Why It Matters

Long-duration capital structures are altering how the lower middle market transacts. As fund life cycles in standard private equity create exit friction in volatile rate environments, permanent and 15-plus year capital vehicles offer a viable alternative to founders wary of continuous sponsor flips. Success in this segment requires buyers to trade financial engineering for relationship-driven sourcing and patience.