Women in Search 2023 with Whitney Shepherd – On Gender Diversity in Entrepreneurship Through Acquisition

women in search

In the latest episode of our Private Market Insights, we discuss a vital issue with the remarkable Whitney Shepherd: women in search and gender diversity in entrepreneurship through acquisition (ETA), with a focus on enhancing the number of women aspiring to buy businesses. Whitney, a former chemist and a respected figure in the online ETA community, champions the idea that buying an SMB can serve as a viable professional pathway for women, substantiating her viewpoint with insights from her own career and personal journey.

If you want to hear the complete version of her insightful personal anecdotes and findings, we encourage you to watch the full discussion here:

How Running a Small Business can Contribute to Mitigating Gender Inequality

Whitney Shepherd considers entrepreneurship through acquisition (ETA) a powerful tool to foster gender equality in the workplace. She believes that by stepping into roles of ownership, women can directly influence and create work environments that champion gender equality. Whitney underlines the significance of top-down leadership in bringing about a change in the gender dynamics at workplaces. 

Despite the recent strides made in enhancing the presence of women in workplaces, Whitney notices that in some larger corporations policies do not always permeate through every layer of the organization, sometimes losing their efficacy in the process. In small businesses, the owners maintain close and consistent contact with their employees, offering a golden opportunity to nurture a gender-equal environment from the ground up. Whitney sees ETA not just as a business opportunity, but also as a vehicle to drive gender equality.

The Pyramid of Barriers for Women in Search

Whitney employs a pyramid metaphor to categorize the three main challenges women face in the Entrepreneurship Through Acquisition (ETA) domain.

  • Base: knowledge of the process. Despite its growing presence in MBA curriculums and social platforms, many entrepreneurs remain unfamiliar with our industry’s potential and the concept of entrepreneurship through acquisition.
  • Middle tier: industry allure. The stability and perks of roles at tech giants like Google can overshadow the appeal of buying into typically male-centric industries, like HVAC. Meanwhile, sectors commonly associated with women, such as med spas or nail salons, often fly under the radar, even with their evident promise.
  • Pyramid’s apex: intimidation, stemming from ETA’s male-dominated environment. Whitney recounts personal instances of facing undue scrutiny and bias, like brokers demanding her credentials and financial proofs—checks her husband has never encountered while helping her with broker calls.

However, Whitney also underscores the brighter side: navigating these challenges fosters resilience, equipping women for the intricacies of business proprietorship. She highlights a hopeful statistic during the discussion: over 12 million businesses are women-owned, suggesting distinctive avenues for female entrepreneurs to both connect with and distinguish themselves in select sectors.

A Non-traditional Path into the ETA Space

Whitney Shepherd’s journey into the ETA sector is characterized by her distinctive background in chemistry. Without the foundational knowledge commonly gained through an MBA or finance degree, Whitney embarked on navigating the sector with a determined focus on bridging the gaps in her knowledge base. She immersed herself in finance literature and utilizing resources such as the Harvard Business Review Guide and the book “Buy Then Build” by Walker Deibel. This helped her foster an understanding of business dynamics, a skill set that became instrumental in her negotiations with potential sellers.

Diverging from the conventional paths often taken in the sector, Whitney’s approach to the search process is distinctive. She crafted a hybrid strategy that merges self-funded research with investor support for initial down payments. She posits that this strategy not only broadens the spectrum of opportunities available in the sector but also fosters a more inclusive and diverse scope for business acquisition.

As she progressed further into her search, Whitney observed that existing resources only cover a fraction of the opportunities available in the ETA sector. Now over a year into her search journey, Whitney’s experience suggests that a non-traditional background might offer a unique perspective, and confirms that an MBA does not need to be a prerequisite for buying a successful small business. 

“Inclusion comes before policy, but you need both”

Whitney Shepherd, Homegrown Holdings

Drawing on her experience working as a chemist, Whitney notes that companies in STEM fields have focused on increasing inclusiveness to bring more women into previously male-dominated roles. However, this is not enough: while fostering inclusiveness in messaging, marketing, and hiring is important, companies looking to retain women need to build policies that account for their distinct needs as employees.

In the traditional search environment within the ETA sector, this issue becomes prominently noticeable. Existing structures might not fully account for factors such as maternity leaves, which can potentially act as a deterrent for women contemplating this career avenue. Shepherd articulates that real inclusivity extends beyond initiating discussions or including women in conversations. It calls for a thorough reevaluation and adaptation of current policies to genuinely incorporate the diverse experiences and requirements of women in search.

Shepherd identifies the potential role of women as CEOs in small businesses as a critical element for instigating this necessary shift, guiding the sector towards genuinely inclusive and adaptive policies that consider various perspectives and life situations. This strategy not only broadens the entry points but also fosters a more diverse and resourceful ETA landscape.

Navigating Challenges

Whitney discusses the challenges in her own search, particularly when it comes to evaluating post-COVID dynamics around business size and stability. Initially targeting smaller businesses, she observed inflated valuations due to pandemic-driven temporary boosts. This led her to shift her attention to larger entities in the 1 to 2 million EBITDA range, known for their more consistent financial profiles.

She values businesses with robust second-tier management, allowing her to focus on growth strategy rather than daily operations. However, discrepancies in business listings, where stated structures differ from actual ones, require deeper seller interactions to determine the business’s true state.

Despite high interest rates, around 10.5% for SBA loans, Whitney’s experience has been that seller expectations remain elevated. Yet, she remains bullish on her own acquisition process and the industry as a whole. Flexible deal structuring options, combined with the emotional attractiveness of selling a business to an individual buyer (as opposed to a private equity firm) inform her view that buyers can still find substantial value. 

To effectively navigate our industry’s challenges, Whitney highlights the need for resilience, strong broker relationships, and leveraging various resources for financing and education throughout the search fund process.

Advice for Aspiring Women in Search

Whitney Shepherd shares insights and guidance for those venturing into the ETA sector based on her own experiences.

  • Value of In-Person Meetings: Whitney underscores the importance of meeting business owners face-to-face before advancing in the acquisition process. An in-person meeting can reveal more than virtual interactions.
  • Scrutinizing Sellers’ Future Intentions: Whitney highlights the necessity of understanding the true intentions behind a seller’s decision to sell. She advises paying close attention to the discussion surrounding non-compete clauses as it might reveal the seller’s future business plans. She urges aspiring searchers to inquire actively about the sellers’ next steps.
  • Developing Sales Skills: Whitney points out that mastering the sales aspect, often understated in search fund literature, is critical. The process involves not only understanding financials and operations but also effectively selling yourself to various stakeholders including owners, brokers, and lenders. She encourages aspiring searchers to develop and refine their sales skills to enhance their success chances, emphasizing the importance of improving social skills and self-awareness in this regard.

In Conclusion

Whitney Shepherd provides a unique overview of the complexities and nuances of the entrepreneurship through acquisition (ETA) sector. Her journey demonstrates that non-traditional approaches can offer fresh perspectives and strategies in the business acquisition landscape, especially when it comes to women in search. She highlights the importance of direct interactions in the acquisition process and sheds light on the potential role of women in reshaping the sector to be more inclusive and adaptable to various needs and perspectives.

She is actively looking to buy a business, so don’t hesitate to follow her on LinkedIn and X (Twitter) or recommend her a deal.

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