Learning from the Trench Lines: Building a Partnership

Published by

Patrick Heath and Alex Sturges, Managing Partners of Bellwether Capital Partners

Published Month

May 2021

Learning from the Trench Lines: Building a Partnership

1. How did you get to know each other? After getting to know each other, how did you decided that you were ideal partners to launch a Search Fund together?

Alex -We met while attending the Wharton School’s executive MBA program. Since the courses were in person, I was flying to Philadelphia (where Pat lives) every other weekend from Texas. After we first got to know each other, Pat took pity on me and invited me to stay with him the next class weekend (Pat’s wife did not know what she was in for). From there, I stayed with Pat and his wife each class weekend. When I would fly in for class, we would all go to dinner. The dinner party quickly shrank from three to two as Pat and I bored his wife to death talking about types of businesses we liked and our entrepreneurial goals. After learning about search funds, I quickly realized that Pat would be the best person with whom to partner and we decided to turn those dinner conversations into reality.

2. What was your motivation to pursue a partnered search vs. launching your own individual funds?

Pat -After speaking with a number of searchers about their journey, two reoccurring themes emerged. The first was that the search process can be very lonely and isolating. Not having someone with whom to share the highs and lows would have been difficult for us. The other theme was the discipline required to stay motivated and consistently meet weekly or monthly goals.  Searching is a marathon and can be incredibly rewarding, but also a mental grind.  A partnered search provides both a built-in support system as well as a system of checks and balances around meeting interim goals and checkpoints.

3. How do you split the tasks and responsibilities during the search process? What is your plan for the operating phase?

Alex -For the search phase, we are each pursuing our own industries and outreach. Once we connect with a business that we think has potential, we come together to discuss and make sure we are both onboard with pursuing the deal. The person who sourced the deal remains the point person and handles the majority of the diligence so the other person keeps sourcing to ensure we have a full pipeline if the deal dies.We have discussed at length how we want to split duties once we acquire a business. Our professional backgrounds are fairly diverse. Pat has more business development and financial experience so he can handle the CFO role and lead the sales effort. I have a background in operations, strategy, and acquisitions and will take the COO role. The goal is for Pat and I to be co-CEOs but are both willing to step into a President role if one partner’s experience is better suited to be the sole CEO.  In any event, we view this journey as a true 50-50 partnership and any “official titles” will symbolic in nature.   

4. Do you have a process in place to make decisions, especially if you are in a disagreement? 

Pat –We drafted a personal “partnership agreement” and constructed a framework to resolve conflict.  What we decided is that the key to our decision-making process is the trust that we have each other and the fund’s best interest in mind. It’s important that even when we disagree on a decision, no negative sentiment lingers. We like making decisions based on data to try and take as much emotion out of the process as possible. For example, when we look at a new industry or company, we run it through a matrix to quantify the opportunity. The inputs of the matrix are quantified so our biases and preferences are mitigated allowing us to make a better decision. Once we enter the operating phase, we will lean on our board for conflicts that have the potential to impact the business in a major way.  Day-to-day conflicts will be resolved in the manor we describe above, but will default to the person in charge of a given area or department.  In any event, we think it’s important to be able to have healthy discourse in our partnership.

5. What would be your recommendations for people looking into launching a partnered search?

Alex -Our biggest recommendation for people looking into launching a partnered search is to make sure you ask each other all the hard and uncomfortable questions before you decide to partner in a search. As Pat mentioned above, we drafted a personal partnership agreement that covered many of these issues up front.  Trust and understanding are the two foundational building blocks of a successful search partnership and it’s challenging to build that by only talking about what happens when things go well.  One way we were able to gain comfort with our partnership was by building a plan for what happens when things go poorly or if we disagree. 

About Bellwether Acquisition Fund

Founded by Alex Sturges and Patrick Heath is a private investment firm focused on the acquisition and active management of a middle-market company at US, with a focus on growth and long-term value creation.

As of the publishing of this note, Bellwether Capital Partners is currently on his first year of the search.