Phil Castle, The Business Times
Eric Payne has worked in a variety of roles in operating a succession of companies — business broker, business appraiser, management consultant and even restaurateur. It’s a diverse experience he describes this way: “I’ve been wearing a lot of hats over the years.”
Payne combines all of those roles and more in his latest enterprise connecting business owners who want to sell all or portions of their operations with a network of investors who want to invest in small businesses.
The Grand Junction man expects to add a social mission by donating a portion of profits to community causes. Payne said his company lives up to its name Venture Advocates by advocating on behalf of businesses and investors as well as the community. Payne said the concept behind Venture Advocates has been “simmering” in various forms for the past 13 years, a period during which he owned and operated a VR Business Brokers franchise in Denver as well as started and grew Nationwide Valuations, a national business appraisal firm. He sold both companies and relocated to Western Colorado, where he launched Company Sellers International, a mergers and acquisitions and business advisory firm.
Rather than marketing a business for sale to prospective buyers, Payne said the idea with Venture Advocates is to assemble a network of private investors interested in considering partial interests in small and mid-sized companies.
Payne envisions a variety of scenarios under which the arrangement might work. Some business owners might want to sell their operations in whole as part of an exit strategy, he said. Other owners might want to continue working, but pull some equity out of their operations.
Still other entrepreneurs might be looking for investors to help start a venture or expand an existing operation to increase sales. Investors in turn could play roles as stockholders with an ownership interest or lenders seeking a fixed return on a loan over a given period, he added.
Depending on the circumstances, owner financing or conventional financing also could be involved in a transaction to further leverage buying power, Payne said.
The Venture Advocates concept is somewhat similar to a private equity group except that investors would have control over how much they invest, in what businesses they invest and for how long, Payne said.
And while private equity firms typically acquire larger businesses with annual earnings of $1 million or more, Venture Advocates would fill a market niche by investing in smaller businesses with earnings from $100,000 to $500,000.
The arrangement would provide investors with opportunities to pool resources to buy businesses as well as diversify their investment portfolios, Payne said. Many investors want to invest in small and mid-sized companies, but don’t want the personal liability or responsibilities associated with owning and operating a company of their own, he added.
There could be additional advantages in sharing resources among the businesses investors purchase, whether its accounting, information technology, legal services or management. In the process of connecting sellers and buyers, Payne expects to offer a variety of additional advisory services related to business planning, exit and succession planning, financing, franchise consulting and management consulting. A core value of Venture Advocates involves a social mission of supporting local and international philanthropic causes, Payne said.
Depending on the wishes of the investors involved in each company, a portion of profits could be set aside to support an organization or cause. The cumulative effect of such efforts could significantly benefit the community, he said.
A growing number of companies have adopted social giving campaigns as a way to create competitive advantages in attracting customers and employees, Payne said. Many companies simply want to do good.
While Venture Advocates juggles the task of constantly seeking out interested investors and identifying new acquisition opportunities, Payne also is assembling a board of advisors with expertise in accounting, graphics, legal issues, marketing, sales and Web site design.
The response he’s received so far, he said, has been positive. And if Venture Advocates ultimately is as successful as Payne foresees, the concept could be replicated elsewhere — perhaps through franchising, licensing agreements or some sort of membership organization. “There are definite synergies in having shared branding over multiple locations,” he said.
In the meantime, Payne said he’s anxious to merge the benefits of his separate business acumens into one new company. “I’m fired up about it.
The benefits to all involved are substantial, including the community.”