Introduction
In this interview, we explore Keegan Dum‘s remarkable journey to traditional search fund success after facing four broken deals. His story reveals how patience, relationship building, and strategic consulting led to acquiring a $6 million revenue software business he later sold for three times the purchase price just 18 months later. This case study offers valuable lessons for aspiring searchers navigating the complex world of business acquisitions.
Founder Success Story QnA
Keegan, what was it that led you to want to buy a business in the first place?
I came from a world that knew nothing about private equity or buying businesses. Was an engineer operating and operations with Exxon Mobile for about seven years. Took a break to go back to get my MBA and that’s where I was exposed to the space. Had always thought of doing something entrepreneurial, but I’m not a startup type. So even though I went to the MBA program ready to go back to Exxon Mobile, while I was there sitting in a class listening to people talk about this world, just kind of fell in love with it and it was a short one-year MBA program. I decided to spend the rest of this time fully focused on trying to get in the search fund space. From a mostly family perspective, it would give us the flexibility to kind of run my life as opposed to being on the 30-year traditional career track with Exxon.
What was the class called?
Entrepreneurial private equity. Two great professors that every class there was kind of a theoretical portion of the class where you’re learning about doing deals and things like that. But really the exciting part of every class was that they had speakers come for every single class. There was one of the most successful private equity firms in the southeast. The guy came and told his story of starting it up. A couple guys who had done search funds that were in the process of searching came and spoke and it just sounded really exciting to me.
So of all of the flavors that you were exposed to in that class, you ended up going the traditional search fund route. Why and what resonated about traditional?
Not having any experience in the space of doing deals or buying companies, combined with the fact that I had two kids and was married with two kids while my wife has stayed home with our kids, and we were going to have a third. It was a combination of me not knowing the space and getting excited about this network aspect that comes in with the traditional search where you have investors and kind of this ecosystem of accountants and lawyers and everybody else who works together. The other half was I’d been digging into our savings for a year while I was doing my MBA, my wife’s not working, I’m not working, and didn’t have the financial capital built up to go take a couple years to do it myself.
You mentioned that you wouldn’t go back to doing traditional search. Why not?
I love every aspect of the traditional search fund world. I love the investors, the conferences they put on, the there’s really a close-knit community. If I had to start over, I would have done it the first time again. But for the second time around now we’re more established, we’ve got kids going through high school, and I’m not ready to jump straight back into that driver’s seat again. It wears you down a little bit after almost five and a half years of operating a company. It’s an amazing opportunity for people doing it for the first time because it teaches you everything about this world with incredible people around you to help, but those are the reasons why I’m going to do it a little differently the next time around.
Okay, so you decide to do a traditional search. What happens then?
Traditional search, you get a chunk of money that’s upfront and it’s going to cover your travel and everything else. I put together a team of interns to help run a brokered process. I stayed 100% focused on the proprietary process directly reaching out to business owners. I had four companies under LOI during the two-year process. The fourth one was kind of forced on me, but really all four of them I decided not to do the deals. Every day for me was I had this big engine going of direct outreach through email to owners and my job every day was coming in, seeing who had responded, getting on phone calls with owners who had not listed their business for sale.
Keegan, anything from those four LOIs or broken deals? Any takeaways from that collection of stories about four broken deals in a traditional search?
Coming from an engineering background, I’m very much an over-analyzer. With 12 investors, every deal you look at, you have a group who tell you, “Oh, this is amazing. This is a great deal.” And then you have another subset of your investors who tell you what a terrible deal it is. On every one of my four deals, I would underweigh the positive investors and give more weight to those telling me why the deals were bad. You realize every single one of these small companies has some reason why you shouldn’t buy it. All four were viable opportunities in hindsight – two of the four sold pretty soon after I walked away from them and sold for more than what I had them under LOI.
You get to the end of two years, four broken deals, what happens?
In the traditional search space, when you get to the end of your two years and you’ve worked your way through all the funds that you raised up front, it’s time to dissolve the search fund. I decided I was going to dissolve it. But I still really wanted to do a deal. So I started consulting. My biggest consulting job was as a quasi president part-time president role for that first LOI which was the software company. The owner had stepped away and was tired of the operations. After about six months of doing that on my own, and really getting to know the company well, we started talking again and renegotiated to buy that company.
Great, Keegan. So let’s hear more about Egeniuty.
It was kind of a bundled hardware software solution. On the automotive shop side, less hardware, virtually no hardware. It’s ultimately a repository for all the vehicle and customer information so that they can cycle through these oil changes and automotive repairs fast. On the car wash side, it was significantly more complex. Our we had the kiosks, the gates, kind of that initial upfront experience for the customer. And then it had to tie into the car wash equipment. The customer base was mostly mom and pops with some chains. On the automotive side, we had more chains. But whether it’s on the car wash or the automotive shop side, super fragmented markets. There’s only 85-90% of the market is mom and pops.
What was strong about Egeniuty that appealed to you initially and what were the weaknesses?
As a search fund searcher, what you’re looking for is recurring revenue and growth. It checked all of the traditional search funds criteria boxes. Primarily what I loved was the recurring revenue business that’s growing. This is 2016, the vertical software space was starting to get sexy. The weaknesses were a lot around operations, the chaos inside trying to keep up with customer complaints. While there were ticketing systems, it was less than optimal and kept the business from being able to scale. There was a lot of operational area for cleaning up. It’s a fantastic high floor business with low churn, but the competition isn’t turning their customers either, making growth challenging at $300/month pricing.
Return us to the actual search and acquisition. After months being in the business consulting, you decide again to buy it. What happens?
We had it under LOI the first time around. Once I’ve been in the business I know the ins and outs of the operations were more comfortable with the actual earnings. The first discussion was at what price point is the owner still excited to sell the business and am I still excited to buy the business. We did reduce the price pretty significantly from that first LOI. I think because I got to live the pain that he had been living and so we could relate to each other. The thought of starting that whole diligence process with somebody who doesn’t know me and doesn’t know my business was unappealing to him.
Give us whatever numbers you can share about the business and then let’s talk structure.
It was roughly $6 million revenue whenever I bought the business. About half of that was recurring software revenue and the other half was equipment components. We reduced it by about a 40% reduction in the price of the business. Structure-wise, he rolled about 20% of the purchase price was a seller note. 15 to 20% of the price was him rolling equity into the business. The rest was raised as equity from investors. The business was roughly a million of EBITDA.
How did you raise the capital to buy this business without your traditional search fund resources?
I went back to all my original investors first. I wanted to honor the first right of refusal with the original group. Went back out to that group, got a tally of who was in, who was out, and some connected me with others to fill the rest. Traditionally, the search capital that they put in gets stepped up by 50%. But since the fund shut down, that overhang was gone. I negotiated two exceptions: no overhang (so investors not investing wouldn’t have equity) and I wanted the chance to earn up to 30% carry instead of 25%, but only if I hit a 40% IRR instead of the traditional 35%.
Let’s hear what happens after you get this deal done. You’re now in the business as CEO, partial owner. What happens?
We invested a lot in people. We dropped the EBITDA significantly down to a few hundred thousand because I was looking for the long term. Wanted to build the right team, start getting operations cleaned up. The team did a great job. We got systems in place, got back in control of the problems that had run away from us operationally. We grew about 20% of the recurring revenue that first year. About a year in, I reached out to a competitor who had a small oil change software company. They flipped the terms on us and said, “Well, Keegan, you know, we actually still like this automotive space. What if we bought you and you can hand over the car wash product and we’ll keep running that and we’d have you just really focus on building out the automotive shop side.” A year and a half in we sold the business.
What were the additional financial benefits going forward after the sale?
For me as the operator personally, the new guys want you to stay on so they gave you some equity in the new company with a three-year package. The company that bought us sold to a public company about nine months after buying us. So that original equity gets cashed out and now you’ve got some stock with the new company. Staying on for the other three and a half years was worth about as much as it was to get through the original exit. Sometimes people sell the business and three months they’re done, but in my case, I was so early in the journey that it made sense to just stay on and keep going.
Round out the story for us.
My wife and I had been wanting to do something, take a break, a full break, and go somewhere abroad. We’ve got three kids that are 14, 11, and seven now. We packed up and moved to Spain. We’re on the southern coast of Spain in Malaga, and we’re spending a year here. The kids are in school. The visa doesn’t allow me to work. So I am doing nothing while I’m here. Especially the first six or seven months was literally nothing other than trying to work on my Spanish and really enjoy it here. Now as we’re getting closer to the end of the year, starting to do the research and think about what’s next and it’ll be something search related.
Keegan, anything else to any themes we didn’t hit?
The main point I always try to hit is how important it is to really build deep relationships in this process. With Dan the guy who ultimately sold me the business, I don’t know why, but I kept talking to him even when he wasn’t sharing financials. With most businesses, if I reached out and they weren’t willing to share financials, I just moved on. With Dan, I think we had like six phone calls where I had no idea what size the business was, but I just kept talking to him because we really hit it off. I liked him. I liked what the business was doing. I liked our dynamic on our phone calls. Normally, I would have cut it off, but for some reason, we kept talking. That relationship is what led to buying the business two years later.
Keegan Dum Business Stats
Keegan’s traditional search fund success story includes impressive metrics from his acquisition and rapid exit of Egeniuty. Despite facing four broken deals during his initial search period, he positioned himself for a remarkable outcome through strategic consulting and relationship building. Below are the key business metrics that demonstrate his journey from acquisition to exit:
- Acquired business with $6 million in annual revenue
- Approximately $1 million EBITDA at acquisition
- 20% growth in recurring revenue during first year of ownership
- Sold business 18 months after acquisition for approximately 3x purchase price
- Additional compensation worth equal to original exit from staying with buyer
| Metric | Value |
|---|---|
| Initial Revenue | $6 million |
| EBITDA at Acquisition | $1 million |
| Time to Exit | 18 months |
| Exit Multiple | ~3x purchase price |
Keegan Dum Method
Keegan’s path to traditional search fund success wasn’t conventional, but his methodical approach turned potential failures into remarkable outcomes. His strategy reveals how patience and relationship building can transform broken deals into successful acquisitions. Here’s how he executed his unique approach:
- Built genuine relationships with potential sellers even without financial details
- Took consulting role to intimately understand business operations before acquisition
- Rewrote deal terms based on insider knowledge, securing 40% price reduction
- Focused on long-term operational improvements over immediate profitability
- Leveraged relationship with seller to create win-win transaction structure
- Accepted strategic acquisition offer when it aligned with long-term vision
Keegan Dum Tools
While specific technology tools weren’t heavily featured in Keegan’s journey to traditional search fund success, his approach reveals that relationship-building was his most powerful tool. His methodology centered around human connection rather than technical systems, demonstrating that sometimes the most valuable tools aren’t software but interpersonal skills. Here’s how he leveraged his core “tools” to achieve success:
- Direct email outreach – Systematic proprietary sourcing to business owners not actively selling
- Relationship capital – Maintained connections with broken deal sellers for future opportunities
- Consulting role – Used as de-risking mechanism before second acquisition attempt
- Negotiation flexibility – Structured creative deal terms after building trust
- Investor network – Leveraged original search fund relationships for acquisition financing
Key Notes
Keegan’s traditional search fund success offers several critical insights for aspiring searchers navigating broken deals and acquisition opportunities. His journey demonstrates that apparent failures can transform into remarkable successes with the right approach. These key takeaways reveal the nuanced thinking required in search fund investing:
- Traditional search provides invaluable network support for first-time operators but may not suit second-time operators with different life circumstances
- Broken deals aren’t failures but stepping stones – two of Keegan’s four broken deals sold shortly after for more than his LOI price
- True due diligence happens after acquisition – his six months as “quasi-president” provided deeper insight than traditional diligence
- Business critical software creates high switching costs but limits growth potential at low price points ($300/month)
- Emotional toll of supporting essential business software affects both sellers and buyers in search fund acquisitions
- Small deal size makes traditional search fund overhang structure (50% step-up) financially prohibitive
Get Started in Just 5 Steps
Keegan’s path to traditional search fund success wasn’t linear, but his experience reveals a clear methodology that others can follow. These five steps distill his journey into actionable guidance for aspiring searchers facing broken deals or seeking creative acquisition paths. Learn how to turn apparent failures into remarkable outcomes:
- Build relationships first – Prioritize genuine connection over immediate transaction, continuing communication even after deals fall through
- Create consulting opportunities – Offer value to broken deal sellers as pathway to deeper understanding and future acquisition
- De-risk through immersion – Spend significant time inside the business to identify true operational challenges and opportunities
- Negotiate creatively – Structure deals that acknowledge relationship history and mutual understanding beyond standard financial metrics
- Think beyond immediate exit – Position yourself for strategic acquisition opportunities that align with industry consolidation trends
Conclusion
Keegan Dum’s traditional search fund success story proves that persistence and relationship building can transform multiple broken deals into a remarkable exit. His journey from four failed acquisitions to buying and selling a business for three times the purchase price in just 18 months offers hope to searchers facing similar challenges. The key lesson is that search isn’t just about finding the right business—it’s about building the right relationships that endure beyond initial LOIs. By taking a consulting role with a former target company, Keegan de-risked the acquisition, secured better terms, and positioned himself for both immediate financial success and long-term compensation. His experience shows that traditional search fund success often comes not from the first deal you find, but from the relationships you maintain when deals fall apart.