Friends and partners -  

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I hope you have had a wonderful 2023! This is our third annual letter and time continues to fly. 

 

This year helped to re-affirm something that I logically knew, but admittedly didn’t embrace fully enough – probably because it is scary. We are not in control of outcomes. Our focus needs to be on executing the process and on walking the path in a way that aligns with our values. We need to trust that the results will follow. Even if the journey up the mountain takes a few twists and turns we hadn’t envisioned.  

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Below are a few examples of divergences from the path we’d envisioned for 2023. I am grateful for each.  
 

• We didn’t acquire a new company in 2023. Our goal is to acquire approximately one business per year, and we didn’t this year. We looked at over 1,000 companies, made 3 offers and bought 0. We maintained our discipline. I’m grateful we know we can resist the pressure to “do deals.”

• We had leadership challenges at one of our companies. This took up bandwidth from other efforts. We made some difficult decisions and worked hard to treat people with grace in challenging circumstances. I’m grateful this forced us to improve and reinforced the importance of culturally aligned leadership at our companies.

• We extended too much trust (and credit) to a counterparty at one of our companies. This could have gotten us into a pinch if the business was highly levered. Instead we inverted the situation, acquired the counterparty, and created a win-win. I’m grateful this reminded us of the benefits (and returns) to a margin of safety (balance sheet cash, no/low leverage).          

Each of these, and many more experiences this year, reminded me that we are not in control. But that doesn’t need to be as scary as it sounds. What we can control is our intentions, approach, actions, and reactions. Focus on the process, trust that results will come, and know that they will not always be what you expect (sometimes worse, but sometimes better!). In 2024, we intend to continue executing on the process to the best of our efforts and abilities, and in a way that aligns with our values. 

 

Across our companies we generated attractive cash yields to our equity dollars. This was more variable from company to company this year than we’d like, but each company seems to be in a good spot. We found some opportunities within our companies to deploy these cash flows into high return, reasonable confidence investments and maintained the discipline to accrue and/or distribute back the rest. 

 

We continue our journey making steady progress up the mountain in the right direction, albeit with a few unanticipated but beneficial detours.  
 

In line with our goal of respecting the resources of our friends and partners (particularly your time), I will keep it short, and end it here.

 

Thank you for your interest, support and partnership. Onward and upward!
 

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Jory Caulkins
CEO
Enduring Companies

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