Friends and partners -  

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I hope you’ve had a wonderful 2024! This is our fourth annual letter and whether we like it or not, it now feels like we’re committed to this being a thing. 

 

This year tested our discipline in multiple ways. I’d like to think we “passed” these tests, but the reality is that we may never know if the decisions we made were the right ones because we don’t know how the alternatives would have played out. 

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Most top of mind for me is finding a new business for investment. We reviewed over 1,400 businesses to buy, made offers on 6 of them, signed LOIs on 2 of them, and didn’t close on any (yet!). While it feels good to just rest on the “we’re disciplined” laurels, the other reality is that we could just be saying “no” for other subconscious reasons (such as a fear of failure or a lack of effort). I’ve been disappointed we haven’t been able to find anything in almost 2 years and often turned the microscope inwards. I’ve felt frustrated with myself for not growing the opportunity set for our partners and people, but also fearful that this desire could push us to take a risk that doesn’t have the commensurate (probabilistically weighted) reward that is worth our opportunity cost (the most finite resource we have). Where I’ve landed is that, while awkward and emotionally taxing, there is beauty in the balance between these two motivators. This balance (and the associated requisite emotional fortitude and patience) are actually a defining element of our organization’s DNA. I didn’t fully appreciate this until this year. I am hopeful that it is struck at the right point for us, our people and our partners. Going forward, we will continue our commitment to the process and to the balance that has become a defining part of Enduring. 

 

Not acquiring a business doesn’t mean we’ve remained stagnant. One of our three core principles is to “relentlessly pursue better.” Below are a few areas in which we’ve made good on this and achieved meaningful progress this year. I am grateful for and proud of each.   

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• For our companies we target a ratio of 10-30% distributable cash flow to our invested equity each year (a large portion of which we distribute), while growing and improving the business (cash flow growth, reducing risks, increasing moat). We’re still finalizing numbers, and we likely have outliers to the upside and downside, but I am confident we’ve hit the higher end of this target on average across our companies.

• We’ve invested in systematizing how we support our businesses and launched Enduring Business Systems. This will likely evolve over time and is the result of a survey of many other approaches and visits to a few “best in class” organizations around the country. We distilled this into a handful of tools we hope strike the right balance of support and ownership for our teams. 

• We articulated what an “Enduring” deal looks like in more concrete detail. This will help us focus our efforts where we think we’ll have the highest likelihood of finding an investment which will result in a good outcome for us and our partners.  

 

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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