Matt Kopp·April 24, 2025

How to Build a Niche Holdco with $2m in Earnings | Matt Kopp Interview

Matt Kopp is an Australian searcher-turned-holdco builder who bought his first business — Southern Biological, a near-monopoly provider of biological/organic science supplies to Australian schools — in 2019 for ~$1.2m (~3x SDE) using a combination of bank debt backed by a personal mortgage, a 15% seller note, and sweat equity supported by two outside investors. He quickly doubled EBIT from $350k to $650k by adding a payment gateway, rebuilding the website, implementing NetSuite, and cutting headcount from 12 to 5. During COVID lockdowns in 2020-2021, he went on an opportunistic buying spree of complementary education services businesses (science workshop provider, two music tuition businesses, a circus/performing arts school) at sub-2x EBIT, integrating them under a shared back office and cross-selling to the same school customer base. The crown jewel deal was Elizabeth Richards — an $8m revenue education supplies business he bought for $5m using a 100% debt COVID government scheme, stripped out $800k in costs, and sold 12 months later to a private equity roll-up for a $3.8m profit. By the time of the episode, Matt had negotiated with his investors to convert his sweat-equity carry into a full 40% ownership stake without a sale, was collecting dividends from a ~$2m EBIT holdco managed by a hired operator, and had launched Enduring Investment Partners, a $30m ETA-style incubator funding four searchers in the Australian market.

Deal facts

purchase price: $1.2m (Southern Biological, first acquisition, ~3x including working capital); $100k (Hands-on Science); two music schools for less than 2x earnings each; $5m (Elizabeth Richards, 5x EBIT)
multiple: Southern Biological ~3x SDE including working capital; COVID-era acquisitions at sub-2x EBIT; Elizabeth Richards at 5x EBIT
sde ebitda: Southern Biological SDE ~$350-375k at acquisition, grew to $650k in year 1; Elizabeth Richards ~$1m EBIT; hold co ~$2m EBIT at time of episode
revenue: Southern Biological $2.1-2.2m at acquisition, grew to $2.7m year 1; Elizabeth Richards ~$7.5-8m; combined hold co ~$13-14m at peak
financing structure: Southern Biological: ~40% bank debt (property-backed mortgage), 15% seller note (3-year, later bought back), remainder equity from two investors (no personal cash equity from Matt); Elizabeth Richards: 100% debt via COVID government-backed loan scheme, interest-only year 1, 10-year term at ~5.5%
notes: Matt held no personal cash equity in initial deal — pure sweat equity with right to earn up to 35% (later raised to 40%). Investors released vesting requirement mid-journey and converted to full equity partnership. Sold Elizabeth Richards ~12 months after acquisition for ~$3.8m profit. Australia has no SBA equivalent; typical multiples 2-5x.

Why this business

Matt discovered the school science supply niche by studying school P&Ls and noticing that science budgets were sticky, recurring, and predictable. Southern Biological was the dominant supplier in its state with near-monopoly status in biological specimens — a super-niche, ugly business no one else wanted. He valued the predictable curriculum-driven demand, very low customer churn, and the opportunity to expand basket size across other Australian states.

What's working

Near-monopoly position in biological/organic science supplies for Australian schools — very hard for competitors to replicate
Curriculum-driven, predictable demand allowed precise inventory planning and near-automatic repeat purchasing by schools
Strong customer moat: schools almost never switch suppliers once relationships are established; brand goodwill built over decades
Rapid operational improvement in year 1: added payment gateway, rebuilt website, implemented NetSuite ERP — EBIT nearly doubled from $350k to $650k on revenue growth from $2.1m to $2.7m
COVID-era opportunistic acquisitions at sub-2x EBIT across complementary education service businesses (science workshops, music tuition, circus/performing arts) — integrated back office, cross-sold across shared school customer base
Synergy thesis worked: buying Hands-on Science for $100k gave access to 30 casual science teachers who boosted content strategy and allowed Southern Biological to get published in school textbooks
Identified and bought Elizabeth Richards — a $8m revenue education supplies business — at 5x for $5m using a COVID government-backed loan at 5.5%, stripped out $800k in costs in 12 months, then sold it for a $3.8m profit to a private equity roll-up
Proprietary outreach using email open-rate tracking to time phone calls — still works in uncrowded Australian market
Australian ETA market offers 2-5x multiples with minimal competition versus US; Matt describes it as being 10-15 years behind the US market

What's hard

No SBA equivalent in Australia — bank debt required full recourse property mortgage; only ~40% LTV typical; 15-20% rates from alternative lenders
Lonely, unsupported search process in 2018-19 Australian market — no established broker network, no local search fund community, no institutional capital
Early ownership at Southern Biological: went too fast cutting staff (12 to 5 in ~4 months) with arrogance and insufficient humility — morale suffered even though the decisions were ultimately correct
Implementing NetSuite in a small, low-tech business: took 6+ months to get 55-year-old staff to use the system properly
Elizabeth Richards deal: freight/import costs spiked massively post-COVID (container costs went from $5k to $50k), compressing gross margins — all earnings improvement came from cost-out, not revenue growth
Turning down the PE firm's day-after-close offer was a hard decision; could have taken a quick $1m profit but chose to hold and improve
Search fund structure creates misalignment: carry only comes at liquidity event, incentivizing premature exit rather than long-term compounding; Matt had to renegotiate with investors to release carry without a sale
Finding A-grade talent to run acquired businesses is the biggest constraint on scaling the hold co model

Notable quotes

I went in with a very probably arrogant approach to sort of small business where I thought that, you know, I've got this really great business. And for me, the business was the brand, the product, and its customers, right? It wasn't the people underneath.

Dashboards and data are the lifeblood of any growth story.

I sort of realized that really what I'm buying is customers. I'm really buying access to customers and they're the hardest thing to acquire.

As a searcher, you are working for your investors to try and get to a hurdle so that you can get something back for it. You're not financially aligned and the economics even stated that you are working for someone else because you got to return something back to them before you get anything yourself.