In today’s episode of The Roadmap, host Lee Heisman is joined by John Ziegler and Jeff Heck, founders of Southstone Holdings, to discuss the private equity industry and why their approach is different from most firms.
Jeff Heck’s leap into the private equity industry started by accident. He took zero finance classes in college, but got his start working at Home Depot in the M&A department. From there, he spent a decade with a large private equity firm in Atlanta. Then in 2011, he co-founded Monday Night Brewing, a craft brewery based in Atlanta. He originally served as CEO and gave himself the humorous title “Supreme Beer Chancellor,” but eventually stepped away from his private equity role to help run the business full-time.
Similarly to Heck, John Ziegler also stumbled his way into the private equity world. After graduating from the University of Virginia, he moved to Atlanta to work at the consulting firm Bain & Company. Ziegler enjoyed solving complex problems and working with people, which eventually steered him toward private equity.
The pair met during the early days of the COVID-19 pandemic. Ziegler’s employer had a loan-out program, allowing employees to temporarily work with other businesses. He approached Heck about joining Monday Night Brewing for a three-month stint, and what started as a temporary project turned into a deep partnership. Together, they helped pivot the brewery during one of its most tumultuous times and emerged from the crisis with a new sense of shared purpose.
Once Heck had built a strong, self-sustaining team at the brewery, he started thinking about his next chapter. That’s when he and Ziegler came together to launch Southstone Holdings with a clear mission: invest in enduring, mission-critical businesses and build long-term value.
What sets Southstone apart?
Unlike many traditional private equity firms that follow a “buy and flip” model, Southstone takes a long-term approach. They intentionally look for companies they can grow and support over many years, not just ones they can exit quickly. Their long fund life means they’re not pressured to sell in three to five years. Instead, they’re focused on sustainable growth, strong relationships, and aligning with business owners who care deeply about their legacy.
Southstone’s first acquisition, Academy Fence Brokers, reflects the kind of businesses they’re drawn to: essential, reliable, and built to last. These are often called “backbone businesses”—industries that haven’t changed much and won’t look drastically different in the future. While Southstone can bring in tech and talent to improve efficiencies, they believe the core of these businesses should remain the same.
What they look for in a business
For small business owners who are thinking about their exit strategy, Heck and Ziegler offer some insight into what makes a business attractive or not, when private equity comes knocking.
A strong track record of profitability
Buyers want to see steady financial performance over time. A great year or two isn’t enough. Southstone looks for businesses with a consistent history of profitability and growth, not one-hit wonders.
Customer concentration
If one customer accounts for a large portion of your revenue, it’s risky. Ideally, the largest customer should make up no more than 15% to 20% of the total revenue. If it’s 30% or more, that raises red flags. That said, sellers can mitigate this by securing long-term contracts or diversifying their customer base.
A clear succession plan
One of the biggest mistakes sellers make is trying to exit without a plan for who’s stepping into their shoes. Even if you have a strong VP or team member in mind, the buyer needs confidence that leadership can continue smoothly. Throwing someone into the role just weeks before going to market doesn’t cut it.
Another thing sellers should consider is how to make the job enjoyable again. Southstone’s approach is to help owners offload the parts of the business they no longer love. For example, with Academy Fence, the owner was passionate about sales but didn’t enjoy managing the schedule. Southstone brought in someone to handle scheduling, allowing the owner to focus on what he did best.
Deal structure matters
Not every acquisition looks the same. Heck and Ziegler walked through a few common structures:
- Earnouts are used when the buyer and seller have different views on future performance. If the business hits certain growth milestones, the seller receives additional compensation down the road.
- Rolling equity allows sellers to keep a stake in the business and stay involved. It aligns incentives and gives both parties a reason to invest in long-term success.
- Full buyouts make sense when the seller wants a clean break, and there’s a strong leadership transition in place.
Whatever the structure, Southstone emphasizes the importance of relationships and alignment. They don’t want to swoop in, cut costs, and flip a company. They want to link arms with business owners and operators to build something lasting.
What’s next for Southstone Holdings?
Heck and Ziegler want to replicate the success they’ve had with Academy Fence. For now, they’re focused on helping that business grow by bringing in the right talent and systems. But they’re actively evaluating new opportunities as well. They plan to build a small internal team to support more acquisitions in the future, but their immediate focus is on helping their portfolio companies thrive.
They’re not rushing to centralize services or force uniform systems across all businesses. Instead, they’re taking a tailored approach, recognizing that each company has its own quirks and needs. In their view, the best improvements often come from adding sales support, updating technology, or investing in marketing, rather than trying to shoehorn everyone into the same back office.
“Investing doesn’t end at the closing of a deal, it starts at the closing of a deal.” – Jeff Heck
"There's a lot of information mismatch between a seller who knows this business for years or decades, and us who spent 90 days learning a business. When you roll equity, when you reinvest in a business, that gives us a lot of confidence that you're willing to bet on this thing moving forward as well." – John Ziegler
