To our investment partners:
This is the first annual letter we have written, and we intend to write one every year for a very long time. Before you read further, you should know what these letters will be and what they will not be. They will be honest. We will tell you what went well, what went poorly, and what we got wrong — in that order of brevity. They will be written in plain language, because we believe that clear writing is evidence of clear thinking, and you are entitled to know how we think. What you've invested in is the quality of our future decisions. And while this letter is addressed to the partners who have entrusted us with their capital, we are publishing it openly. If you are reading over a partner's shoulder, welcome. We write to our partners; everyone else is invited to eavesdrop.
We run businesses on a timescale of decades, so a yearly accounting feels about right. Here is the first one.
How we got here
Verde Peak began before it had a name. At some point in 2021, we were introduced by a friend in graduate school. We were the only two people anyone knew from Arizona and they thought with our similar backgrounds, that we should meet. They were right. (Thanks again, Emily!)
Why we do this
Every firm says it has a thesis. Ours fits in a sentence: great small businesses deserve owners who treat them with the same care their founders did.
Arizona is home to more than 600,000 small businesses. A large share of their owners are approaching retirement with no succession plan and no natural buyer. Institutional capital mostly ignores them — too small for private equity, too illiquid for everyone else. So when the owner of a profitable, durable company decides it is time, his realistic options are often a competitor who wants his customer list, a stranger who wants his cash flow, or a closure notice on the door. We founded Verde Peak to be a fourth option: buyers who keep the name on the truck, the team on the payroll, and the standards that built the reputation — and who intend to still own the business twenty years from now.
There is also simple arithmetic underneath the conviction. Small businesses in America sell, on average, for roughly two and a half times their annual owner earnings, and industry survey data puts most owner-operated companies in a range of about two to three times. Think about what that means. A company that has thrown off dependable cash for a decade — and would for decades more — changes hands for less than three years of its own earnings. The seller, for understandable reasons of age, energy, or estate, leaves an enormous amount of future value on the table. Whoever buys well and holds patiently picks it up. Most buyers can't or won't hold; they need to flip, and the flipping is where businesses get hollowed out. We can hold. That patience is the entire engine of Verde Peak: buy a good company at a fair price, run it with discipline, let time do the compounding.
We plan to buy and hold, not turn and burn. We wrote that line in our first acquisition letters, and we expect to be repeating it in our last.
The year in review
Shepherd's. Three years in, Shepherd's serves clients from Kansas City and Dallas, with a Washington, DC location opening this fall. The company continued to grow revenue meaningfully this year while deepening what actually matters in this business: repeat clients, referrals, and craftsmanship worth referring. Shepherd's remains our proof that heritage businesses aren't only bought — sometimes they're founded.
Rite-A-Way Garage Doors & Gates. This was the flagship story of our year. We spent the first half of 2025 in diligence on a ten-year-old garage door and gate company serving the Phoenix metro area — the kind of business we exist to own: essential service, 24/7 operations, a decade of earned reputation. We raised our equity from a small circle of aligned partners, secured SBA financing, and closed on September 30, 2025. We call it Day One, and we mean it — our plan is measured in decades, not quarters.
The first ten months of ownership have been about building: a professionalized sales process to match the company's operational excellence, new operating systems (including a dashboard we built ourselves to see the whole business at a glance), a growing community presence, and a deeper bench of technicians and support. Revenue has grown since acquisition, and in early 2026 we opened a second round of investment to fund the next phase. The team that built Rite-A-Way is still building it. That was the promise we made to the seller, and keeping it has proven to be not just right but profitable.
Watson's Hat Shop. In 2026 we partnered with Watson's Hat Shop in Cave Creek, one of the finest custom hat makers in the country, where hats are still made by hand on restored machinery more than a century old. Verde Peak took a minority ownership position with operating responsibility, and — consistent with how we think about people — we structured meaningful profit-sharing and equity-like incentives for the craftsmen who make Watson's what it is. Watson's will never be our largest holding. It may always be our clearest statement of purpose: some businesses deserve to exist forever, and somebody has to make sure they do.
Mistakes and lessons
A letter that only reports victories isn't a report; it's an advertisement. Here is what we got wrong.
We waited too long to build outbound sales at Rite-A-Way. The company came to us with excellent inbound demand, and for months we treated that as sufficient. It wasn't. Demand you wait for is demand you don't control. We have since built a true outbound effort — proactive follow-up on every estimate, commercial outreach, community presence — and the pipeline reflects it. The lesson: inherited strength is not a strategy.
We communicated poorly with each other about availability and workload. Two partners running multiple companies will always be stretched; the mistake was assuming each of us knew what the other was carrying. We didn't, and work fell into the gaps between us. We now run a deliberate operating rhythm — who owns what, who is where, what is stuck — and treat internal communication with the same seriousness we give investor communication.
We overestimated how quickly Shepherd's would be "done." One of us believed Shepherd's would reach a point of running itself, freeing his full attention for the search and the new acquisitions. Businesses are never done. The result was one partner badly overloaded for longer than either of us should have allowed. The correction was structural, not motivational: we hired real operating help, delegated authority rather than tasks, and got honest about what one person can carry.
We hired too quickly to support growth. At both Shepherd's and Rite-A-Way, growth created urgency, and urgency lowered our bar. Some of those hires didn't work out, and the cost of a wrong hire in a small company — in money, morale, and management attention — is far larger than the cost of a vacant seat. We now hire slowly against a written standard, and we'd rather strain the team we trust than dilute it.
You will notice all four are judgment errors, not bad luck. That is deliberate. Luck will come and go; judgment is what we owe you.
The people
Everything in this letter was done by people who trusted us, and we want to name that trust. The seller of Rite-A-Way, who spent ten years building something worth buying and chose us to carry it. The Watson family and craftsmen, who let us into a legacy. The team members, old and new, across all three companies who do the actual work while we write letters about it. And you, our partners — many of whom wired funds on the strength of a memorandum and a handshake, and at least a few of whom have already threatened to attend an investor retreat in the White Mountains. We intend to make good on that.
Beyond the portfolio, we continued to invest in the state that made all of this possible — through the Verde Peak Foundation and our work with the 1912 Institute — because we believe firms that draw their strength from a place owe something back to it.
Looking ahead
Our criteria haven't changed: profitable, durable, owner-operated Arizona businesses with real reputations and no natural successor. We are patient, we are picky, and we are looking. If you own such a business, or know someone who does, our door is open.
To our partners: expect from us what you received this year — candor, effort, long horizons, and this letter, every year, for as long as we're fortunate enough to write it.
With gratitude,
Chris & Joel
Managing Partners, Verde Peak Partners
