Acquisition capital in a SF

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November 09, 2023

by a searcher from London School of Economics and Political Science, University of London in Stockholm, Sverige

Does anyone have experience from making acquisitions within a search fund structure, that are not financed by cash flows or bank financing, i.e. you need more equity from investors to it. It seems to difficult to me since it requires all investors to go in with their proportional stakes in a new funding round, in order to not have investors with different IRRs in the end (if you for example have an IRR performance based carry). Is there any way around this?

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Reply by a searcher
from University of San Diego in Los Angeles, CA, USA
Try to use a MOIC hurdle instead of IRR - this removes the time sensitivity of a deal too.
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