Hi everyone - prospective searcher here. I'm evaluating the search model in the current market environment in North America and would love some perspective from the community. The overall question I'm trying to assess is around the current market environment for deals.
Seems that there is more capital chasing deals now than 2-3 years ago and the impact of this may be that it is either taking longer to find a deal or more searchers are coming up empty handed than the past Stanford study would suggest. What is the community's perspective? Particularly on the following:
- Is there significantly more competition for deals? Where is this competition coming from (mid-market PE firms, strategics, other searchers, etc)?
- What has been the impact on valuations?
- How long on average is it taking searchers to conclude a search? Has this lengthened during COVID?
- Are more searchers coming up empty handed than the previous Stanford study would suggest?
- What is the attitude among sellers towards searchers? Any change vs. previous years?
- And broadly, is this a good time to start a search?
Appreciate any words of wisdom/thoughts!
Things are still a lot less competitive on the self funded search side where deals are often in the $300k-1.5M EBITDA range. The failure rate on the self funded side appears to be a lot lower as most self-funded searchers are able to find and acquire a company in less than a year. Self-funded searchers also keep a lot more of the economics and typically have control of the acquired company, which seems to attract more entrepreneurial folks.
I have invested in both funded and self-funded searchers in the past, but have started to focus more on working with self-funded searchers recently because the probability of getting a deal done is significantly higher.