Exploring Non-Traditional Search Fund Industries

December 21, 2024

by a searcher from Technische Universität Bergakademie Freiberg in 51 Bergisch Gladbach, Germany

Been diving into some less-discussed industries for potential acquisitions. While HVAC and IT services get lots of attention, I'm curious about niche sectors like:

• Specialized Equipment Rental • Pet Services/Products • Environmental Testing • Specialized Education/Training

Anyone here explored or successfully acquired in non-traditional industries? Would love to hear experiences about hidden gems in unexpected places.

Trying to think differently about where sustainable profits might be hiding. Thoughts?

2 Likes

12 Replies

232 Views

Replies

Reply by a searcher
from INSEAD in San Francisco, CA, USA

I think it’s challenging to truly find "non-traditional" industries. The industries you mentioned have seen a fair amount of activity, and I wouldn’t necessarily classify them as non-traditional. PE firms and searchers spend significant time exploring various sectors, so it’s tough to discover something entirely overlooked.

That said, some validation of an industry can be a good thing—it shows there's a viable market. Instead of aiming to be first to market, I’d recommend focusing on industries with *some* (but not *too much*) activity from searchers or PE firms. This can be a great proxy for identifying promising opportunities. Here are a few tactical steps I’ve taken in the past to narrow down industries:

1. Review the 2-digit NAICS codes one by one and see what types of businesses appear on platforms like Zoominfo.

2. Study the portfolios of smaller PE firms to identify industries or companies they’ve invested in.

3. Revisit summaries or highlights from popular ETA podcasts to uncover interesting businesses or industries worth exploring.

Reply by a professional
from University of Southern California in North Palm Beach, FL, USA

The more you can get away from where the hoard is searching, the better it will be for you. One of my clients bought an environmental testing business; he had zero experience in the field; he and the business are doing great. It's because the business was already secure and he did his homework before and after buying. Especially knowing how to answer questions from brokers, lenders, and sellers, that helped them see the bridge from where he was to where he wanted to go. Happy searching!

+10 more replies.

Join the discussion