Financing your Search

July 04, 2022

by an member from ESSEC Business School in Singapore

Hi all,
I'm an ESSEC Master student, currently a PE intern at Quilvest Capital Partners in Paris, and I am looking to launch a Search Fund in South-East Asia in the near future. The perspectives truly excite me, and I am eager to invest years of my life on this project.

Given my crippling student debt, I was curious to understand better how one finances the Search phase. Obviously, I cannot proceed with a self-funded Search Fund at this time, but I was curious about industry best practices for financing the Search. Assuming one doesn't have the resources to finance up to 2 years of Search, is he expected to take out a loan or is there an arrangement with the investors to support the Search efforts?

Looking forward to your insights, and thank you in advance for your indulgence!

Reply by a searcher
from The University of Michigan in New York, NY, USA

The funded search model typically is structured such that the searcher receives a salary and has enough capital for things like quality of earnings reports, legal advice, etc and thus does not need to dip into personal savings. Obviously this comes at the expense of investors who back the search phase receiving better economics if/when a deal is closed. In the case of student loans you likely would just have to share with your investors your long term plans for paying them off. The salary is not meant as a savings vehicle, just enough to live a decently comfortable life, so probably difficult to make a meaningful dent in the loan balance during search phase.

Reply by an member
from ESSEC Business School in Singapore

Thank you Alexander, it really helped!

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