FROM CORPORATE LIFE TO SEARCH FUND
I literally woke up two weeks ago (Sunday morning) and it hit me; I need to start a search fund. What the hell is a search fund? I had a rough idea. But, I haven't really dug into exactly what it is. But, Google was just a reach away on my nightstand, so I began searching. The juices started flowing, the drive started kicking in, and... there I was - Set to start a search fund.
I've been a corporate banker for the past 15 years. I've worked my way up from a small business banker helping mom and pop to helping multi billion dollar entities structure their syndication. I've worked across borders from Mexico to Singapore to Spain to China. I've seen how its done so many times. The frustration in myself that ensued was almost constant. It wasn't until recently that I figured out my true emotion was anxiety. It wasn't clinically debilitating. On the contrary, it was something that kept my energy levels high and my drive more than my counterparts. I wanted to make my personal job, my office, and every one of my colleagues better. There was just one problem; I wasn't the boss.
I am the black sheep of the family. My great grandfather started a business that my grandfather took to another level and sold off. My father was an entrepreneur and ended up the CEO of a very successful company, only to have his job axed by an acquisition at the age of 55. He took his life savings and started a competitor. Doing so successfully, he sold the company about 10 years later and is now retired. My brother, also a successful entrepreneur, sold his business last year[redacted]So, for me to be a corporate banker was... Well, let's call it a failure. This only added to my anxiety levels.
To keep up with my family, I've always dabbled in entrepreneurship. My most successful endeavor was starting an Amazon Fulfillment Center with my brother. We grew revenues to over $2mm. I've had many failures, however, as they were all self funded and good business write offs for me... oh yeah, my job that paid well. So, having a full time job at a bank and trying my hand at entrepreneurship was always a difficult task.
However, in September of 2019, I got the offer of a lifetime. One of my clients was looking to sell his manufacturing company. He didn't know what to do and how to make it better, so we worked out a deal where I could take over as CEO over about a year and he would pay me (very well) to learn. I mean... Who wouldn't want to own a company, find an acquisition target, and learn from the owner.... all with zero risk? It was on.
I didn't anticipate many of the pitfalls of the company and myself, but the biggest pitfall was simple; Sales decreased and the owner didn't trust me to manage the sales manager (I'm very detailed when it comes to the sales process). So, as sales decelerated, the onset of Covid came onto the world, and by March of this year, I found myself out of work earning unemployment which was a fraction of what I did while working.
It was in 2015 when I first heard of a search fund. I worked closely with private equity, helping finance various transactions, but it was a random call that introduced me to two young freshly minted MBAs from Harvard. I was really impressed with their ability to have raised capital to acquire a company. When I began to analyze the structure, funding sources, business, etc - I was thoroughly intrigued. I ended up funding them with $5 million which consisted of senior secured debt and a revolving line based on their ARs and Inventory. I managed that relationship pretty well, but lost touch with them after moving banks.
Back to Covid World, I mulled over various businesses I could buy, self funded. I found an amazing opportunity to buy a business in West Hollywood, California - I wanted to turn it into a coffee shop that I had seen in Thailand while visiting in February. Negotiations started in early March until the world came to a halt. Today, we still haven't resumed negotiations and I probably won't (Though, if I got the permits, it is perfect and could gross a good $2-5mm in its first year with minimal investment).
That morning sun was just about to rise as was no different than any other. I rolled around for a bit as my downtown Los Angeles view was in sight from my bed. The morning light tickled my eyes as the words, "search fund", hit my brain. Then, I thought, "is it search fund or opportunity fund". I reached for my phone and began reading. "Holy Shit", were the only words that came to mind. It was like the stars had aligned and they pointed to the nativity scene where my search fund would give birth. This was the beginning.
I had all of the skills needed to do this. Moreover, I had the network of high net worth individuals. This was my calling. Moreover, my abilities to simply start anything were on fleek (As the kids say). But… It hit me… I don’t have an MBA, I am too old, this is something that only young MBAs do. As with most entrepreneurs, I knew these negative self-thoughts would creep in, and it wasn’t any more than 5 minutes into reading that this hit me. As most of you reading this have, I found the study on search funds… Negative self-thoughts – Time to get out of here! My business development attributes, my ability to quickly analyze a company, learn an industry, understand the financial metrics, negotiate, etc… These were all abilities that I have learned simply being on the job compared to what an MBA would have (Not dismissing your abilities by any extent, this was just my justification). So, it was time to set out.
I spent the following week reading, studying, learning every aspect of the search fund. I talked with CFOs, CEOs, and others in my network to gather their thoughts. Every single one of them agreed that this is my calling. Moreover, my background as a fiduciary, I refused to take investors money (especially those of my friends) if I couldn’t be certain of my abilities to pay them back. But, this… THIS… This I could wrap my head around. Moreover, this was my way of doing exactly what I wanted and having fun with it.
Celebrating the two week mark from the point of conception, I am now ready to launch. I’ve written up my PPM, I have a pitch deck, I’ve got my list of investors I am going to approach, I have my website up, I am working on getting the entities established, branded, and set up, and working on much more. Only 2 weeks into a venture and I feel very confident. But, now… To connect to the Search Fund world. This is where Searchfunder comes into place. So, I write this initial post to introduce myself and what has led me here. I’m not an MBA – I have the typical self-doubt anyone has, but through experience I know how to overcome it – I’ve got a ton of experience in this space, but my weakest link is in operations – and I am now committed to something that I can get behind for the rest of my life… This is going to be fun.