I am trying to understand what type of due-diligence costs can be recharged to the acquired entity when a traditional search fund is executing on its ultimate acquisition. Typically an acquiring entity is able to recharge due-diligence cost (FDD, legal DD and others) to the target. The search fund vehicle should therefore be able to recover some cost incurred during the search. If that’s right then can these costs and any outstanding funding left at the end of the search be used to fund the acquisition? Any views on this would be much appreciated.
Many thanks