Is anyone willing to share creative vesting schemes for a traditional search fund SHA?

searcher profile

February 03, 2023

by a searcher from Massachusetts Institute of Technology - MIT Sloan School of Management in Madrid, Spain

What are current market conditions regarding the last tranche (1/3) of total searcher vesting? Is conditioning last tranche to exit (IRR performance calculated only at exit) common practice? Only cash? Stock? Rationale by some institutional investors is that stock does not make sense conditioned to exit (they want to align you with selling the company), and they want to condition vesting on making an exit. Any comments welcome. Thank you!

0
2
45
Replies
2
commentor profile
Reply by a professional
from Dartmouth College in Los Angeles, CA, USA
Vesting tied to sale often occurs as an accelerator of vesting (meaning if sale happens before regular vesting then it accelerates at close). But otherwise tying vesting exclusively to a sale is probably pretty rare. As far as cash/vs stock, searcher interests are typically reflected as a "carry" or profits interest since funds are typically llc's or partnerships. To incentivize performance typically a performance hurdle for the carry provides that.
commentor profile
Reply by an admin
from Massachusetts Institute of Technology in Portland, OR, USA
^redacted‌ have told us they like investing in traditional search funds and might be able to comment on current market conditions related to related to searcher vesting.

[Thank you in advance for helping to make Searchfunder a more collaborative community! If you are no longer interested in investing in traditional search funds, please update your investment criteria under your account profile.]
Join the discussion