Mitigating the Drawbacks of the Self-Funded Model

You can mimic the benefits of having committed search capital. Approach investors at the outset of the search - ask them if they'd (a) be willing to invest if you found an attractive deal under your target specifications, (b) be willing to provide a non-binding indication of such along with their previous private capital investing experience and average bite size, and (c) be willing to be kept apprise of your search process.

The first two LOIs that I put forward listed prospective investor names as references - how long I'd known them, what their professional backgrounds were, and what there target commitment amounts were. I found this was sufficient to put both sellers at ease of my ability to fund a transaction.

Over the last 6 months of studying the model, one thing about self funded searchers I’ve realized is that investors don’t get the time to build a rapport. Imagine getting funded for two years by###-###-#### searchers. Each month the searcher will report back on progress, hurdles, solutions, etc. this allows the investors to really assess your strengths and weaknesses in different situations and gain confidence for when it’s go time! This isn’t so easy for self funded searchers...