Non-Profit Acquisition Expertise Needed - 3 Questions

Member resources:

Frequent asked questions:

What is Searchfunder.com?

Searchfunder.com is an online community of searchers, investors, lenders, brokers and other professionals. Over 80% of those involved in searchfunds maintain a Searchfunder account to help them network, hire, and mentor others.

What are the benefits of membership?

In addition to accessing the most active online network of business buyers, Searchfunder licenses research that is simply not cost effective for individuals. Access over 15,000 industry reports and 50,000 transaction financials. You also get monthly credits for contact information for your company sourcing campaign with the option to purchase more at drastically discounted rates. Searchfunder has pre-purchased access from these data providers in order to empower individual buyers and to help searchers level the playing field versus private equity.

Do you have deals?

While we are primarily a buy-side network, we do have hundreds of brokers that regularly post deals to the community.

Can I find an internship on Searchfunder?

Absolutely! We have the industry's largest intern job board. If you are considering a search, the first step is to help another business buyer so you can hit the ground running.

What does it cost?

Searchfunder is a subscription service. We offer flexible monthly, annual and lifetime memberships.

Monthly

$79 / month

Annual

$19 / month

Lifetime

$432 / once

Those who maintain an account with us for over 4 continuous years are permanently added to the community without the need for a membership.

Do I need an MBA to join?

While a large number of our members come from dedicated programs at Harvard Business School, Stanford GSB, Chicago Booth, and other top programs, searching is no longer reserved for the elite. With the current abundance of dry powder in private equity, and an increasing number of business owners reaching retirement age, good deals rarely go unfunded.

Post a question, deal, job, etc...

Make a post...

Complete registration to post.

by a searcher from University of Maryland - Robert H. Smith School of Business
in New York, NY, USA

6yrs ago

Non-Profit Acquisition Expertise Needed - 3 Questions

I am currently exploring an acquisition of a Non-Profit entity that has a focused product with substantial growth potential. The business was originally structured as a Non-Profit 25 years ago to take advantage of free access to space and tax benefits, effectively lowering the expenses of the company.

A few questions:

1. Does it make sense to re-incorporate the business as a B-Corp for profit, or retain the non-profit status and create a secondary for-profit entity?

2. How would it work to acquire a Non-Profit and use seller financing to pay out the owner? If you can't distribute profits - would you be able to do this? (ie - can you do an annual Consulting Fee?

3. How could you work with a minority investor to acquire the Non-Profit and be able to distribute returns to the investor?

Thanks for the expertise/help

3 Likes

133 Views

reply by a professional 6yrs ago
from University of Minnesota in Minneapolis, MN, USA

There are a lot important tax and legal distinctions between "nonprofit" and "tax-exempt" organizations, in particular with regard to 501(C)(3) tax-exempt organizations. Unfortunately, most lawyers who work in the M&A space are not going to know much about these distinctions (myself included). Frankly, the selling entity probably has more to worry about, but there are certainly risks to a Buyer as well.

I'm an attorney, but I"m also an advocate of DIY legal work when practicable. In this particular instance, you're going to want to either 1) talk to an attorney with experience dealing with nonprofit or tax-exempt deals, OR 2) Do a LOT of research (and be sure to vet your sources properly).

Good luck!!

reply by a searcher 6yrs ago
from University of California, Berkeley in San Francisco, CA, USA

As Jake pointed out earlier, 501c3 is very unique and specific. But at a high-level, 501c3's have no shareholders and often times no members (like in case of LLC, LLP) either. Therefore decisions are made by CEO/ED with authorities granted by the Board of Directors, who typically are the primary fiduciaries over the entity in question. Often times, NFP have regulatory obligations to contracts and funders. With the background above, I think you would need to first figure out obligations of target(s) and your thesis why #1, 2 and 3 of your questions would make sense.