Does anyone have any experience working as a partially self-funded search? How does the 1.5x step-up work, given that a portion of the search is self-funded. Would the self-funded portion also be entitled to the 1.5x step-up? How would the search fund capital be valued at the time of acquisition?
For example, consider a search fund budget of $500k in total. If it was fully funded by outside investment, I understand the step-up to $750k towards equity value. However, if the budget is $500k, and the searcher puts up $200k and raises $300k, how would the economics work for the searcher-funded portion? (I'm assuming here that the investors, who put in $300k would be entitled to the 1.5x step-up, yielding $450k of equity value. How would the $200k searcher investment be handled?
Thanks.
Partially Self-funded Searches and the 1.5x Step-up
by a searcher from Georgetown University - The McDonough School of Business
More on Searchfunder
Searchfunder is an online community and toolkit for searchfunds. Over 80% of those involved in searchfunds maintain a Searchfunder.com account to help them network, problem solve challenges, and keep up with the industry.
We maintain partnerships with database providers that make searching more effective, efficient and affordable along with features that help searchers find deals and investors and vice versa.
We maintain partnerships with database providers that make searching more effective, efficient and affordable along with features that help searchers find deals and investors and vice versa.
Curious where you ended up on this and if you had further feedback in addition to the above. Did you come across many searchers who partially self-funded?
Peter