Search Fund Versus Rollup Strategy

searcher profile

October 29, 2022

by a searcher from Columbia University - Columbia Business School in West Palm Beach, FL, USA

I'm curious if anyone has insights into the pros/cons of setting up a search fund to fund one acquisition candidate versus rolling up more than one company at a time. I'm attempting a rollup of a few alcohol beverage brands. I have worked in alcohol beverage M&A and integration so this is a very familiar skillset for me. Additionally, the assets are mostly brands (as opposed to any owned production, equipment, etc.) so the integration process is fairly straightforward. Finally, we are searching early-stage so the brands are usually not cash flow positive unless we roll enough###-###-#### together to significantly reduce costs and generate revenue syngergies. That's one reason we favor the rollup versus funding one campny. Any considerations or advice please?

1
7
253
Replies
7
commentor profile
Reply by a searcher
from Columbia University in West Palm Beach, FL, USA
Thank you everyone for your comments. We're now actually considering a pivot to more of a search fund -- finding one cash flow positive asset -- as opposed to the rollup strategy. Some of our early investors have suggested this too. We are close to submitting LOIs on 2-3 brands. How should I be thinking about economics (both our own equity as well as the search fund costs) if we already have identified assets and are much closer to finalizing a deal than a true searcher? Thank you.
commentor profile
Reply by a searcher
from The University of Chicago in 1251 US-31 N, Greenwood, IN 46142, USA
commentor profile
+5 more replies.
Join the discussion