Brand new searcher here. I'm having a difficult time understanding the fundamental/structural differences between the Independent/Unfunded Sponsor and the Search Fund model.
Am I correct in understanding the main difference is that the search fund model is fundamentally designed to fund/bridge the search period for the principal, incentivizing initial investors through step-up's and preferential deal-level investment, while the Independent Sponsor model requires self-funding of initial 'survival' capital but is similar in other regards?
Thinking longer-term, would it be reasonable to assume that once an initial search-fund backed deal was exited, assuming profitably, a principal would likely move towards an Independent Sponsor or self-funded model for their next deal or deals?
Thanks in advance for any help along this new journey.
Search Fund vs Independent Sponsor Fundamentals
by a searcher from University of Pittsburgh - The Joseph M. Katz Graduate School of Business
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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.
And yes, the way I see it, a formal search deal is just the first step to gain the equity and experience to fund a deal on your own (either recap the original investment and buy out your funding partners), or sell-out entirely and search for a new opportunity.