Seeking to speak with people who had negative search experiences

December 13, 2023

by a searcher from INSEAD in Warsaw, Poland

I am seeking an opportunity to speak with people who experienced "hiccups" or more serious issues in their search fund journey and would be willing to share. All in the spirit of learning from your experiences and helping a new searcher be equipped to seeing red flags early. Please PM me if you are willing to have a confidential chat. Thank you in advance - I know that re-counting these experiences is not always easy. I am well aware that this has been asked before.

Some more background (my profile and examples of negative experiences) below.

My profile:
I am in the very initial stages of raising a traditional search fund (starting to draft a PPM, planning to fund raise early in 2024) focused on Poland. I have background in consulting, private equity operations and small business management. I am decided and excited to get going. I have done the work (books, podcasts, meetings with people in the ecosystem) but I still feel like I have a gap in understanding when it comes to things that can go wrong, or even very very wrong.

Examples of potential situations (not exhaustive) which I have heard off anecdotally and I would like to explore:
1. Difficulty raising a fund (e.g., not getting a good response despite seemingly tested market and good searcher profile)
2. Not finding the right company/willing seller (e.g., running out of time/money, too narrow search parameters/"picky" searchers)
3. Not being able to acquire the company (e.g., acquisition funding not coming through)
4. Not generating expected value in acquisition (e.g., bad market, surprises post acquisition, getting fired by the Board)
5. No successful exit (e.g., lack of alignment on timing/type of exit, lack of market interest)
6. Issues with investors (e.g., challenging relationships: searcher-investors and intra investor group)
7. Issues with other stakeholders (e.g., sellers, employees, banks etc.)
8. Bias in search (e.g., negative perceptions you had to deal with as a women)

Reply by a searcher
in Loudon, NH, USA

I found that I did not 'fit' the criteria for the typical traditional search fund. I'm mid career, have a family and no MBA. Therefore, I identified with the self funded search path but the disconnect I find is that while I can find deals, both on and off market and have spoken with investors, I wouldn't say I have 'committed' capital to count on nor do I have enough deal making expertise to submit an LOI without investor input as to what terms they'd bite on. Sure, I can write an LOI but will investors like the deal after I submit it? The gap between LOI and close when it requires outside capital as a self funded searcher has been a struggle. I've been stuck doing smaller deals with my own capital because i haven't figured this part out yet and/or met the right person(s).

Reply by a searcher
in New York, NY, USA

Although I did not have any challenges fundraising, I have found that the biggest challenge is finding deals that the majority of my cap table likes, and deciding how to proceed when opinions differ. When there is a difference of opinion, and when you can see both sides, it is ultimately up to you to determine whether you want to proceed forward with the deal, despite the challenges, and commit to getting the gap funded.

+3 more replies.

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